Excerpt from a letter sent by Melissa Newman, Vice President-Federal Regulatory Affairs of CenturyLink, to FCC Secretary Marlene Dortch:
CenturyLink and others have identified numerous flaws in the Verizon-INCOMPAS proposed framework for resolving the above-referenced proceedings. A recent filing by Verizon in another docket further demonstrates how unsound and unreliable that proposal is. In support of its proposed acquisition of XO Communications, Verizon submitted an economic study entitled “Whitepaper on the effect of Verizon’s XO acquisition on business data services.” The Whitepaper, prepared several months after Verizon and INCOMPAS first announced their strategic alliance, undermines the factual premises of the Verizon-INCOMPAS proposal. In stark contrast to the dour portrayal of competition that Verizon and INCOMPAS have advanced to justify their draconian regulatory proposals concerning business data services (“BDS”), the Whitepaper highlights the intense competition in the BDS marketplace. As such, the Whitepaper further highlights the points that CenturyLink and others (including Verizon, earlier this year) have been making throughout this proceeding, and undermines any claim that the Verizon-INCOMPAS proposal is an appropriate basis for regulatory action.
For instance, although the Verizon-INCOMPAS proposal is predicated on a lack of BDS competition, the Whitepaper emphatically concludes that “there will continue to be extensive competition for [BDS] provided over fiber, cable, and copper by a wide range of providers” following the proposed transaction. In particular, according to the Whitepaper, “[c]able companies have . . . become ‘significant suppliers of BDS,’ which the FCC has heralded as a ‘great entry success story.'” As Verizon notes, “‘the looming threat [of cable] is no longer looming.’ The cable threat is here. . . . [R]ecently, cable operators have upgraded their widely available HFC networks to offer [BDS].” Cable is such a competitive threat because “Ethernet over HFC is . . . more cost effective than EoC [or Ethernet over copper].”