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By Kyle Daly
Aug. 18 — There is already ample competition in the business data market and little reason for the Federal Communications Commission to upset the apple cart, panelists critical of the agency's efforts to restructure the market argued during an Aug. 18 event.
The FCC has proposed new price regulations on data connection services in markets it deems insufficiently competitive. Business data services (BDS)—also known as special access services— are offered by telecom providers to connect cell sites to backbone networks—backhaul— for the wireless industry and support high-speed broadband services for banks, retailers, government and corporate users, schools and hospitals.
In markets it deems lacking competition, the FCC plan would impose price caps on the rates BDS providers can charge users, as well as on the rates incumbent providers can charge competitors to access existing network facilities. Verizon Communications Inc. backs the plan, but AT&T Inc. opposes it.
The agency issued its proposal on a 3-2 party-line vote in April (2016 TLN 5, 4/5/16), and observers say the agency may finalize and vote on the proposal by October.
Bloomberg BNA's Lydia Beyoud moderated the panel discussion at the Aug. 18 event, hosted by communications industry association USTelecom. Before the panel, former Sen. Mary Landrieu (D-La.) delivered remarks in which she said the FCC's proposal could lead to a “dangerous place,” with significantly chilled investment in rural broadband.
Analyzing data the FCC used as evidence that it needed to intervene in the BDS market, University of California economist Glenn Woroch concluded that, as of 2013, as many as 95.2 percent of all U.S. census blocks and 98.9 percent of businesses in the U.S. had access to a competitive BDS market—defined as having two or more nearby providers either already offering service to businesses or close enough to be able to easily connect a business to its network. When Woroch excluded cable companies from consideration, he found fewer competitive markets—82.6 percent of census blocks and 92.1 percent of businesses. Cable companies are not traditionally seen as BDS providers, but increasingly provide a range of internet connectivity services to businesses.
The panelists maintained that Woroch's findings suggest a highly competitive nationwide BDS market, and one that wouldn't benefit from more FCC intervention. They said forcing rates down would make BDS providers less likely to invest in network expansion. That, they said, will chill broader investment in both wireless and wireline broadband.
“If prices for these services is pushed so low that there is not the return on the investment to incent the upgrading to fiber, then the architecture we need — cell towers and small cell sites — is not going to be built,” said Debbie Goldman, a research economist for the Communications Workers of America.
Proponents of the FCC's plan dispute Woroch's data analysis. Competify, an industry coalition whose members include competitive telecom provider industry association INCOMPAS and Sprint Corp., said in an Aug. 18 statement that their own reading of the 2013 data concluded that 96 percent of locations and 91 percent of census blocks are controlled by “one—and sometimes two—providers.”
Competify also disputed the claim that most cable company business offerings are viable alternatives to fiber-based BDS, given that they offer significantly slower speed.
FCC Chairman Tom Wheeler has said the BDS proposal would in fact spark greater competition and investment in 5G wireless services.
“There is a reason why all the major wireless carriers—save one—support this item,” Wheeler said at the FCC's April vote on the plan, referring to AT&T's opposition. “Because it's essential to wireless competition. Competition today, in 5G innovation, and competition tomorrow.”
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The Competify statement is available at: http://src.bna.com/hRt
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