Verizon and AT&T are under fire from the Federal Communications Commission, which is investigating both companies for allegedly "locking out" smaller competitors in the special access sector of the massive data industry. Other companies included in the probe are CenturyLink and Frontier.
The FCC's Wireline Competition Bureau has announced that the four companies are facing accusations from smaller providers for abusing their dominance in a significant portion of the wireless market. Special access services are those used by businesses, governments and educational institutions to provide high-speed Internet access, which are often used to connect things such as ATMs, retail outlets and university libraries.
"The Bureau concludes that the record raises sufficient questions regarding the lawfulness of certain terms and conditions contained in certain special access tariff pricing plans offered by AT&T, CenturyLink, Frontier and Verizon to warrant their investigation," says the FCC.
Smaller companies, such as Sprint, which pays for Verizon's special access services to connect its cell towers, accuse the bigger companies of charging exorbitant fees for their services and locking them into a seven to 10-year contract with expensive early termination fees. Sprint says it had to pay a hefty fine when it decided to move its 38,000 towers to another service provider.
Another complainant, Level 3, says the companies are forcing it into so-called "percentage commitments," where they have to buy a certain percentage of their special access needs from the company in order to avoid paying massive penalties.
Verizon and AT&T, however, have denied the allegations, defending their measures as industry-standard practices.
"The terms and commission is reviewing are commonplace in most commercial contracts," says Frank Simone, vice president of federal regulatory at AT&T.
"If the FCC is going to examine these tariffs, it should at least first analyze the data it has collected from the industry so that the agency has an accurate view of how this marketplace is quickly evolving before taking action," says a Verizon spokesperson, adding that the changes in the Internet landscape are making the special access market "less relevant."
The FCC has yet to arrive at a conclusion, and it will likely take a few months before it does. Should the FCC decide that the four companies are liable, any sanctions that may be imposed will require at least three yes votes from the agency's five commissioners.