FCC Votes to Relax Regs in Competitive Markets

The controversial Business Data Services update remained on the FCC’s voting agenda yesterday and passed 2-1. BDS provide connectivity for businesses like banks to connect ATM networks and retail credit-card readers, as well as backhaul for wireless carriers.

The FCC voted to update its BDS rules, noting that where competition exists, it will relax what it says are unneeded regulations and preserve those where competition is still lacking. USTelecom CEO Jonathan Spalter hailed the change, calling it a “measured step” that reflects 10 years of increasing competition and tech advances. It “will restore incentives to invest” in broadband infrastructure.

The Commission believes competition for packet-based services at speeds exceeding 45 Megabits-per-second is widespread, making pricing regulation counterproductive for these services. Continued price regulation for legacy TDM-based BDS in areas deemed competitive may stifle investment and inhibit the transition to modern IP services. The Order adopts a competitive market test which determines that pricing regulation is no longer required when certain conditions are met. The item also provides for a reasonable transition period, according to agency officials.  

Commissioner Mignon Clyburn, the lone Democrat along the commissioner, voted against the change, saying it opens the door to price hikes, especially in rural areas.  “This order puts a hefty nail in the coffin of wireline competition, undermining the market opening goals of the 1996 Telecommunications Act and paving the way for less competition and more industry consolidation.”

Commissioner Michael O’Rielly backed the update, saying “It is appropriate for the commission to recognize the time has come to step back and let the market further develop absent heavy-handed regulation. While I, too, would have done some things differently, I think it’s in the right direction.”

Chairman Ajit Pai defended the move this way: “Price regulation threatens competition and investment. That’s because regulators will always struggle to set the right price. If the price is too low, network owners won’t have an incentive to invest in more modern networks. Why would they if by law they can’t get a return on that investment? If it’s too low, competitive providers also won’t have an incentive to build their own facilities. Why would they when they can cheaply and profitably use someone else’s network?”

April 21, 2017      

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