Verizon Tells FCC It Reached A ‘Grand Bargain’ With INCOMPAS

Courtesy of Benzinga.

Verizon Communications Inc. (NYSE: VZ), in conjunction with INCOMPAS, an organization that represents competitive telecom firms, wrote a letter to the FCC on June 27, outlining a “grand bargain” on the special access proceeding related to business data services.

Citi’s Michael Rollins maintains a Neutral rating on Verizon Communications.

The Agreement

“The two sides, long on opposite ends of the debate, reached eight conclusions that seem to address nearly all the questions posted by the FCC in their Further Notice of Proposed Rulemaking (FNPRM),” Rollins mentioned.

Verizon Communications has agreed to make significant reductions to the existing special access prices, along with caps on future non-competitive services.

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The company has also agreed to a one-time, mark-to-market transition, over a period of two years, which Rollins believes could represent a 35-40 percent reduction in the current prices.

What It Means

“By agreeing to price reductions and potential future price caps, we believe Verizon is attempting to gain access to wholesale high-bandwidth services from all potential providers,” the analyst said, while adding, “By including cable and other infrastructure providers, VZ would gain access to that backhaul and at reasonable prices.”

“We believe the potential for the FCC to act on the proposals included in the FNPRM, generally, could be neutral to negative for incumbent telecom companies and neutral to positive for alternative telecom providers,” Rollins added.

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