AT&T's special access proposal faces fire from CompSouth

January 6, 2014 | By Sean Buckley

AT&T's (NYSE: T) desire to eliminate pricing discounts on special access contracts that are longer than three years now faces its latest challenge from CompSouth, an association of CLECs serving business customers in the Southeast.

The telco's main argument is related to its goal of switching all of its current wholesale TDM-based special access customers to IP-based services such as Ethernet by 2020.

In its filing with the Tennessee Regulatory Authority (TRA), CompSouth said AT&T has not provided any facts about how it would no longer be able to provide DS1 and DS3 services after it transitions to all-IP. Incumbent telcos use circuit emulation technology that allows TDM-based services to be transported over an IP network.  

"CompSouth submits that there is no factual basis for AT&T's claim that the company will be unable to continue offering DS1 and DS3 services following its alleged transition to an 'all IP' network," the organization wrote in its complaint.

If AT&T eventually gets its way, a wholesale customer's monthly charges could increase by as much as 20 to 30 percent for some services.

CompSouth said that AT&T's proposed "elimination of long-term discounts for DS1 and DS3 services is not necessitated by the transition to IP but by AT&T's desire to increase revenue from the sale of DS1 and DS3 services."

Critics say AT&T's proposal has two implications for businesses that are served by competitive providers. Besides raising service prices, the other reality of AT&T's proposal is that much of the TDM equipment used today won't be replaced for a number of years. And while Ethernet and IP have advantages in terms of speed and flexibility, they are not universally available, nor are the higher speeds appropriate for every business.

Currently, AT&T and fellow RBOC Verizon (NYSE: VZ) own about 80 percent of the special access market.

Competitive providers that purchase wholesale special access services from AT&T and other incumbent telcos got a reprieve in December when the FCC said that it was suspending the telco's plan for five months.