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Sprint Presses for Cheaper Access to Broadband Lines
Sprint Nextel says phone companies keep prices high for access to high-capacity broadband lines to businesses.
(Associated Press)
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Paying higher prices for such capacity raises rates for Sprint customers and slashes funds crucial to building its own high-speed WiMax network, the company says.
"We're shoveling money right out the door to our competitors," said Anna Gomez, Sprint's vice president of regulatory affairs. "We're not seeking heavily discounted prices; we're seeking prices based on cost."
The Telecommunications Act of 1996 opened up the local phone market, allowing new competitors to lease part of the incumbent phone companies' networks. In 1999, the FCC reduced those pricing requirements in markets where there was considered to be enough competition to hold down prices.
Since then, competition has suffered, said Rep. Edward Markey (D-Mass.), chairman of the House subcommittee looking into business broadband prices. He is pressuring the FCC to "recalibrate" regulations to promote competition, which he says will accelerate the deployment of broadband.
"There is a market failure here that's putting our national broadband aspirations at risk," he said.
According to a 2006 report by the Government Accountability Office, about 6 percent of buildings have a choice of providers for their basic broadband services. In Washington, about 10 percent of buildings have a choice of broadband providers.
Demand for these high-capacity broadband lines has grown dramatically along with the wireless industry and businesses' need for robust, secure connections. But because so few companies control such lines, Sprint estimates, the wireless industry overpays for the services by more than $6 billion each year, expenses that are passed on to customers..
AT&T and Verizon say that their rates have actually decreased and that wireless companies simply buy more capacity as their business grows.
Verizon said it offers government-set rates in 88 percent of its markets, including highly competitive cities such as New York, Philadelphia and Washington.
Tom Tauke, Verizon's executive vice president of public affairs, plans to tell members of Congress today that the FCC's policies are working and should not be altered. There is an average of nine competitors in the markets that make up 80 of its revenue from high-capacity broadband services, he said.
The prices of business broadband services affect more than phone carriers. A group of 20 large companies, including banks, insurance companies and auto manufacturers, are also lobbying for lower prices for these services.
"If the Bells are overcharging, then companies have that much less money to spend on their own businesses," said Colleen Boothby, who represents this group, known as the Ad Hoc Telecom Users Committee. "Broadband is such a pervasive product -- it's how you conduct business."
