Telcos Urge FCC To Strike 'Flawed' Cable Data/Analysis from BDS Record, Alter FNPRM

Six telcos called on the FCC to strike "flawed" cable industry data from the record in the business data service proceeding aimed at overhauling its special access framework. The FCC should also remove the report of its consultant, Marc Rysman, and other studies that were based on the data, and rescind those portions of a Further NPRM that relied on the data and analyses, said AT&T, CenturyLink, Cincinnati Bell, Consolidated Communications, FairPoint Communications and Frontier Communications, in a motion Friday in docket 16-143.

"It has now become clear that the report prepared by" Rysman "as well as nearly all other analyses submitted into the record, were based on an irretrievably flawed data set that severely understated cable providers’ ability to provision true business data services ('BDS')," the telcos wrote. "The record now shows that the major cable providers were able to provide Metro Ethernet -- not what the Commission calls 'best efforts' service -- in 22 times as many census blocks in 2013 as was reflected in the original data set on which the Rysman Report and many other analyses were based." That figure aggregates data from Comcast, Cox, Charter Communications and Time Warner Cable, the motion said.

The FCC has "downplayed or misunderstood the significance of the flawed data set, but there is no basis for doing so," the telcos said. "The record now shows that the largest cable providers had upgraded their facilities to provide Metro Ethernet service (which the Commission has been clear is a true substitute for ILEC BDS) virtually everywhere in 2013," their motion said. "Even absent legal compulsion, the Commission should recognize that the public would be best served by granting the relief sought herein. Here, though, the Commission also does face an overwhelming legal compulsion to grant this relief."

"The Administrative Procedure Act, the Data Quality Act, and bedrock principles of evidence require that these materials be stricken from the record," the motion said. "Given the central role the Rysman Report plays in the Commission’s proposals, the agency should rescind the aspects of the May 2 FNPRM that cited or relied upon them, allowing the Commission and parties to conduct new analyses reflecting accurate data regarding the state of the marketplace. The Commission should then develop and seek comment on new proposals as appropriate."

An FCC spokesman said agency staff is reviewing the motion. "The Commission will, of course, fully consider the impact, if any, of additional data from cable companies as part of its analysis," he emailed. "The presence of cable facilities that could be used to provide low-bandwidth business data services was only one of many factors that Dr. Rysman reviewed.” The commission proposed a "technology-neutral" BDS framework that would establish "a level playing field" and base regulatory judgments on market competitiveness, said Chairman Tom Wheeler when the agency adopted the FNPRM April 28 (see 1604280057).

Frontier said the "recent factual revelations change the entire analysis" of the BDS market. It said the FCC can't vote "on its proposal to further regulate the BDS market because the proposal relies on flawed and incomplete data." The Rysman report and other analysis "could not and did not take the massive scale of cable's competitiveness into account," it said in a statement. "This new information requires the FCC to reset its analysis and provide an opportunity for interested parties to review and comment," said Executive Vice President Kathleen Abernathy.

CenturyLink is "extremely concerned" the FCC proposal is "based on fatally flawed data that, unless corrected and updated, could have serious economic consequences for the business broadband market,” said Senior Vice President John Jones in a company release. “The FCC’s FNPRM proposes a big, positive step towards deregulating competitive areas. However, the commission’s rulemaking decisions regarding pricing and additional regulation in non-competitive markets must be grounded on a sound factual basis."

Incompas CEO Chip Pickering played down the new cable data. "The business data services market is broken and in need of reform and the cable data in question does not alter that fundamental fact," he emailed. "The big Bell companies spent a decade trying to delay reform, but business customers and wireless customers need the Commission to forge ahead with reforms that will bring more competition and lower prices."

Cable companies and the NCTA didn't comment, but Comcast pointed us to a June 1 data filing and an April 28 blog lamenting FCC "regulation, regulation, regulation." Comcast also noted a paragraph of a recent FCC order denying an NCTA request to extend comment deadlines (see 1606090037). "Regarding the updated data recently provided by cable service providers, any cable-presence undercounting does not impact the conclusions in the Rysman White Paper regarding market power," said the Wireline Bureau order. "As Dr. Rysman noted in his paper, '[k]nowing the distribution of cable technology might affect our interpretation of whether that competition is driven by the BDS market or by cable, but it does not change the conclusion in this paper that there is evidence that local competition affects BDS prices.' The vast majority of the submitted data relates only to availability of best efforts service, which is distinguishable from the types of dedicated services considered in the Further Notice. Indeed, Charter and Comcast each have stated a belief that the filing of updated information was not relevant to the Commission’s inquiry."

Separately, Public Knowledge said it generally backed the FCC-proposed framework as long as the "final rules prevent BDS providers from exerting market power and charging supra-competitive rates, and promote technology-neutral competition." Commission policy "should be grounded in and guided by key facts and principles," said a PK filing. "First, the BDS market is, by any measure, overwhelmingly concentrated and the market power of incumbent providers requires regulatory oversight. Second the Commission should establish a benchmark that reflects competitive market pricing. ... Third, the Commission’s prior efforts to predict future competition and justify deregulation based on potential competition have been a failure. Thus, the Commission’s determinations regarding whether markets are competitive and policies to promote competition should be based on actual competition, not the specter of potential competition. Last, the Commission’s approach should be technology neutral to adequately address threats to competition from both incumbent and competitive BDS providers, as well as cable BDS providers."