AT&T called Incompas/Verizon business data service regulatory proposals nothing like the compromise the two parties suggest it is. Verizon sold so many wireline systems, it "is almost certainly a net purchaser of BDS whose interests are more aligned" with Incompas than with other ILECs, said an AT&T filing posted Monday in docket 16-143, calling their joint recommendations "cynical." As Incompas and Verizon reveal details of their proposals, it's becoming clear their proposals are "structured as a massively one-sided giveaway to Verizon at the expense of consumers, competition and virtually all other BDS competitors," AT&T wrote. It said Verizon had some of the highest BDS rates in the industry where it's the incumbent, "significantly higher than AT&T's, for example." But Incompas is willing to protect Verizon's high in-region rates to win the telco's support for "radical and debilitating rate reductions on all other ILECs and Ethernet providers outside of Verizon's territory," AT&T said. "That may be a win-win for Verizon and INCOMPAS, but it would be hard to design a proposal more inimical to the public interest." AT&T said "Verizon would be rewarded for having DS1 rates that far exceed those of AT&T, because those high DS1 rates translate directly into higher benchmark Ethernet rates for Verizon." Incompas and Verizon didn't comment to us. In a Monday filing, Verizon said cable provides BDS offerings the same way others do, via common carriage. Verizon also asked the FCC to allow existing BDS contracts to run their course rather than void them through "fresh look" requirements, in the filing on a call with Wireline Bureau Chief Matt DelNero. In a blog post, USTelecom said Friday the FCC should stop barring incumbents from discounting BDS prices in about one-third of the country. "Prices could be lower in those areas if the FCC simply granted more flexibility to incumbent providers to lower their prices in all areas of the country," the ILEC group said. A Macquarie Securities note to investors Monday said the impact of new FCC BDS regulation "could be greater" for Frontier Communications and CenturyLink.

CenturyLink accused Verizon of engaging in "doubletalk" on competition by selectively stressing the positives or negatives of the business market in different regulatory proceedings for its own advantage. CenturyLink cited a recent Verizon white paper that said Verizon's planned takeover of XO Communications wouldn't harm competition because of a wide range of fiber competitors in the business market (see 1608300036). But Verizon has pointed to the general lack of competition in making proposals with Incompas for regulation of business data services (BDS), CenturyLink said.

CenturyLink accused Verizon of engaging in "doubletalk" on competition by selectively stressing the positives or negatives of the business market in different regulatory proceedings for its own advantage. CenturyLink cited a recent Verizon white paper that said Verizon's planned takeover of XO Communications wouldn't harm competition because of a wide range of fiber competitors in the business market (see 1608300036). But Verizon has pointed to the general lack of competition in making proposals with Incompas for regulation of business data services (BDS), CenturyLink said.

NCTA proposed a business data service framework as it and others criticized rival recommendations and possible FCC regulation. The cable group said key Incompas/Verizon proposals to broadly regulate all BDS providers had been "thoroughly refuted." It said regulation should be applied only to legacy BDS rates in census tracts having a single BDS-capable facilities provider, fewer than 10 BDS customers, and no customers buying fiber-based Ethernet services. "Rates for TDM services in these noncompetitive tracts would be regulated under the existing price cap regime, and should account for higher costs," said an NCTA filing to be posted in docket 16-143. "Regulation would sunset in 2025 if at least one provider offers Ethernet services in the census tract at that time. The Commission also should adopt an expedited complaint process." Incompas emailed that its proposals with Verizon open "a race to the future, filled with lower prices, competition and investment. These are all things NCTA opposes, so it’s not surprising to see them propose a flawed framework that favors monopoly and duopoly control." Level 3 said NCTA ignored "overwhelming evidence" that BDS competition is often lacking. “NCTA would have the Commission adopt, once again, a framework for deregulation that relies on imaginary potential competition rather than actual evidence, just a few short years after the Commission finally abandoned its failed 'pricing flexibility triggers' framework, perhaps the most notable characteristic of which was its similarity to the NCTA proposal," Level 3 emailed . But NCTA and others cited seven economists who said they were troubled by proposals to "impose widespread rate regulation in all markets" that don't have at least three or four BDS providers. The commission should adopt "a competitive market test targeted squarely at combating supracompetitive rents in entrenched monopoly markets, rather than regulating markets with multiple facilities-based competitors present," said a letter to be posted from Joseph Farrell, professor emeritus at the University of California, Berkley; Michael Katz, a UC-Berkley professor; and others. The Communications Workers of America said it's "deeply concerned" the FCC is considering an Incompas/Verizon BDS framework that could cause a "20 percent (or higher) flash cut in rates," reducing provider annual revenue by $1.4 billion, as estimated by an economist. "Drastic" BDS rate cuts "would lead to reduced investment in broadband networks -- especially in rural areas -- and downward pressure on jobs and living standards," said the letter from CWA President Christopher Shelton to be posted. The Competitive Carriers Association called for "immediate BDS reform, particularly as mobile carriers work to densify their networks" to prepare for 5G. The FCC should "adopt a presumption that low-capacity BDS are not competitive and apply a competitive market test to high-capacity BDS above-50 or -100 Mbps," said a CCA filing on a meeting (see 1609140028) with Commissioner Jessica Rosenworcel and an aide. Alaska Communications discussed the "unique characteristics of the BDS market in Alaska" with commissioner aides, said another filing.

NCTA proposed a business data service framework as it and others criticized rival recommendations and possible FCC regulation. The cable group said key Incompas/Verizon proposals to broadly regulate all BDS providers had been "thoroughly refuted." It said regulation should be applied only to legacy BDS rates in census tracts having a single BDS-capable facilities provider, fewer than 10 BDS customers, and no customers buying fiber-based Ethernet services. "Rates for TDM services in these noncompetitive tracts would be regulated under the existing price cap regime, and should account for higher costs," said an NCTA filing to be posted in docket 16-143. "Regulation would sunset in 2025 if at least one provider offers Ethernet services in the census tract at that time. The Commission also should adopt an expedited complaint process." Incompas emailed that its proposals with Verizon open "a race to the future, filled with lower prices, competition and investment. These are all things NCTA opposes, so it’s not surprising to see them propose a flawed framework that favors monopoly and duopoly control." Level 3 said NCTA ignored "overwhelming evidence" that BDS competition is often lacking. “NCTA would have the Commission adopt, once again, a framework for deregulation that relies on imaginary potential competition rather than actual evidence, just a few short years after the Commission finally abandoned its failed 'pricing flexibility triggers' framework, perhaps the most notable characteristic of which was its similarity to the NCTA proposal," Level 3 emailed . But NCTA and others cited seven economists who said they were troubled by proposals to "impose widespread rate regulation in all markets" that don't have at least three or four BDS providers. The commission should adopt "a competitive market test targeted squarely at combating supracompetitive rents in entrenched monopoly markets, rather than regulating markets with multiple facilities-based competitors present," said a letter to be posted from Joseph Farrell, professor emeritus at the University of California, Berkley; Michael Katz, a UC-Berkley professor; and others. The Communications Workers of America said it's "deeply concerned" the FCC is considering an Incompas/Verizon BDS framework that could cause a "20 percent (or higher) flash cut in rates," reducing provider annual revenue by $1.4 billion, as estimated by an economist. "Drastic" BDS rate cuts "would lead to reduced investment in broadband networks -- especially in rural areas -- and downward pressure on jobs and living standards," said the letter from CWA President Christopher Shelton to be posted. The Competitive Carriers Association called for "immediate BDS reform, particularly as mobile carriers work to densify their networks" to prepare for 5G. The FCC should "adopt a presumption that low-capacity BDS are not competitive and apply a competitive market test to high-capacity BDS above-50 or -100 Mbps," said a CCA filing on a meeting (see 1609140028) with Commissioner Jessica Rosenworcel and an aide. Alaska Communications discussed the "unique characteristics of the BDS market in Alaska" with commissioner aides, said another filing.

Two cable companies objected to possible FCC regulation of their business data services. Cox Communications said direct or indirect regulation of its BDS offerings would "significantly impact" its investment decisions. Ethernet prices are falling sharply and developments such as consumer use of over-the-top BDS were pressing its business plans, said Cox filing posted Tuesday covering a meeting with senior FCC officials, including General Counsel Howard Symons, Wireline Bureau Chief Matt DelNero and Stephanie Weiner, an aide to Chairman Tom Wheeler. "Reject competitive market tests based on overly granular areas such [as] census blocks or specific locations and that required multiple competitors before finding a market competitive." When asked about a possible delay in directly price regulating new BDS entrants, Cox said such regulation should be tied to market power, with "new entrants" defined as providers starting BDS after 1996. Incompas and Verizon had suggested a three-year delay. Mediacom met separately with Symons, commissioner aides, and other staffers to oppose new regulation of competitive BDS offerings, including its "nascent" service. "Mediacom’s BDS prices have been subject to competitive pressure that has forced prices to decline markedly since 2011," said a filing, also in docket 16-143. "There is no record evidence that Mediacom’s rates are unreasonable, or that the company possesses market power. We also argued that adoption of a competitive test that defines a competitive market as those with at least four facilities-based providers is not reasonably tailored to address isolated allegations of excessive rates because it would treat nearly all markets as non-competitive."

The FCC should allow market forces to ensure navigation device competition, not a government-supervised industry committee, Amazon officials said in a call with aides to Chairman Tom Wheeler Thursday, according to an ex parte filing posted Tuesday in docket 16-42. “There is no need for app licensing terms to be determined by an industry group subject to Commission oversight. The process to create such a license and oversight body will delay competition and delay customers from receiving the [multichannel video programming distributor] services they already pay for on the device of their choice." Instead, the FCC should require large MVPDs to provide a “consumption-only application to widely distributed systems within one year of the final Order, under the common, transparent, and well-understood practices of appstores,” Amazon said. “If the Commission is concerned that existing app store processes may not work in the MVPD app context, then it could create a complaint process through which an aggrieved party could file a complaint about unfair terms and conditions.” The FCC “should resist action that would weaken the rights that consumers enjoy today or restrict the ability of third parties to develop new features that help consumers gain access to lawful content,” said Consumer Video Choice Coalition representatives including the Computer and Communications Industry Association, Incompas CEO Chip Pickering, Arent Fox Senior Policy Adviser Byron Dorgan and Public Knowledge CEO Gene Kimmelman in a meeting with Commissioner Jessica Rosenworcel Thursday. “Assertions made in recent ex parte letters from content companies raise serious questions regarding antitrust and how oversight by the Commission is essential to preventing anticompetitive practices.” A set-top box order is on circulation for a likely vote at commissioners' next meeting (see 1609080085).

A group of state and local CLEC associations supported several parts of the Verizon/Incompas proposal on business data services. A letter Monday to FCC Chairman Tom Wheeler was signed by CalTel, CompSouth, Midwest Association of Competitive Communications, Michigan Internet & Telecommunications Alliance and the Northwest Telecommunications Association. They supported parts of the Verizon/Incompas plan including (1) a competitive market test using three bandwidth tiers, (2) ensuring that price adjustments adopted by the FCC should result in “significant actual price reductions from current levels” for TDM and IP-based services, (3) reductions in price cap levels for TDM of at least 15 percent, and (4) adoption of an X-Factor reducing rates annually by 4.4 percent minus inflation. The groups backed adoption of an enforceable framework of ex ante price regulation for Ethernet services, which “should result in price reductions for Ethernet services that are at least as large as those proposed for TDM services on a one-time and on-going basis.” The CLEC associations supported a proposal of the Wholesale Voice Line Coalition to extend the FCC requirement that ILECs provide a reasonably comparable replacement product for its wholesale voice services when they transition to IP-based networks. Incompas General Counsel Angie Kronenberg said in a statement she welcomed the support from associations “on the front lines of state and local broadband challenges.” In a separate letter in docket 16-143, Verizon proposed an effective date of July 1 for implementing the order if it’s adopted later this year. The date is “aggressive, but Verizon suggests the Commission should align the deadline for implementing the major reforms with next year’s annual filing,” it said.

Two cable companies objected to possible FCC regulation of their business data services. Cox Communications said direct or indirect regulation of its BDS offerings would "significantly impact" its investment decisions. Ethernet prices are falling sharply and developments such as consumer use of over-the-top BDS were pressing its business plans, said Cox filing posted Tuesday covering a meeting with senior FCC officials, including General Counsel Howard Symons, Wireline Bureau Chief Matt DelNero and Stephanie Weiner, an aide to Chairman Tom Wheeler. "Reject competitive market tests based on overly granular areas such [as] census blocks or specific locations and that required multiple competitors before finding a market competitive." When asked about a possible delay in directly price regulating new BDS entrants, Cox said such regulation should be tied to market power, with "new entrants" defined as providers starting BDS after 1996. Incompas and Verizon had suggested a three-year delay. Mediacom met separately with Symons, commissioner aides, and other staffers to oppose new regulation of competitive BDS offerings, including its "nascent" service. "Mediacom’s BDS prices have been subject to competitive pressure that has forced prices to decline markedly since 2011," said a filing, also in docket 16-143. "There is no record evidence that Mediacom’s rates are unreasonable, or that the company possesses market power. We also argued that adoption of a competitive test that defines a competitive market as those with at least four facilities-based providers is not reasonably tailored to address isolated allegations of excessive rates because it would treat nearly all markets as non-competitive."

The FCC should allow market forces to ensure navigation device competition, not a government-supervised industry committee, Amazon officials said in a call with aides to Chairman Tom Wheeler Thursday, according to an ex parte filing posted Tuesday in docket 16-42. “There is no need for app licensing terms to be determined by an industry group subject to Commission oversight. The process to create such a license and oversight body will delay competition and delay customers from receiving the [multichannel video programming distributor] services they already pay for on the device of their choice." Instead, the FCC should require large MVPDs to provide a “consumption-only application to widely distributed systems within one year of the final Order, under the common, transparent, and well-understood practices of appstores,” Amazon said. “If the Commission is concerned that existing app store processes may not work in the MVPD app context, then it could create a complaint process through which an aggrieved party could file a complaint about unfair terms and conditions.” The FCC “should resist action that would weaken the rights that consumers enjoy today or restrict the ability of third parties to develop new features that help consumers gain access to lawful content,” said Consumer Video Choice Coalition representatives including the Computer and Communications Industry Association, Incompas CEO Chip Pickering, Arent Fox Senior Policy Adviser Byron Dorgan and Public Knowledge CEO Gene Kimmelman in a meeting with Commissioner Jessica Rosenworcel Thursday. “Assertions made in recent ex parte letters from content companies raise serious questions regarding antitrust and how oversight by the Commission is essential to preventing anticompetitive practices.” A set-top box order is on circulation for a likely vote at commissioners' next meeting (see 1609080085).