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A small Maryland companys decision this week to stop publishing telecom carrier rates is making a big stir in the industry, as experts say one of the free-market effects of the 1996 Telecommunications Act is finally being felt, nearly a decade after it was passed.
Rockville, Md.-based Center for Communications Management Information this week ceased publishing “DealWatch,” a compendium of rates of telecommunications carriers, used by major corporations, and small and medium-size businesses, to shop around for the best-priced telecom deal.
“We just made an announcement,” said a spokeswoman for CCMI, Deana Holton. “Were ceasing publication. Companies arent putting enough useful information out there.”
Before the 1996 Telecommunications Act, carriers used to report, regularly, to the Federal Communications Commission about their rates, or, in government language, their “tariffs.”
There was even a so-called “tariff room” at the FCC in Washington, D.C., where members of the public could go, and read all about the rates being offered by MCI or AT&T and others, said Jonathan “Jack” Nadler, a leading telecommunications attorney, who practices before the FCC, said.
“That changed in 1996 with the Telecommunications Act,” said Nadler, a partner with Squire, Sanders & Dempsey. “The FCC passed a de-tariffing order.”
As a result of the order, the FCC abolished the tariff room, but carriers were still required to maintain lists of the prices of their services. “The idea was that if a consumer asks, the information would be available,” said Nadler.
Trouble is, over the last three to four years, carriers started providing the FCC with a “range of rates” that they offered, rather than specifics about their actual prices, said Bryan Lancelot, a senior vice president at Telwares, a telecommunications management services company, based in Destin, Fla. “Its been sort of a slow process,” said Lancelot. “The carriers started testing the waters with the FCC a few years ago with the range of rates.”
With the “range of rates” reports the carriers filed with the FCC, no one can actually pinpoint what rates go with what particular deal, said Lancelot. “I believe AT&T was the first carrier to test out the range of rates concept, and the FCC did not push back,” said Lancelot. “MCI ultimately followed suit. As time went by, other carriers became even bolder in not complying. They started filing little to no information about specific deals. Since the FCC never pushed back on the carriers…the carriers have basically stopped filing any deal-specific terms with the FCC.”
For years, the firm CCMI published the “DealWatch” compendium of pricing and deals. For example, a recent report from CCMI indicated that the price of retail telecommunications services for small businesses increased by 0.28 percent for April, and increased by 3.80 percent for March. For medium-size businesses, the price index increased by 0.12 percent for April, and 0.59 percent for March. For large businesses, the price of retail telecom services went up by 0.25 percent for April and 0.05 percent for March, according to CCMIs DealWatch, which included a market basket of data, such as long distance, local, frame relay, and private line services.
The average spending per month for a small business on telephone services was $10,000, while the average spending for a large business was $175,000.
Sprint led the way in April, according to CCMIs DealWatch, a Web-based publication, with 174 new negotiated deals, while SBC had 62 such deals, and BellSouth had 44 such deals.
The trouble is, the data didnt get more specific than that—and no one was reporting to the FCC, from which CCMIs “DealWatch” got its information—the terms of the individual negotiated deals.
Telecom companies, like Sprint, note that they publish their general terms and conditions for businesses on the Internet,
But that reporting is vague, critics say. “Even if an enterprise conducts a telecom RFP and obtains price quotes from the carriers, the enterprise still does not know if the pricing quoted is bad, average, good, or leading edge, compared to the current market,” said Lancelot of Telwares, a firm ranked in the Inc. Magazine 500 prestigious small firms index.
The only way to get a handle on what the deals were to be had was to find a company that itself had negotiated a number of pricing deals—a time-consuming process.
“Market pricing has continually shifted on a quarterly basis over the last five years,” said Lancelot. “With the pending industry consolidation, the market will shift again.”
This ever-changing “landscape of rates and plans makes it difficult for businesses to ensure they have the right plan in place with the most advantageous of rates,” said Beth S. Miller, a spokeswoman for mindWireless, a telecom management consulting firm, based in Houston. “Carriers are reluctant to turn their data over to a competitor.”
Carriers on the wireline side of the industry still provide a lot of pricing information to the FCC, but the biggest growth area is in wireless telecom, and there is a real paucity of competitive data, experts said.
This may, however, be what the FCC intended nearly a decade ago when it passed the rules, which are only today being felt. The government should treat the telecom market “like it does any competitive business,” said then FCC Commissioner Rachelle B. Chong, in a statement.
The reasoning? The FCC wanted to “deter price coordination among carriers,” said Nadler, the telecom attorney, who practices before the commission and the federal courts. “The thinking was that in a competitive market, the burden is on the consumer to find the costs.”