Government bean counters have given the Federal Communications Commission the green light to find out whether big telecom companies are charging other businesses too much for connectivity. The FCC said Monday that the Office of Management and Budget has approved a long-awaited study of the issue, which concerns the dedicated voice and data connections that link together networks at banks, businesses, universities and even wireless carriers.
When you pick up a call on your cell phone, or use an ATM, or log onto a school network that connects different campuses, you're taking advantage of a complex behind-the-scenes network that's probably using dedicated voice and data lines at some part of the journey. Parts of this back-end infrastructure may be owned and operated by different telecom companies, which means that — unbeknownst to many of us — there's also a huge commercial market for communications that you as a consumer may only experience indirectly.
Telecom geeks call this system "special access." Here's why special access is important: Because of the size of the players in this rather obscure market, the amount of money changing hands can be enormous. Yet as more of these connections shift from carrying voice to data, some worry about the prices that special access providers are charging. Some say the prices are veering into monopoly territory, because in some places only a few incumbent companies like Verizon and AT&T offer it. It's a bit like the way consumers complain about a lack of choices among retail Internet providers, but in this case, the consumers are businesses with enterprise-grade needs. These costs get passed along to consumers in the form of higher prices.
In 2006, a Government Accountability Office report took the FCC to task for lacking the information to make better decisions about regulating special access.
In 1996, money from special access charges accounted for less than five percent of revenues at the largest Baby Bells — companies that had been split off from AT&T when regulators broke up AT&T's regulated monopoly in the 1980s. By 2000, however, data from the National Association of Regulatory Utility Commissioners showed that special access accounted for 10 percent of revenue. By 2007, it had jumped again to 20 percent or more.
"Special access data is competition data," said Jeff Sharp, a spokesman for the Broadband Coalition, which represents smaller broadband companies like EarthLink and TW Telecom.
NARUC's paper found that there wasn't much evidence of systematic overcharging, although it seemed to be a problem in some areas. By moving forward with a 2012 proposal to look into special access prices, the FCC's new study will shed light on the special access market for the first time in years.
"Special access service has become increasingly important in the digital economy, enabling businesses large and small to connect to their customers around the globe," said FCC Chairman Tom Wheeler. "Consistent with the terms of OMB’s approval, we will move forward with data collection and fact-based analysis that will help the Commission better understand competition in this marketplace, and the impact on consumers."
You may not have heard of special access. But a lot of people — including you — depend on it.