FCC Draft BDS Order Still Expected to Circulate; Not on Oct. 27 Tentative Agenda
The FCC still seemed likely to circulate a business data service draft order among commissioners late Thursday, several BDS stakeholders told us in the afternoon. "It’s supposed to get circulated late today, with advisors being briefed tomorrow morning, and fact sheet released tomorrow morning," emailed a telecom industry official. The tentative agenda for the Oct. 27 commission meeting didn't include the order.
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If the item circulated Thursday, Chairman Tom Wheeler could still place it on the meeting agenda due out Oct. 20. The FCC didn't comment. Numerous parties continued to lobby the commission and make filings in docket 16-143.
CenturyLink proposed a BDS framework it said would address market concerns without discouraging network investment or creating undue administrative burdens. The telco said BDS services with data speeds above 50 Mbps should be presumed competitive, while services between 10 and 50 Mbps would be subject to a competitive market test by census tract and deemed competitive if three or more providers have facilities in or within 2,000 feet of the census tract. Services under that level (such as DS1s), would be subject to a different competitive test, with offerings using Ethernet over hybrid-fiber-coax counted as competing providers, it said in a filing. CenturyLink criticized the "extremely aggressive regime" offered by Incompas and Verizon and said there's no justification for the FCC to simply declare BDS services with speeds at or below 50 Mbps are noncompetitive, which would subject all ILEC legacy DS1 and DS3 services to price-cap regulation.
CenturyLink said competitive markets should be subject to permissive detariffing, no additional price regulation and limited regulation of practices. Noncompetitive markets should face price-cap regulation but be subjected only to a "modest" productivity based rate "reset" phased in over three years, and annual "X-factor" reductions of no more than 2.1 percent minus inflation, the ILEC said. Ethernet rates shouldn't be regulated, it said.
Incompas rejected the proposals. "This is nothing but a repackaged retread of monopoly arguments that have been proven to fail competition and fail investment," emailed General Counsel Angie Kronenberg.
Windstream proposed "regulatory backstop" language for wholesale BDS deals. "At a minimum, the Commission should adopt a rule substantially in the form attached to this letter, which will set out the specific requirements for establishing a backstop on wholesale last-mile input rates for business data services, and will better guide parties in commercial negotiations," a company filing said. "The Commission should adopt this rule, including an interim safe harbor, as a backstop to supplement additional actions needed for robust competition in the business data services markets."
The record "clearly demonstrates that incumbents are exercising market power by charging unreasonably high prices for packet-based business data services such as Ethernet, as well as legacy services, such as DS1 and DS3 services," said the Benton Foundation and other consumer and public-interest groups in a filing this week. "These high prices harm consumers, small businesses, schools, libraries, universities, and government agencies at all levels across our economy. ... We urge you to ensure that comprehensive reform applies to both legacy TDM services and to more advanced Ethernet services that are used by millions of consumers, businesses, and anchor institutions every day."
Congressional Black Caucus members voiced concerns about the Further NPRM proposing to adopt a new BDS regulatory framework. The FCC should "promote infrastructure investment and not impose obstacles that stifle broadband deployment and adoption in the communities we represent," said CBC Chairman G.K. Butterfield, D-N.C., and 15 colleagues in a letter to Wheeler.
Frontier Communications suggested potential BDS rate cuts could restrict its ability to make network investments and address debts associated with its strategic purchases, including of Verizon's wireline systems in California, Florida and Texas. "Depending upon the scale and timing of any BDS reductions, Frontier will have a limited means of offsetting them beyond reduced investment in broadband and job cuts," the ILEC said in a filing on a meeting with officials, including Wireline Bureau Chief Matt DelNero and Office of Strategic Planning Chief Paul de Sa. Frontier urged the FCC to "consider a transition period and limited BDS rate reductions for midsize ILECs who stand to be disproportionately affected" by regulatory changes to USF and intercarrier compensation that imposed new deployment requirements and limited revenue.
FairPoint Communications said it opposed any BDS decision that would consider its price-cap markets as noncompetitive or prices as above cost. "FairPoint believes the record in this proceeding is devoid of any evidence that FairPoint has market power in the BDS sector," it said in a filing on a meeting with DelNero. "The record demonstrates neither control of bottleneck facilities nor the ability to raise prices. In fact, FairPoint’s prices and revenues consistently have declined over a period of years, while the overall market has grown."