CenturyLink knocked an Incompas/Verizon proposal to reduce ILEC rates for DS1 and DS3 special access services in areas deemed noncompetitive "to account for supposed growth" in ILEC productivity since 2005. CenturyLink said the proposal would cut ILEC DS1 and DS3 rates by 10 percent in year one and another 5 percent in year two, on top of productivity-driven "X-factor" cuts of 4.4 percent for both years, producing a total reduction of more than 20 percent in the first two years. The cuts could potentially affect Ethernet rates as well, if a "benchmarking" plan is adopted, the telco said.

House Communications Subcommittee ranking member Anna Eshoo, D-Calif., lauded the joint filing by Verizon and Incompas in the FCC business data services proceeding. Replies were due Tuesday (see 1608090053). The filing “demonstrates that there is a practical path forward to bring competition to the business data services market,” she said in a statement. “This proceeding has languished at the FCC for far too long, and now that key industry stakeholders have come together, it’s time for the FCC to take advantage of the opportunity it has to finally bring business data services reform across the finish line.” She and other House Democrats sent the agency a letter on the topic earlier this month (see 1608050050).

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.

House Communications Subcommittee ranking member Anna Eshoo, D-Calif., lauded the joint filing by Verizon and Incompas in the FCC business data services proceeding. Replies were due Tuesday (see 1608090053). The filing “demonstrates that there is a practical path forward to bring competition to the business data services market,” she said in a statement. “This proceeding has languished at the FCC for far too long, and now that key industry stakeholders have come together, it’s time for the FCC to take advantage of the opportunity it has to finally bring business data services reform across the finish line.” She and other House Democrats sent the agency a letter on the topic earlier this month (see 1608050050).

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.