(Giuseppe Macri, InsideSources) The Federal Communications Commission voted Thursday for new light-touch rules aimed at broad business broadband deregulation, loosening price caps and restrictions designed to boost competition in the market that provides high-capacity internet to businesses, hospitals, libraries, schools, public safety offices, ATM networks, and cell phone networks.
Commissioners voted 2-1 during the FCC’s monthly open meeting to lift agency restrictions on large business data services (BDS) providers like AT&T and Verizon. The regulations require incumbent local exchange carriers (ILECs) to lease portions of their networks to smaller competitive local exchange carriers (CLECs) like Sprint and Level 3 at regulated rates to boost competition.
Under FCC Chairman Pai’s business broadband deregulation order, BDS markets with one competitor “nearby” or within “a half mile” will be deregulated, a move critics say essentially allows a duopoly and sometimes a monopoly to meet the new Republican FCC’s standard for competition. More than a decade of FCC data revealed 73 percent of the BDS market is only served by one provider and 97 percent served by only one or two.
“But these legacy networks, which operate on yesterday’s copper-based ‘TDM’ technologies at relatively low speeds, are becoming increasingly obsolete,” the agency said in a statement after the vote. “Instead, high-bandwidth applications, like video and teleconferencing, are driving demand for modern, high-speed Ethernet packet-based networks. Such networks are often deployed by lightly-regulated competitive carriers, which now account for nearly half of the $45 billion BDS marketplace.”
According to the Internet Innovation Alliance (IIA), a pro-deregulation policy group whose members include AT&T, the market is “highly competitive.” Figures released by the group show BDS services by cable providers are growing at a rate of 20 percent annually while $23 billion of the total $45 billion in BDS revenue in 2013 went to small providers.
The FCC added 50 percent of the buildings in a county are within a half-mile of a location served by a competitive provider. Seventy-five percent of the census blocks in a county have a cable provider present, though opposition groups including the pro-net neutrality think tank Public Knowledge argue cable BDS isn’t as powerful as services from traditional BDS providers.
Other groups opposed to business broadband deregulation say the FCC also hasn’t taken into account the high cost of running fiber to buildings without existing service, regardless of distance. Republicans and Democrats in Congress say the lack of a transition period before the rules take effect won’t give businesses adequate time to prepare for the price hike many are predicting, and which AT&T already announced earlier this week. They and others asked the FCC to delay Thursday’s vote in favor of gathering more data on the market.
Pai said the BDS proceeding “was launched way back in 2005,” and that “a dozen years of deliberation is enough.”
“Organizations calling for delay urged BDS action late last year, vouching for the robust record of evidence before the FCC now,” the chairman added.
Pai described the the existing rules as micromanagement that thwarts competition and holds back long-term benefits for consumers. Price caps, he went on, discourage network operators from investing in modern networks like fiber.
Commissioner Mignon Clyburn, the agency’s sole Democrat, said business broadband deregulation will lead to price hikes for hospitals, schools, libraries and police departments.
“The FCC’s BDS deregulation order is a 186 page all-out assault on America’s small businesses, schools and local economies,” she said. “I vociferously dissent.”
The move marks yet another departure from the Obama FCC, which sought to strengthen regulations and price caps in ILECs in response to complaints from CLECs about unfair prices and contract terms.
Commissioners also passed an order aimed at streamlining broadband infrastructure deployment by overriding state and local regulations that hold up construction. Buried in the order is another reversal of the Tom Wheeler-led FCC that required providers to give adequate notice to subscribers and the FCC when replacing old copper networks with new internet protocol (IP)-based fiber and wireless networks.
Prior to the order, some areas experienced a loss of services during such “tech transitions” including fax and alarm systems, and in some cases couldn’t even guarantee 9-1-1 service. Pai’s order gets rid of rules that required providers continue supporting old networks and get permission from the FCC before replacing them to protect against any loss of services, which the FCC says will speed up the transition from legacy to IP networks.
In the day’s final reversal, the agency rolled back a vote last year to limit the number of TV stations a broadcaster can own in each market. The “media ownership rule” or “UHF discount” makes it easier for broadcasters to buy stations that broadcast on ultra-high frequencies without surpassing limits on the number of stations they can own in each market.
“There is no justification for the FCC to restore the UHF Loophole,” House Minority Leader Nancy Pelosi and and New Jersey Democrat Rep. Frank Pallone wrote to Pai Wednesday. “The UHF Loophole is unfair to the public because it treats UHF stations differently only for one purpose — to let big station conglomerates own more stations across the country.”
The FCC plans to readdress the issue later this year.