The FCC and supporters defended a 2015 pole-attachment order putting new downward pressure on rates that is being challenged in court by electric power companies, which own poles. In a joint reply brief to the 8th U.S. Circuit Court of Appeals posted Tuesday, the FCC/DOJ said the commission has "broad authority" to regulate pole-attachment rates under Section 224(b) of the Communications Act (Ameren Corp., et al., v. FCC, No. 16-1683). They said that mandate was affirmed when the D.C. Circuit in 2013 upheld a 2011 FCC order that aimed to drive telecom rates down to lower cable rate levels in American Electric Power, which said the commission used its discretion reasonably to eliminate market distortions. After finding the rules weren't working as intended, the FCC in November adjusted cost allocators to bring the telecom and cable rates into closer parity at the lower levels (see 1511240071). "The rules, as amended, share the same structure and the same purpose as the 2011 rules. Accordingly, they are no less lawful than the rules at issue in American Electric Power, and this Court should follow the D.C. Circuit’s reasoning in that case to avoid a circuit split," said the FCC/DOJ, requesting an oral argument. Intervenors USTelecom plus NCTA, Incompas and Level 3 filed briefs backing the FCC actions (here and here in Pacer). The order "encourages broadband deployment, narrows the unjustified discrepancy that existed between the 'just and reasonable' rates that may be charged" competitors, and continues to fully compensate pole owners, USTelecom said. Both intervenor briefs said oral argument isn't necessary. "This challenge merely repackages the prior challenge rejected by the D.C. Circuit," USTelecom said. In their May brief (in Pacer), the power companies also said oral argument isn't necessary, "because the issues and relevant authority are clear." The commission's "conflation of the two cost formulas violates congressional intent and the canon against surplusage," said Ameren, American Electric Power Service, CenterPoint Energy Houston Electric and Dominion Virginia Power. "The FCC's definition of 'cost' is also arbitrary and capricious because it gives an infinite number of meanings to the same term in the same subsection of the same statute." If the 8th Circuit orders oral argument, they said, 15 minutes will be sufficient for each side, the same as the FCC/DOJ requested.

AT&T and ILEC allies said the business data service market is flourishing, and heavy-handed regulation would undermine investment and facilities-based competition. But rivals of incumbent telcos continued to press their case for regulating a business broadband market they say is dominated by ILECs, and Incompas and Verizon offered new details for establishing Ethernet "benchmarks" and a competitive market test as part of their joint proposal to establish a new regulatory BDS framework. Some parties issued news releases and statements to frame the BDS debate as reply comments were due Tuesday in the FCC's rulemaking in docket 16-143 initiated by a Further NPRM (see 1604280057).

AT&T and ILEC allies said the business data service market is flourishing, and heavy-handed regulation would undermine investment and facilities-based competition. But rivals of incumbent telcos continued to press their case for regulating a business broadband market they say is dominated by ILECs, and Incompas and Verizon offered new details for establishing Ethernet "benchmarks" and a competitive market test as part of their joint proposal to establish a new regulatory BDS framework. Some parties issued news releases and statements to frame the BDS debate as reply comments were due Tuesday in the FCC's rulemaking in docket 16-143 initiated by a Further NPRM (see 1604280057).

The FCC could act in late September to revise its special access framework for business data services, said Incompas CEO Chip Pickering Monday. On a Competify call highlighting BDS arguments ahead of reply comments due Tuesday, Pickering and others argued for more FCC regulation of the BDS market, which they said is still dominated by incumbent telcos overcharging competitors and business customers. Meanwhile, CenturyLink and Frontier Communications urged the FCC not to impose regulation they said would harm BDS competition and investment. NCTA said it would file a reply showing there's no market failure "justifying massive regulatory intervention."

The FCC could act in late September to revise its special access framework for business data services, said Incompas CEO Chip Pickering Monday. On a Competify call highlighting BDS arguments ahead of reply comments due Tuesday, Pickering and others argued for more FCC regulation of the BDS market, which they said is still dominated by incumbent telcos overcharging competitors and business customers. Meanwhile, CenturyLink and Frontier Communications urged the FCC not to impose regulation they said would harm BDS competition and investment. NCTA said it would file a reply showing there's no market failure "justifying massive regulatory intervention."

Incompas and Verizon pushed business data service (BDS) regulation proposals they had made to the FCC. In a meeting with commission officials, "We focused on the need for the three-tiered approach to the competition test and the need for a one-time adjustment to TDM [time-division multiplexing] rates in areas served by price cap ILECs to account for the freeze in rates under the CALLS [Coalition for Affordable Local and Long Distance Service] Order" of 2000, said a joint filing Friday in docket 16-143 on a meeting with FCC General Counsel Howard Symons and other staffers. Incompas and Verizon in June proposed creating three tiers of BDS offerings based on their data speeds, with the lowest tier (below no lower than 50 Mbps) deemed noncompetitive and subject to regulation, the highest tier (above 1 Gbps) deemed competitive and not subject to regulation, and the middle tier subject to commission review by census blocks (see 1606270058). "We also discussed the need for an Ethernet benchmark in relevant markets that are insufficiently competitive, which would involve price regulation on a technology-neutral basis," said the Friday filing. "The FCC would apply the benchmark to constrain prices and ensure that providers could not abuse their market positions by imposing rates, terms or conditions that are unjust or unreasonable. The benchmark would be adjusted each year to ensure that rates are reduced over time." Separately, Free State Foundation President Randolph May said BDS regulation would deter network investment that he said already had been undermined by the net neutrality and broadband reclassification order. "The reason is simple -- and widely-acknowledged by regulatory economists: Rate regulation mandating that incumbent telephone company providers give competitors access to their facilities at below-market rates discourages investment in facilities by both incumbent providers and new entrants," he said in a Friday blog post. "This depressive investment effect is the likely result of any Commission action in the BDS proceeding that forces the telephone companies to reduce the rates for network inputs sought by competitors." He cited recent "dismal figures" for U.S. business investment, a report by economist Hal Singer on broadband investment, and an opinion by Supreme Court Justice Stephen Breyer in a 1999 AT&T v. Iowa Utilities Board ruling as supportive of his broader arguments.

Incompas and Verizon pushed business data service (BDS) regulation proposals they had made to the FCC. In a meeting with commission officials, "We focused on the need for the three-tiered approach to the competition test and the need for a one-time adjustment to TDM [time-division multiplexing] rates in areas served by price cap ILECs to account for the freeze in rates under the CALLS [Coalition for Affordable Local and Long Distance Service] Order" of 2000, said a joint filing Friday in docket 16-143 on a meeting with FCC General Counsel Howard Symons and other staffers. Incompas and Verizon in June proposed creating three tiers of BDS offerings based on their data speeds, with the lowest tier (below no lower than 50 Mbps) deemed noncompetitive and subject to regulation, the highest tier (above 1 Gbps) deemed competitive and not subject to regulation, and the middle tier subject to commission review by census blocks (see 1606270058). "We also discussed the need for an Ethernet benchmark in relevant markets that are insufficiently competitive, which would involve price regulation on a technology-neutral basis," said the Friday filing. "The FCC would apply the benchmark to constrain prices and ensure that providers could not abuse their market positions by imposing rates, terms or conditions that are unjust or unreasonable. The benchmark would be adjusted each year to ensure that rates are reduced over time." Separately, Free State Foundation President Randolph May said BDS regulation would deter network investment that he said already had been undermined by the net neutrality and broadband reclassification order. "The reason is simple -- and widely-acknowledged by regulatory economists: Rate regulation mandating that incumbent telephone company providers give competitors access to their facilities at below-market rates discourages investment in facilities by both incumbent providers and new entrants," he said in a Friday blog post. "This depressive investment effect is the likely result of any Commission action in the BDS proceeding that forces the telephone companies to reduce the rates for network inputs sought by competitors." He cited recent "dismal figures" for U.S. business investment, a report by economist Hal Singer on broadband investment, and an opinion by Supreme Court Justice Stephen Breyer in a 1999 AT&T v. Iowa Utilities Board ruling as supportive of his broader arguments.

CTIA, Incompas, NCTA and USTelecom backed a March 2015 petition for reconsideration asking the FCC to vacate a policy statement on the forfeiture methodology for violations of rules governing payment to certain payment programs. "Because the Policy Statement is written in terms that bind the agency in applicable monetary forfeiture proceedings, the Administrative Procedure Act required notice and comment prior to issuance of the Policy Statement," said a filing Friday by a CTIA counsel on a meeting with Enforcement Bureau staffers. It noted there was no docket because the commission didn't put the petition out for comment. The groups had said in 2015 the policy statement created “draconian” treble damages for amounts owed to USF and other funds (see 1503310052).

Pay-TV officials don't expect the FCC eventual final set-top box order to be much influenced by the letter from the Copyright Office released last week (see 1608040062). They expect the FCC to offer some compromise, drawing from multiple proposals, but it likely will include aspects of the content “unbundling” that were criticized in the CO letter, the pay-TV officials said. Proponents of the FCC original plan also expect a compromise solution, they told us Friday. Members of the Consumer Video Choice Coalition said the eventual order must allow for third-party boxes to have their own channel guides for navigating multichannel video programming distributors content, which is one of the concepts the CO said violates copyright. In a news conference Thursday, FCC Chairman Wheeler repeatedly said the eventual FCC plan would comply with copyright law.

Pay-TV officials don't expect the FCC eventual final set-top box order to be much influenced by the letter from the Copyright Office released last week (see 1608040062). They expect the FCC to offer some compromise, drawing from multiple proposals, but it likely will include aspects of the content “unbundling” that were criticized in the CO letter, the pay-TV officials said. Proponents of the FCC original plan also expect a compromise solution, they told us Friday. Members of the Consumer Video Choice Coalition said the eventual order must allow for third-party boxes to have their own channel guides for navigating multichannel video programming distributors content, which is one of the concepts the CO said violates copyright. In a news conference Thursday, FCC Chairman Wheeler repeatedly said the eventual FCC plan would comply with copyright law.