TDM space set for continued price cap rule enforcement, while packet-based market to continue with light-touch regulation in new FCC BDS proposal
Making good on a recent promise, Federal Communications Commission Chairman Tom Wheeler has circulated proposed rules to fellow commissioners looking to reform the business data services market.
The order includes what the FCC terms a “new framework” designed to balance differences in competition between legacy time-division multiplexing services, which are said to have the least amount of choice, and packet-based services, which the FCC noted “new entry and competition may be emerging.” In addition, the rules reaffirm BDS services as being subject to the government agency’s Title II oversight.
In terms of TDM-focused regulation, the FCC proposes to continue enforcing “price cap” rules that set a maximum price for services. Those prices are meant to replicate a more competitive market and are set to decrease in an attempt to account for efficiency gains.
The FCC noted current price caps have not been adjusted since 2004, with plans to make changes in accordance with efficiency gains to the tune of a one-time 11% cap cut phased in over a three-year period beginning next year; move to implement an annual 3% price reduction offset by inflation; allow for more flexibility for incumbent local exchange carriers in negotiating pricing; and mandating “fair terms and conditions” based on the FCC’s recent Tariff Investigation Order.
For packet-based and circuit-based BDS services, the FCC is looking to keep a “light-touch” regulatory approach, citing increased competition in the space from the likes of cable providers. The government agency did note it plans to reaffirm that those offerings are “telecommunications services” and thus subject to common carrier rules “and as such need to deal on reasonable and nondiscriminatory terms.”
“The order provides guidance on the FCC’s application of these basic statutory requirements,” the rules note. “To be clear, the order would not mandate more prescriptive requirements like network unbundling or wholesale rate discounts.”
The FCC also is looking to refrain from price caps, benchmarking or other forms of price control in the market, though wants to implement a “robust complaint process” to expedite guidance and requirements.
Wheeler also is proposing a Further Notice on the rules to allow for further action on Ethernet pricing if necessary.
“Since 2006, the commission has granted incumbent LEC providers of Ethernet BDS service varying degrees of forbearance – or exemptions – from Title II of the Communications Act,” the rules state. “The Order would level the playing field for all packet-based and circuit-based BDS providers delivering speeds in excess of 45 [megabits per second] by granting uniform forbearance to certain portions of Title II, including dominant carrier and tariffing requirements.”
During a keynote address at the recent Competitive Carriers Association Annual Convention, Wheeler said he would move on the reform proposal by year-end.
“I will present the commission with a reform proposal that will tackle this issue and encourage innovation and investment in what we now call business data services, while ensuring that lack of competition in some places cannot be used to hold back wireless coverage,” Wheeler said, taking aim at AT&T in adding, “notably, reform is supported by the nation’s leading wireless carriers, save one.”
AT&T has said “the facts show that competition in the BDS market is thriving,” according to Caroline Van Wie, assistant VP of federal regulatory at AT&T, in a recent blog post on the topic.
CCA President and CEO Steve Berry discussed Wheeler’s remarks as well as the industry trade group’s view on the proceedings.
Earlier this year Wheeler touted the FCC’s BDS proceedings, in which the commission is looking to ensure broader access to wired backhaul assets for wireless networks. The move has drawn strong criticism from many cable providers and telecom operators.
Bored? Why not follow me on Twitter
