The holiday hike

On Black Friday you braved the cold and fought the crowds all to save a little money. But while you were waiting in lines for bargains, AT&T was finding ways to make broadband lines more expensive.

On your shopping expedition chances are you pumped gas, got cash from an ATM or swiped your credit card. These transactions require a high capacity broadband line – lines on which AT&T is planning to raise rates by 15 to 25 percent.  It is AT&T’s idea of a bad Santa special to you and businesses across the country.

{mosads}In a filing last week before the Federal Communications Commission (FCC), AT&T said it plans to eliminate cost saving long-term plans of five to seven years in order to force special-access business customers to buy these high-powered business lines at the more expensive three-year rate.

By law, the FCC has until December 9 to reject AT&T’s rate hike that would begin immediately on December 10th. It should do so.

Raising rates on business broadband lines will impact the entire economy.  These lines power financial institutions, manufacturing facilities and warehouse traffic – places that move our supply chains. [Sorry cyber Monday shopper, you too are in trouble.]

AT&T originally floated this idea last month. But after bad press and Congressional criticism, AT&T conveniently delayed its rate hike request to the FCC. Holding off until Thanksgiving week, when members of Congress were away from Washington. Just call it the Holiday Hike. 

So why does AT&T have such power over broadband lines? It started with the company’s 100-year head start in the marketplace.  In 1996, Congress tore down the bells’ monopoly with the Telecommunication Act. But AT&T retained control of the rate-payer built infrastructure provided it leased lines to the competition at wholesale rates. While no longer a monopoly, it was still a sweetheart deal for AT&T and Verizon, the legacy companies that to this day control 80 percent of the special access marketplace.

Much like the small businesses we celebrated on Small Business Saturday, broadband competitors proved scrappy, locally driven and innovative. They packaged long-term discounts with tailored customer service plans for small and medium-sized businesses. As a result of these innovative service models, prices dropped and services improved.

But the innovations of broadband competitors didn’t stop there. Competition prompted additional innovations such as VOIP, Ethernet and cloud based services.

So here’s where AT&T is trying to get clever. In an attempt to justify its rate hike, AT&T claims ending long-term discounts on broadband business lines is a needed step in order to transition to the same IP based technology brought to market by the competition. Only AT&T IP network plans won’t allow competition to interconnect and serve “last mile” customers. 

The truth is AT&T wants a permanent holiday from competition.  Their gift to you is to raise rates and disconnect its customers from the services that drive our economy.  

AT&T’s spurious use of the IP transition to justify rate hikes is wrong on three counts. First, the company fails to explain why transition to IP-based services in the long run validates its decision to charge businesses more in the short run for the same special access connections they already have.  

Second, current providers of IP services have cautioned against the rate hike, warning that unilaterally raising rates punishes the customers of IP-based providers that depend on last mile access to interconnect customers.

Finally, the FCC is moving forward on both the IP transition and a comprehensive review of the special access marketplace. New chairman Tom Wheeler has cited the need for competition and access in the IP transition. The FCC is collecting reams of data that once public will show that, despite nearly 20 years of legal obligations to allow competition, AT&T and Verizon have maintained dominance in the wholesale market through anti-competitive practices.

In essence, AT&T is trying to carve the turkey before the timer has popped. The FCC should make sure that the competitive telecommunications market for American businesses has the chance to fully cook.

Using the holiday hikes to end discounts that have been helping small business for over 15 years is the wrong way to move into the future. If the IP transition becomes nothing more than an excuse for AT&T to raise rates and provide fewer services then America’s broadband future is in grave danger.

Pickering served in the House of Representatives from 1997 to 2009. He is currently spokesperson for the Broadband Coalition and will start in January as CEO of Comptel.