01 December 2006

GAO Report on Access Competition

The US General Accountabiltiy Office (GAO) released this report on the state of dedicated access competition that is worth a read. This report surveys sixteen metropolitan areas (including Pittsburgh) and assesses the extent of facilities based competition. The findings include:

Available data suggest that incumbents’ list prices and average revenues for dedicated access services have decreased since 2001, resulting from price decreases due to regulation and contract discounts. However, in areas where FCC granted full pricing flexibility due to the presumed presence of competitive alternatives, list prices and average revenues tend to be higher than or the same as list prices and average revenues in areas still under some FCC price regulation. According to the large incumbent firms, many large customers needing service in areas with pricing flexibility purchase dedicated access services under contracts that provide additional discounts. However, GAO found that contracts do not generally affect the differential cited previously, and that contracts also contain various conditions or termination penalties competitors argue inhibit customer choice.

What kind of response do you think is necessary or appropriate? What does this say to you about a pro-competition telecommunications policy? How do these results match with related studies elsewhere in the world (eg. the European Union)?

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