ILECs Take Aim at BDS Legacy Transport Regulation; Rivals Seek More Constraints

Incumbent telcos, their rivals and others flooded the FCC with competing arguments regarding possible business data service regulation, in last-minute filings posted Monday and last week in dockets 16-143 and 05-25 as lobbying restrictions took hold a week ahead of a planned BDS vote at Thursday's commissioners' meeting. ILECs pressed the FCC to scale back proposed price-cap regulation of legacy TDM-based DS1 and DS3 (below 50 Mbps data speeds), including interoffice transport (see 1611080032).

Frontier Communications CEO Dan McCarthy told FCC Chairman Tom Wheeler that his draft order and Further NPRM would "unduly affect" midsize ILECs such as Frontier that don't have a wireless or significant CLEC presence. "The result would be deeply harmful to investment in American broadband connectivity and jobs," said a filing on a phone call between McCarthy and Wheeler. "Mr. McCarthy requested that the Commission consider an additional transition period for midsize ILECs as well as a lower rate of reduction."

CLECs, Sprint and consumer advocates defended the legacy regulation proposed by Wheeler in the draft item (see 1610070052), and they urged the agency to strengthen controls for at least some packet-based Ethernet services. NCTA opposed possible mandatory wholesale discounts while the American Cable Association voiced concern about an FCC "Fact Sheet" suggestion that packetized Ethernet providers generally would be considered common carriers.

At least one commissioner has requested changes to the draft, said a telecom industry official. There's "just a lot of uncertainty" said the industry official, citing last week's GOP election victory and talk of a congressional letter to the commission that could be in the works. An FCC official told us Thursday that Capitol Hill Republicans could demand the Democratic-run commission halt action on contentious items due to the election outcome and coming transfer of power from President Barack Obama to President-elect Donald Trump, which will give the GOP the FCC helm (see 1611100041).

AT&T Friday noted that Rep. Greg Walden, R-Ore., chairman of the Commerce Communications Subcommittee, had, according to a news story, cautioned the FCC about imposing unnecessary and unfair regulations at this time. Yet the "FCC plans to vote on the sweeping nationwide re-regulation of TDM-based transport and access services," said a Friday blog post by AT&T Senior Vice President Joan Marsh. "The FCC’s proposal, as outlined in the Business Data Services (BDS) Fact Sheet released some weeks ago, picks regulatory winners and losers without regard to the significant factual and economic evidence presented in the docket." She said the losers would be the facts, fiber investment, jobs and traditional ILECs, while the winners would be Incompas, Sprint, Windstream and "maybe" cable.

Incompas said it's "disappointing but not surprising to see AT&T continuing to spread misinformation" about the FCC plan to spur more business broadband competition. "Ironically, the very same AT&T executive said the exact opposite in 2002, when AT&T recognized prices in the same special access market were ‘exorbitantly’ high, well before technological efficiencies allowed AT&T to absorb even more profits off these lines," said General Counsel Angie Kronenberg in an emailed statement Friday. "In the same filing, AT&T stated that competitive overbuilding is not feasible at most customer locations. The FCC’s current data proves this point, showing 98 percent of business customers lack real choice for broadband service. So under AT&T’s plan, it can keep its prices high while its costs go down, hurting competition. Business customers want relief from monopoly rents. Competition is the future, and the FCC must stay the course and give Americans what they want: More choice and affordable service.”

An AT&T spokesman responded further Monday: "Incompas' willingness to rely on an analysis that is 14 years old demonstrates how little the current marketplace facts have mattered in this proceeding. The FCC now has detailed maps showing the precise extent of competitive fiber build-out. Instead of relying on outdated ex parte filings, the FCC should regulate special access in light of the evidence of extensive marketplace competition that is now on the record."