FCC Not Expected to Place BDS Order on Agenda for Oct. 27 Meeting

Commissioners appear unlikely to vote on a business data service order at their Oct. 27 monthly meeting, FCC and industry officials told us Wednesday. That could change, because "we're not past the point of no return," said one FCC official, but that person and others don't expect Chairman Tom Wheeler to place a draft BDS order on the meeting agenda due out Thursday. A telco official said it appeared "90 percent" likely the draft wouldn't be on the agenda. Another telecom official said Wheeler is still committed to acting on BDS by the end of the year and plans to vote on the item at the Nov. 17 meeting, the preliminary agenda for which is due Oct. 27.

Wells Fargo telecom analyst Jennifer Fritzsche said her contacts also were saying the BDS (special access) order may not be put to a vote this month. "This could be due to a lack of votes, although we note the situation does remain fluid," she emailed investors. She noted November's meeting is after the election, which could alter political dynamics.

"The longer this is delayed, the better for the incumbent carriers that are the largest special access receivers on our coverage list, which are [AT&T, CenturyLink and Frontier Communications] (in order of exposure)," Fritzsche wrote. "However, a delay would be a negative for carriers like [Level 3 and Sprint] that pay significant special access fees. Recall, [Sprint] has said special access costs are in the hundreds of millions each year. While we believe some type of reform will occur, it could lose some momentum if it's not voted on before the new President is sworn in (and a new FCC commissioner is appointed)."

Wheeler's draft order targets BDS rate regulation on legacy DS1 and DS3 services (with data speeds at or below 45 Mbps) while taking a lighter-touch approach to packet-based Ethernet services, said an Oct. 7 "fact sheet" summary and agency officials (see 1610070052). FCC members are expected to vote 3-2 on party lines to adopt some BDS rate regulation, but changes are still possible as they consider the details (see 1610140035).

Numerous stakeholders lobbied the FCC on their proposals and issues raised in the Wheeler draft, according to filings this week in dockets 16-143 and 05-25. Representatives of CLECs and some others are asking the FCC to address concerns that Ethernet services aren't subject to effective competition. Incompas CEO Chip Pickering and Windstream officials met with FCC General Counsel Howard Symons and a Wheeler aide, said a filing. They "made the same points" Incompas made in an Oct. 13 filing that urged the FCC, among other things, to adopt a proposal to counter "supracompetitive rates" that BDS customers face for packetized services with speeds below 50 Mbps. Sprint CEO Marcelo Claure cited the "importance of ensuring that wholesale rates for Ethernet services should be less than those charged at retail," said a filing on a discussion with Commissioner Jessica Rosenworcel and an aide. A Schools, Health & Libraries Broadband Coalition filing said the group wanted to work with the FCC "to strengthen its final decision with specific price reductions and ongoing regulatory measures covering both TDM and Ethernet services to make high-capacity broadband more affordable for anchor institutions."

AT&T said it agreed with the agency that it should continue to forbear from applying most Title II regulation to all packet-based BDS, but disagreed with FCC suggestions that legacy TDM-based services should be rate regulated in all markets, according to a filing of a meeting with a Rosenworcel aide. Cable parties voiced concerns about possible common-carrier regulation.