FCC Seen More Likely to Include BDS Item on Tentative Agenda for April Meeting

The FCC is aiming to put a business data service item on the tentative agenda Thursday for the April 20 commissioners' meeting, industry representatives told us Tuesday. Chairman Ajit Pai appears likely to circulate a deregulatory BDS draft to commissioners this week and seek a vote next month, though uncertainty remains, some said. The commission didn't comment.

Cowen analyst Paul Gallant said the FCC could act soon, without specifying April. "Based on recent filings, the FCC appears to be moving toward a deregulatory ruling for incumbent telcos" on their BDS offerings, said Gallant in a note Tuesday. "Reduced price regulation and other changes would benefit major BDS suppliers like AT&T, CenturyLink and Frontier. It might be a headwind for net buyers of BDS like Sprint and Windstream." He said the commission "may well decide to move forward soon on BDS price relief for ILECs," citing a recent Sprint filing as indicating its belief "that the FCC may act on the current record rather than seeking additional comment" (see 1703230051). Price regulation of cable BDS is "extremely unlikely," he said.

Odds a BDS draft would be teed up for an April vote seemed higher this week. Last week, most industry parties told us they believed the FCC was drafting an order that likely was to be put on the tentative agenda, but some were doubtful (see 1703240045). "I still hear they'll be circulating this week," said one industry representative.

Two others who had been skeptical about April action were less so Tuesday. "Actually, I'm now hearing BDS likely on April 20 agenda," emailed an industry attorney. An industry official who also had voiced doubts about April action still didn't know what the FCC would do, but said, "The rumor mill is telling me it's more likely than not."

Windstream opposed more deregulation of incumbent telco legacy DS1 and DS3 services (1.5 Mbps and 45 Mbps), as proposed by AT&T (see 1703210017) and even more so by CenturyLink and Frontier Communications (see 1703140046). Some industry parties have said they believe the FCC draft will be similar to AT&T's proposals. "These proposals conveniently ignore the fact that in many parts of the country -- particularly in less dense suburbs, exurbs and rural areas -- DS1s and DS3s are the only way that small and medium-sized businesses, governments, and health care institutions can obtain the quality data services that they need to operate," said a detailed Windstream filing posted Tuesday in docket 16-143.

FCC-collected data "demonstrates that for locations with less than 50 Mbps in total [BDS] demand, 86 percent lack any facilities-based alternative to the ILEC," Windstream wrote. "In both approach and outcome, these recommendations represent the complete reversal of the Commission’s proposals in the Further Notice issued last year, and would require repudiating findings already made by the Commission based on market experience with the large-scale pricing flexibility first granted in 1999.”

Incompas CEO Chip Pickering and others met with Commissioner Mike O'Rielly and an aide to discuss the BDS market and reinforce some of the points made by Sprint, said a filing posted Tuesday. The group "stressed that the consolidation that is occurring is further enhancing the market power of incumbent telcos; the continued need for affordable [BDS] to enable competition for small businesses, critical community anchor institutions and 5G infrastructure; and that the Commission must seek comment on any proposal that deviates from past findings before moving to Order.”

NCTA said "best efforts" business broadband services aren't the same as BDS as defined by the commission. The Further NPRM "states that BDS 'refers to dedicated point-to-point transmission of data at certain guaranteed speeds and performance levels using high-capacity connections,’” said the cable group. "By definition, BDS is 'distinctly different' than a best efforts service provided over a shared network that does not provide guaranteed speed or performance levels. Consequently, even if some customers consider those services to be an alternative to BDS, such services cannot meet the needs of those BDS customers that require guaranteed performance and under no circumstances should they be subject to BDS regulation." A Cox Communications filing opposed regulation of the BDS services of cable and other new entrants. It said AT&T's proposal addressed several of Cox's previous concerns about contours of a potential competitive market test.