FCC May Act on BDS in Late September, Pickering Says; ILEC Critics Press Case

It's "a reasonable expectation" the FCC will act on BDS by late September, or October "at the latest," Pickering said. "That's the current schedule that we are assuming." The FCC has monthly meetings scheduled for Sept. 29 and Oct. 27. Pickering said a BDS overhaul is "long overdue" and would bring lower prices that spur growth and innovation. He summarized the Incompas/Verizon joint proposal for creating three BDS tiers based on the data speeds of offerings, with the lowest tier -- below 50 or 100 Mbps -- deemed noncompetitive and subject to price-cap regulation, the highest tier (above 1 Gbps) deemed competitive and not subject to regulation, and the middle tier subject to commission review (see 1606270058). The FCC and USTelecom didn't comment.

Sprint believes regulation is needed to facilitate wireless upgrades to 5G networks, which require "densification" and more backhaul connections to/from cell towers, said Charles McKee, vice president-government affairs, one of several on the Competify call. He said Sprint is focused on ensuring a market test based on actual competition, not potential competition, as pushed by ILECs. He said ILECs are always making claims that competition is ramping up but industry data demonstrated the vast majority of the BDS market was a monopoly, or at best a duopoly. Sprint will provide new economic analysis that shows that recently submitted cable data doesn't change that fundamental picture, he said.

The special access/BDS proceeding began 4,219 days ago, said Steven Berry, Competitive Carriers Association CEO, noting there was no iPhone then. He said the FCC shouldn't assume BDS offerings above 50 or 100 Mbps are competitive. "The FCC should shoot a little higher," he said. Next-generation 5G services are particularly critical to rural America, where he said 40 percent of consumers lack high-speed internet access. Wireless carriers will be able to provide gigabit speeds "shortly" and facilities-based competition to incumbents. He said the FCC needs to "future proof" its competition test to account for technological and other market changes, so industry doesn't have to wait another 11 years for further action.

Community anchor institutions face two large broadband problems, high prices and the lack of competition, and FCC action could address both, said John Windhausen, executive director of the Schools, Health & Libraries Broadband Coalition. He said schools and libraries often get no bids or only one bid when they seek service supported by USF E-rate discounts. He said he believes the FCC-planned fine of AT&T for allegedly not giving Florida school districts the "lowest corresponding price" (see 1607280028) is the first such enforcement of that E-rate rule and was an example of what happens when markets are prematurely deregulated.

Telco claims the market is competitive can't be taken at face value and were belied by the industry data, Windhausen said. Colleen Boothby, counsel for the Ad Hoc Telecommunications Users Commission, said ILEC "credibility" was shredded by the record. Many businesses are served by a single provider, she said. Berry said less than 3 percent of the BDS market had three or more competitors. Phillip Berenbroick, Public Knowledge senior policy counsel, said the ILECs always threaten to leave the market if they're not allowed to overcharge BDS customers. "We simply do not believe that. We believe that is blowing smoke and crying wolf," he said, voicing confidence in FCC remedial action.

CenturyLink and Frontier believe "price regulation will distort and deter competition in the BDS market; prices set too low will preclude competitors from entering the market and deter further infrastructure investment in rural America, which is particularly costly to serve," said a Frontier filing in docket 16-143 on a meeting representatives of the two telcos had with FCC officials, including General Counsel Howard Symons. "We also discussed backhaul purchasing trends and described how carriers negotiate backhaul and other BDS agreements."

"The costs of new rate regulation almost certainly will outweigh the benefits," and "the extensive rate regulation proposed by some parties could seriously undermine competition and investment" in the BDS market," said NCTA Vice President Steve Morris in a blog post. He said the cable group's reply comments will include a report -- by economists Michael Katz, an FCC chief economist during the Clinton administration, and Bryan Keating, an executive Vice President at Compass Lexecon -- that will cast more doubt on the ability of regulation to improve market performance. "The Commission should reaffirm its decades-old policy of not regulating rates charged by competitors," Morris said.

Verizon said cable offered BDS as common carriage. Negotiating individual contracts doesn't automatically change common-carriage services into private carriage, said a Verizon filing on a meeting with Symons and other FCC officials. Another Verizon filing summarized its proposals for establishing a "benchmarks approach" for "light-touch regulation" of packet-based BDS offerings such as Ethernet above a threshold deemed competitive.