FCC stalls AT&T move to end discounts for wholesale clients

NEW YORK, Dec 9 (Reuters) - The U.S. Federal Communications Commission on Monday said it was suspending a plan by AT&T Inc to end certain discounts for so called special-access services for wholesale clients after some of its customers complained.

The decision came a day before AT&T, the country's biggest telecommunications service provider, had planned to eliminate certain long-term contracts for high-speed network connections based on older technologies. The plan was part of its effort to upgrade its network to Internet Protocol technology.

But some customers had objected as they would no longer be able to avail themselves of the discounts that came with longer-term plans.

As a result of the FCC, the U.S. telecommunications regulator, said it was suspending AT&T's plan for five months and opening an investigation due to "substantial questions regarding the lawfulness of AT&T's tariff revisions that require further investigation."

In an order published on its website the FCC cited petitions from companies including Sprint Corp, Level 3 Communications Inc and Windstream Holdings Inc.

These companies had asked the FCC to reject or suspend AT&T's proposed revisions as they argued that it would effectively result in substantial price increases because a lack of competition in this area would give them no other choice.

Sprint, the No.3 U.S. mobile service provider, welcomed the FCC decision. It said AT&T had sought to raise its prices by as much as 24 percent and noted that the disputed services are essential to financial services, retailers, manufacturers and educational institutions as well as wireless service providers.

After the FCC filing AT&T said on Monday that it would continue to meet its customers and "remain flexible in attempting to meet their needs" as it upgrades its network.

Stifel Nicolaus analyst David Kaut said in a research note that he doubted the FCC would ultimately block AT&T's move to Internet-based services.

But he said that AT&T would likely end up having to negotiate with its customers over what they consider a reasonable transition period from the older technologies.