Startups Ask Congress to Back FCC on Business Broadband

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By Lydia Beyoud

Sept. 14 — Sixteen startup companies are seeking congressional support for the Federal Communications Commission's proposal to re-regulate rates in the business-to-business broadband market.

In a Sept. 14 letter from Engine, an advocacy group representing the startup community, the companies said the FCC's proposal could help them get a leg up in growing their businesses by ensuring access to high-speed broadband networks.

The startups, including recruitment marketing company Zoomforth and video messaging application company YayaTV, are hoping congressional support will spur the FCC to swiftly wrap up its effort to reintroduce price caps in certain markets for business data services, in which telecom and cable companies sell broadband services to other businesses to help them handle data traffic. The tech startup support offsets opposition to the FCC proposal from companies such as AT&T Inc. and Comcast Corp.

“We have been pretty pleased with the direction the FCC is going in, and hope Congress will voice their support that the FCC will continue to move,” Emma Peck, a policy analyst at Engine, told Bloomberg BNA.

The agency's proposed rules call for a 15 percent reduction in business data services prices to be phased in over two years in markets deemed uncompetitive by the FCC. That could make for significant cost savings for companies looking to grow, the startups said.

“When starting and scaling a company, every dollar counts. A recent report from the Internet Innovation Alliance found that access to quality broadband can save startups an average of $16,000 annually,” the group said. “For the archetypal entrepreneur starting a business in their garage or dorm room, $16,000 can make all the difference between moving forward with their dream or throwing in the towel,” they said.

That figure reflects projected savings for startup companies that they might otherwise spend, such as allowing for telecommuting rather than paying for a physical office, video conference costs, and other online activities, Peck said. She added that some of the letter's signatories are data-intensive businesses, while another is an accelerator network, which in turn supports a number of other startups, all of which require high-speed broadband.

Community Institutions

Multiple sides of the telecommunications industry continue to vie for the upper hand in shaping final FCC rules, according to recent agency filings.

Telecom company Level 3 Communications, Inc., which provides both retail and wholesale services, the Competitive Carriers Association and Verizon Wireless continue to urge the FCC to wrap up the proceeding post haste. The trade group INCOMPAS, which represents smaller telecom providers, and consumer groups have long decried what they view as anti-competitive pricing in the deregulated business data services market.

A group of anchor institutions, represented by the Schools, Health and Libraries Broadband (SHLB) Coalition, also asked Congress in a Sept. 14 letter to support the proceeding, which they said would help community groups afford the broadband networks they need to continue operating.

“According to data collected by the FCC, the large majority of BDS customers do not have competitive choices for their broadband services. That means that every interaction — a Skype lecture in the classroom, a tablet using the library’s Wi-Fi, a desktop terminal at the nurse’s station — will at some point travel over broadband “pipes” owned by just a few companies who do not compete with one another,” the institutions said.

Defining Market Power

However, the agency faces continued criticism of how it collects the data it is relying on to support its policy proposals, particularly how it defines competition and BDS market power.

Under the FCC’s proposal, markets that are found to be “competitive” – however that is defined – wouldn’t be subject to BDS rate regulation. But big carriers, including AT&T, CenturyLink Inc. and Verizon Communications Inc., could face the prospect of rate caps.

Cable companies, which haven't previously been regulated by the FCC for their business data offerings, are also opposing a provision that would include them as potential dominant providers within a market.

Those companies have asked the FCC to continue to allow the market to set prices.

Seven economists told the FCC in a Sept. 14 joint letter that ethernet and business data services prices have been declining “sharply” and that cable providers don't exercise significant market power, citing comments to the FCC by Comcast Corp.

“As commenters across the spectrum rightly acknowledge, the rationale for ex ante rate regulation hinges entirely on protecting customers from a dominant provider’s abuse of market power; in turn, there is no plausible argument for regulating BDS providers that lack market power,” the economists said.

Wheeler Commitment

FCC Chairman Tom Wheeler wants a commission vote by year's end on final rules to re-regulate the business data services market.

Wheeler is expected to reiterate that timetable before the Senate Commerce, Science and Transportation Committee during a Sept. 15 FCC oversight hearing, according to prepared remarks obtained by Bloomberg BNA.

To contact the reporter on this story: Lydia Beyoud in Washington at

To contact the editor responsible for this story: Keith Perine at

For More Information

Text of the Engine letter is at

Text of the SHLB Coalition letter is at

Text of the economists' letter is at

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