Before the

FEDERAL COMMUNICATIONS COMMISSION Washington, DC 20554

In the Matters of Special Access Rates for Price Cap Local Exchange Carriers AT&T Corp. Petition for Rulemaking to Reform Regulation of Incumbent Local Exchange Carrier Rates for Interstate Special Access Services

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WC Docket No. 05-25

RM-10593

REPLY COMMENTS OF MEDIA ACTION GRASSROOTS NETWORK Media Access Project, on behalf of Media Action Grassroots Network (“MAG-Net”), submits these Reply Comments to provide the Commission with the perspective of residents and Internet users in low-income and immigrant communities and communities of color, in rural and urban neighborhoods. The constituents of MAG-Net firmly believe that broadband is critical to their lives. For the members of MAG-Net, all people - and especially those living in disenfranchised communities - need an affordable, accessible, and well distributed Internet backbone. As the numbers continue to increase for people who live in disenfranchised communities and understand the importance and relevance of the Internet, it is imperative that this critical infrastructure is made available and affordable to all. The Commission can take an important step to facilitate and advance such availability and affordability by taking swift action to reform special access, as the majority of comments filed initially in this proceeding suggest. I. INTRODUCTION Collectively, MAG-Net represents communities that consist of people of color, low-income residents, immigrant populations, and other vulnerable demographic groups, in both rural and urban

neighborhoods (generally, “disenfranchised communities”).1 For the constituents of MAG-Net, access to the Internet is essential to their ability to communicate for economic, political, and social purposes. Indeed, MAG-Net views communication as an essential human need and a fundamental human right in which freedom of expression is the basis of individual and societal development, and economic opportunity. One key piece of this communications rights platform is increased availability and affordability of broadband Internet access. In turn, one key element to making broadband Internet access more ubiquitously available and affordable is the ability of traditional Internet service providers and competitors to purchase special access under reasonable rates, terms, and conditions. Incumbent ISPs and competitors, whether they provide wireline or wireless Internet access, need special access to reach the “last mile” connection between the customer and the Internet. In fact, special access is employed in the majority of interconnection capabilities that constitute the Internet, and demand for it has been increasing significantly over the years.2 However, the special access market has become increasingly concentrated,3 leading to higher prices and burdensome terms and conditions. As a result, these excess costs can limit the deployment of broadband in disenfranchised communities or result in

The Media Action Grassroots Network, or MAG-Net, is a national initiative launched by some of the country’s most dynamic regional organizations to provide an infrastructure for grassroots media activist organizations. Across the country they are building constituencies, partnerships and victories for progressive structural change. Grounded in a vision of social justice, these organizations generate creative, pragmatic models of strategic communications and mobilization that resonate powerfully far beyond the D.C. Beltway. MAG-Net Anchor’s are Media Mobilizing Project, Main Street Project, Media Alliance, Media Justice League, Center for Media Justice, Reclaim the Media, Media Literacy Project, Peoples Production House, Esperanza Peace and Justice Center, and Thousand Kites. 2 See, e.g., Comments of Verizon and Verizon Wireless, WC Docket No. 05-25, RM-10593, at 15 (filed Jan. 19, 2010) (“Verizon Comments”) (“The growing demand for broadband is creating more demand for high capacity services and special access services.”). Of course, although Verizon asserts that such increases in demand create a powerful incentive for potential competitive entry, the Commission initiated the current proceeding to measure actual competitive entry – if any – and its impact on incumbents’ special access offerings in markets where meaningful competitive offerings are available. 3 See, e.g., Comments of Sprint Nextel Corp., WC Docket No. 05-25, RM-10593, at Attachment A (Decl. of Bridger M. Mitchell), pages 15-16 (filed Jan. 19, 2010) (“Sprint Nextel Comments”).

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prohibitive costs to those who would like to, but are unable to, purchase affordable Internet access. MAG-Net urges the Commission to move swiftly towards special access reform, which would help to make special access more reasonably available to competing ISPs, thus increasing the potential for the availability and affordability of broadband in disenfranchised communities. II. SPECIAL ACCESS REFORM IS KEY TO CLOSING THE DIGITAL DIVIDE People increasingly rely on the Internet to access health services and educational resources, connect with family, find jobs, participate in civic activities, and generally increase their quality of life. However, many continue to live in regions without adequate networks or they simply cannot afford the high prices for accessing the Internet. According to a recent survey, 5 percent do not have broadband at home because it is not available, and among those still using a dial-up service 21 percent do not have broadband at home because it is not available.4 Moreover, almost 50 percent of adults do not subscribe to broadband at home because of the costs.5 Additionally, while the national average of households having broadband at home is 67 percent, only 49 percent of Hispanics and 59 percent of African-Americans have broadband at home.6 There is also a wide discrepancy of broadband use at home between those living in urban areas and rural areas; urban households have higher rates of access at home than rural households.7 Consequently, many communities, especially the constituents of MAG-Net, are without access to broadband; indeed, the

See John B. Horrigan, Ph. D., Broadband Adoption and Use in America, OBI Working Paper Series No. 1, 30 (February 2010) (“Broadband Adoption and Use Study”). 5 See id. at 27-28. While 87 percent of households with incomes over $50,000 have broadband at home, only 52 percent of U.S. homes with less than $50,000 in annual income have a broadband connection. See id. at 3. Only 40 percent of low-income households, where the annual incomes falls below $20,000, subscribe to broadband. See id. 6 See id. at 13-14. 7 See U.S. Dep’t of Commerce, National Telecommunication and Information Administration, Digital Nation 8 (February 2010).

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existence of a digital divide among communities of color has been well documented.8 A. Special Access Reform is Necessary to Promote Broadband Deployment and Affordable Internet Access.

Solving the digital divide requires a number of new policies and efforts, but one key element to encouraging broadband deployment and affordability is the ability of providers to purchase special access at reasonable and affordable rates, terms, and condition.9 However, the current structure of the market for backhaul services has a dramatic, negative effect on competition in the broadband ecosystem. Unreasonable special access pricing, terms, and conditions, facilitated unfortunately by the Commission’s past deregulation of special access services, create barriers to the entry and growth of competitive Internet access providers.10 Consequently, the high cost of special access prices trickles down to the consumer who either will not have broadband deployed to his or her community or has to pay higher prices for broadband Internet access.11 B. Special Access Reform Is Especially Needed for Wireless Internet Access. Special access is critical to providing wireless broadband access. 12 In fact, almost 90% of all

See id.; see also, John Horrigan, Pew Internet & American Life Project, Home Broadband Adoption 2009 (June 2009); see also Pew Hispanic Center, Pew Internet & American Life Project, Latinos Online (March 14, 2007) (“Pew Latinos Study”). 9 See, e.g., Comments of the NoChokePoints Coalition, WC Docket No. 05-25, RM-10593, at 45 (filed Jan. 19, 2010) (“NCP Comments”). 10 See, e.g., Ex parte notice of United States Cellular Corp., Expanding Wireless Broadband Services and Increasing Wireless Competition at 4 ( “Handset exclusivity, lack of data roaming and high special access rates impede deployment and uses of broadband services)” and 10 ( “Special access is a significant cost driver for regional wireless carriers - critical to broadband deployment.”), WC Docket No. 05-25, RM-10593, (filed September 9, 2009). 11 See, e.g., Special Access Overpricing and the US Economy, How Unchecked RBOC Market power Is Costing US Jobs and Impairing US Competitiveness, Economics and Technology, Inc., at 8-9, August 2007 (hereinafter, “Special Access Overpricing”) (filed as Appendix 1 to the Comments of AdHoc Telecommunications Users Committee, WC Docket No. 05-25, August 8, 2007). 12 Comments of Sprint Nextel Corp., WC Docket No. 05-25, Appendix at 2 (filed Aug. 8., 2007) (“Special access facilities are a significant input in the provision of both Commercial Mobile Radio Services ... and wireless broadband services.”).

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wireless cell sites are connected to the switches of the wireless carriers via special access.13 Accessibility and affordability of wireless Internet access is especially vital to disenfranchised communities. For the communities represented by MAG-Net, mobile Internet access is a critical means for communication and accessing information. In fact, according to a recent survey, more people are beginning to own mobile devices that allow them to access the Internet with a wireless connection and use that connection for access.14 Even devices traditionally not thought of as being used with a wireless Internet connection are being used to access the Internet, though not in as large numbers as handheld devices or laptops.15 Importantly, these devices actually are being used by the constituents of MAG-Net to access the Internet. For instance, 48% of African Americans and 47% of English-speaking Hispanics have accessed the Internet on a handheld device.16 This is a marked increase from 2007, when 29% of African Americans and 38% of English-speaking Hispanics accessed the Internet on a handheld device.17 These numbers indicate that people of color are increasingly relying on a mobile device to access the Internet. In fact, access and adoption are especially relevant for people of color, who rely more than Whites on a mobile device for non-voice activities. The Pew Wireless Study concludes that Blacks and Hispanics are more likely than Whites to use their phones for a number of non-voice activities. For example, Blacks and Hispanics send or receive email, access the Internet, and send or receive instant

See Special Access Overpricing at 8-9. For example, 85% of the adult population owns a handheld device, and 32% of the population have used it to go online. Similarly, 47% own a laptop and 39% of the population has used it to go online. See John Horrigan, Pew Internet & American Life Project, Wireless Internet Use, at 8 (July 2009) (“Pew Wireless Study”). 15 For example, desktop computers, game consoles, and iPods/mp3 players are being used to access the Internet through a wireless connection. See id. 16 See id. at 14. 17 See id.
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messages on their mobile phones more than Whites.18 Moreover, according to the Broadband Adoption and Use Study, among Hispanics that have a laptop, 30% have used mobile wireless broadband.19 Similarly, “African Americans are the most active users of the mobile internet - and their use of it is also growing the fastest.”20 According to the survey, the “high level of activity among African Americans on mobile devices helps offset lower levels of access tools that have been traditional onramps to the internet, namely desktop computers, laptops, and home broadband connections.”21 The study concludes that “[f]or African Americans,…the onramp to internet is, in contrast to whites, more likely to be a handheld device on mobile wireless network - and not nearly as likely to be on a wireline home broadband connection.”22 Moreover, with the introduction of devices like netbooks, the iPad, and wireless data cards, more and more individuals in these communities will be able to rely on a wireless Internet connection to access the same services, content, and opportunities that would be available to them with wireline access. For example, “34% of African Americans have a laptop and 28% have used it to go online wirelessly.”23 Further, with respect to African Americans the “lower level of home broadband access...in conjunction with lower levels of ownership of ‘heavy’ access devices - desktop and laptop computers - helps explain less frequent online access when the questions are framed in terms of traditional access.”24 However, the “picture changes when including access on a handheld and with the broader measure of wireless use that includes laptops and other devices.”25 In those cases, “use among African Americans matches or

See id. at 28. See Broadband Adoption and Use Study at 23. 20 Pew Wireless Study at 4. 21 Id. 22 Id. at 35. 23 Id. at 13. A more recent survey found that among African-Americans who have a laptop, 36 percent have used mobile wireless broadband. See Broadband Adoption and Use Study at 23. 24 Id. at 32. 25 Id. at 33.
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exceeds that of white Americans...[where] African Americans are 70% more likely” to access the Internet wirelessly.26 Moreover, “when tethered and wireless access are considered together, the gaps in online engagement between whites and blacks largely dissipates.”27 Thus, it appears that wireless access to the Internet can play a critical role in disenfranchised communities. The numbers indicate that wireless devices are increasingly being used for Internet access, especially by communities of color. However, MAG-Net does not consider access to the Internet through a wireless device as a complete solution to solving the digital divide; access to the wireless ecosystem is a critical first step in helping to close the digital divide as well as providing a means for communication. Thus, the Commission must move quickly to reform the special access market. III. A LOCAL ANALYSIS OF THE SPECIAL ACCESS MARKET IS MORE APPROPRIATE To ensure that an analysis of market competition in the special access market does not further deprive disenfranchised communities of competition in the broadband market, it is critical that competition is measured on a more granular level. A more granular, local analysis is especially necessary since no two “urban” or “rural” areas are identical. For example, rural communities are extremely diverse in a number of ways - geographically, racially, and socially. Similarly, not all urban communities are homogenous when considering these same factors. To truly ensure that all communities have access to affordable broadband, it is appropriate for the Commission to reassess its measurement of special access competition and to ensure that special access is available in all neighborhoods at reasonable rates, terms, and conditions.

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Id. Id.

In fact, when the Government Accountability Office (“GAO”) conducted its analysis of the special access market, it analyzed competition on a building-by-building basis.28 Similarly, the

Department of Justice, in its review of the SBC/AT&T and Verizon/MCI mergers, also assessed competition on a building-by-building basis.29 The Commission should consider analyzing competition in the special access market similarly. A more granular analysis is necessary to spur competition, ensure that the Commission’s rules are working properly, and make certain that affordable broadband can be made available in disenfranchised communities. IV. SPECIAL ACCESS REFORM WILL NOT UNDERMINE ILEC INCENTIVES TO INVEST. Some commenters in this proceeding suggest that special access reform will discourage investment in high-capacity broadband.30 However, MAG-Net believes the opposite should be true; that is, special access reform should encourage providers to deploy broadband (wireline or wireless) Internet access in disenfranchised communities and make it available at affordable prices. According to a 2007 study by Economics and Technology, Inc. (“ETI”): Producers that rely upon special access – or upon other telecom services that are themselves dependent upon the use of special access – as an input to their own economic activity may curtail their use of the service and will, in any event, generally be forced to pass on the excessive prices they pay for these services in the prices of their own final product. This has the effect of suppressing demand for those downstream products and diminishing consumer surplus – i.e., the net economic benefit that consumers derive from their purchases of those final products – as a result of both the inflated price levels of those final products and the See United States Government Accountability Office, Report, FCC Needs to Improve Its Ability to Monitor and Determine the Extent of Competition in Dedicated Access Services at 22 (Nov. 2006) See, United States' Notice of Public Filing of Redacted Submission, Redacted Declaration of W. Robert Majure at 11 n. 17, United States v. SBC Commc'ns, Inc., Case No 1:05-cv-02102, D.E. #133 (D.D.C. Aug. 9, 2006)
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See, e.g., Comments of AT&T Inc. at 13-20 (filed Jan. 19, 2010).

suppressed consumption of them. The inflated prices of special access also force producers that utilize these services to decrease their use (and their own output quantities), and/or to substitute less efficient production methods.31 In other words, high special access prices limit the production of certain services, such as the deployment of broadband, and/or these high costs are passed on to the end user - the customer. In turn, the high cost and unavailability of broadband leads to limited adoption of broadband, disenfranchising communities that could greatly benefit from high-speed Internet access. Moreover, a 2009 report by ETI demonstrates that monopoly profits may actually reduce investment. Specifically, ETI found that in recent years, wireline network investment has actually been reduced.32 ETI found “no evidence of any extraordinary investment programs spurred by the broad regulatory relief that the RBOCs have been granted. In fact, as the data reveal, capital investment by the RBOCs in the US has slowed as regulation has decreased.”33 Special access reform could help to encourage ISPs to deploy affordable broadband in disenfranchised communities, thereby increasing overall investment, simply by preventing RBOCs from reaping continued monopoly profits. The Commission should not allow RBOCs to continue to increase profits while so many are left without an increasingly essential service. IV. THE COMMISSION MUST ACT SWIFTLY Some parties suggest that the growth in demand for the special access market already has led to “competitive entry and competitive expansion.”34 However, many of the constituents of MAG-Net

Special Access Overpricing at 8. Economics and Technology, Inc., The Role Of Regulation in a Competitive Telecom Environment: How Smart Regulation of Essential Wholesale Facilities Stimulates Investment and Promotes Competition at 22 (2009). 33 Id. 34 See, e.g., Verizon Comments at 2.
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continue to wait for affordable broadband.35 Moreover, there is substantial evidence submitted in this and other proceedings that the relevant markets are not competitive, and that special access reform is necessary to encourage competition for both wireline and wireless Internet access.36 With this current round of comments, the Commission now has a thorough record. MAG-Net urges the Commission to issue a data request quickly and thereafter resolve as soon as possible the issues raised throughout this five-year old proceeding. Continued delay will undermine the potential for ISPs to invest in increased broadband capacity in disenfranchised communities. V. CONCLUSION Recognizing that the current special access market is flawed, the Commission nearly five years ago began a proceeding to review the special access market and determine what changes would be necessary to ensure reasonable prices. The Commission has not taken any action yet, and the market continues to deteriorate, with ripple effects through the entire broadband economy. MAG-Net urges the Commission to act swiftly to increase the availability and affordability of broadband in disenfranchised communities by requiring special access to be available on more just and reasonable terms.

See, e.g., http://www.dailykos.com/story/2010/2/13/836774/-Dial-Up-InternetRural-America(provides documentaries of those living in rural and low-income communities who must still rely on dialup Internet access but want broadband Internet access). 36 See, e.g., Comments of the NoChokePoints Coalition, WC Docket No. 05-25, RM-10593 (filed January 19, 2010); Comments of Consumer Federation of America, et al, WT Docket No. 09-66 at 27-29 (filed Sept. 30, 2009).

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Respectfully submitted,

Parul P. Desai Matthew F. Wood Andrew Jay Schwartzman Media Access Project Suite 1000 1625 K Street, NW Washington, DC 20006 (202) 232-4300 Counsel for Media Action Grassroots Network February 24, 2010

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