FCC to probe Verizon, AT&T over contract lock-in

The FCC announced late last week that it would investigate Verizon, AT&T, CenturyLink and Frontier over highly strict service terms in wireline business service contracts, which critics say lock customers into their deals unfairly.

The commission is particularly focused on the special access market, which encompasses the legacy copper links that make up part of the fabric of U.S. Internet service. The large incumbent providers under investigation control a lot of these special access links, and their competitors have been claiming for years that they’ve leveraged these localized monopolies to keep customers from jumping ship.

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Many of those critics hailed Friday’s announcement – XO Communications called it a “significant move toward leveling the playing field and spurring broadband deployment,” while industry groups like the Broadband Coalition, COMPTEL and the Computer and Communications Industry Association piled on additional praise.

“Almost every American relies upon these high-capacity, ‘special access,’ broadband lines each day – usually without even knowing it,” said CCIA President and CEO Ed Black. “But, the only thing ‘special’ about them is that the two biggest providers ‘lock-up’ their customers into long-term, exorbitant contracts, preventing them from seeking alternative choices and using innovative new products.”

Specifically under investigation are some of the big providers’ least popular clauses, including shortfall fees (which are charged to businesses which use less than a certain percentage of their monthly allotments), “all or nothing” commitments (which lock customers into a single “take it or leave it” pricing structure for all their purchases), outsized contract term length, and more besides.

AT&T Vice President of Federal Regulatory Frank Simone said the whole thing was a waste of time.

“Each day the Commission wastes investigating and interfering in commercial agreements between companies that build infrastructure and those that do not is a day it is not encouraging fiber investment or looking boldly towards the benefits those investments will provide to consumers,” he said.