Special Access

1
Special Access

• Dave Conn
• Nat. Director, State Regulatory
• T-Mobile USA
• Bellevue, WA
• Presentation to NARUC Staff Subcommittee on
  Telecommunications
• July 14, 2007

2
Special Access Regulatory Framework

• Two alternate regulatory processes used for
  Price Cap carriers
• Phase I pricing flexibility allows contract
  tariffs, and term and volume discounts, but must
  maintain availability of price-cap tariffed
  offerings
• Phase II allows services to be offered free of
  constraints imposed by Part 69 (rate structure)
  and Part 61 (price caps)
• Determinations of whether "triggers" for
  alternate treatment have been met are made at the
  MSA level
• Triggers are intended to be a measurement of
  competition within the MSA
• If triggers are met, competition is assumed to be
  sufficient to constrain market power within the
  MSA
• Different triggers for
• Channel terminations (dedicated circuit between
  LEC end office and customer premises)
• Dedicated transport services

3
Special Access Regulatory Framework

• Triggers for Channel Terminations
• Phase I pricing flexibility allowed if
  unaffiliated competitors
• are collocated at 50 LEC's wire centers within
  the MSA or
• are collocated at wire centers accounting for at
  least 65 of the revenue within the MSA of the
  allows contract tariffs, and term and volume
  discounts, but must maintain availability of
  price-cap tariffed offerings
• Phase II pricing flexibility allowed if
  unaffiliated competitors
• are collocated at 65 LEC's wire centers within
  the MSA or
• are collocated at wire centers accounting for at
  least 85 of the revenue within the MSA of the
  allows contract tariffs, and term and volume
  discounts, but must maintain availability of
  price-cap tariffed offerings
• Triggers for Dedicated Transport
• Phase I pricing flexibility allowed if
  unaffiliated competitors
• are collocated at 15 LEC's wire centers within
  the MSA or
• are collocated at wire centers accounting for at
  least 30 of the revenue within the MSA of the
  allows contract tariffs, and term and volume
  discounts, but must maintain availability of
  price-cap tariffed offerings
• Phase II pricing flexibility allowed if
  unaffiliated competitors
• are collocated at 50 LEC's wire centers within
  the MSA or
• are collocated at wire centers accounting for at
  least 65 of the revenue within the MSA of the
  allows contract tariffs, and term and volume
  discounts, but must maintain availability of
  price-cap tariffed offerings

4
Special Access Why T-Mobile Cares Illustrative
Network Design

Cell Site
Cell Site
Cell Site
DS1s
96 of links to cell sites purchased from ILECs
CO
68 of Interoffice Transport links (Tandem to
MSC) are purchased from ILECs
DS1s (and sometimes DS3s)
94 of Interoffice Transport links (CO to Tandem)
purchased from ILECs
DS3
Tandem
MSC
5
Special Access Why T-Mobile Cares

• Key T-Mobile Facts
• 96 of "cell site to end office" links (DS1s) are
  purchased from incumbent wireline carriers
• 94 of "end office to tandem" links (special
  access DS1s and DS3s) are purchased from
  incumbent wireline carriers
• 68 of "tandem to mobile switch" links (DS3s) are
  purchased from incumbent wireline carriers

6
Special Access Why T-Mobile Cares

• Key Policy Facts
• In areas where pricing flexibility has been
  granted to ILECs, special access prices have gone
  up, not down
• Qwest 62 between 2002 and 2005
• SWB 27 between 2002 and 2005
• Pac Bell 15 between 2002 and 2005
• Price-flex markets have DS1 rates that are 20
  higher than price-capped markets today
• Special Access prices are usually 25-200 higher
  than prices for equivalent cost-based UNEs
• ROI on special access of 37 in 2002, 43 in 2003
  , and continues to climb
• Validate against results of ATT/BS Merger
  Conditions

7
Special Access Why It Matters

• Problems posed by the control of bottleneck
  telecommunications facilities
• Backhaul, primarily using bottleneck special
  access facilities, constitutes 30 of total
  wireless operating expenses, which in turn
  affects
• The price paid by consumers
• The ability to expand and improve wireless
  coverage
• The quality of wireless service
• State Commissions are in a good position to
  evaluate the actual competition for special
  access services

8
Special Access Next Steps

• Understand that special access issues affect
  customers in your states, both in terms of price
  and in terms of quality of service
• NARUC Study underway
• Determine how special access competition should
  be measured
• Investigate whether special access markets are
  sufficiently competitive to warrant price
  deregulation
• Discover whether there are special access
  provisioning issues that affect competitors
• Examine data at a granular level
• Tell the FCC

9
Thank you!Contact InformationDave
ConnNational Director, State Regulatory425 383
6151Dave.Conn_at_T-Mobile.com