Comcast, ACA Say FCC Move Toward Cable BDS Regulation Total Surprise
Cable parties voiced dismay the FCC is even considering regulating their business data services (BDS) as part of a planned rulemaking to revamp its special access framework traditionally targeting incumbent telcos. Comcast said there was no hint of cable regulation until recently and urged the commission not to rush into adopting a "premature" Further NPRM that could be "counterproductive." The American Cable Association (ACA) said it was also surprised and urged the agency to back off, water down the notice to a preliminary inquiry, or at least ask basic questions about the justification for regulating new entrants in the BDS market. The FCC is to consider the Further NPRM and related order Thursday, and parties made a flurry of FCC visits last Thursday before lobbying restrictions took effect.
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Some wireless and CLEC interests voiced support for regulatory actions to ensure they have reasonable wholesale access to special access lines connecting to cell towers and business customers. Sprint stressed the importance of ensuring wireless carriers can affordably lease backhaul services above 50 Mbps. A Level 3 and Windstream consultant said the FCC shouldn't assume the BDS market for connections above 50 Mbps is competitive, which an agency official suggested recently (see 1604080011). Windstream also disputed CenturyLink arguments opposing special access regulation, and Level 3 voiced support for FCC Chairman Tom Wheeler's draft tariff investigation order that would restrict some ILEC pricing practices.
Comcast "expressed deep concerns" about the prospect the FCC would regulate nondominant facilities-based providers of Ethernet services, said a filing in docket 05-25 on meetings with commissioner aides, one of many filings posted Thursday and Friday. It also voiced "strong opposition" to the agency even seeking comment on potential "ex ante rate regulation of business broadband Internet access services." It said such services are distinct from dedicated point-to-point special access services and regulation of them would contravene Wheeler declarations. Comcast also said cable BDS regulation would be a disincentive to network investment and could pose "significant operational challenges" if it creates a "patchwork of disparate regulatory obligations in geographic markets."
Comcast said rushing to adopt a Further NPRM "proposing a radical rate-regulation scheme for new entrants" would be "unwise and counterproductive." Despite protracted proceedings and various notices, "no one had ever so much as hinted at imposing prescriptive rate regulation on the services provided by facilities-based competitors until a few weeks ago," the cable company said. It also said staff briefings leave no doubt the further notice "is massively complicated" and needs more input to avoid adoption of a notice that "at best would be premature and incomplete."
ACA said it opposes an FCC proposal to consider regulating competitor BDS rates in areas deemed noncompetitive. "There has been no prior consideration of regulating participants lacking market power," the group said in a filing on a meeting at the FCC. "Thus, it comes as a surprise that the Commission would 'out of the blue' even consider soliciting comments about whether to regulate the rates of competitive providers," said the ACA, which urged the agency not to even seek comment on the issue or at most issue a notice of inquiry. But if the FCC acts on a Further NPRM, the cable group urged it to explain its "tentative economic rationale for reversing course" on its approach. "The Commission should ask interested parties to provide specific evidence, should any exist, that competitive providers are charging supra-competitive pricing for products in non-competitive markets," or "are acting in a manner consistent with an exercise of market power in specific non-competitive geographic and product markets," it said. Cox Communications also met with FCC officials to oppose potential cable regulation.
Sprint said industry data show there is only one provider selling 50 to 200 Mbps special access services in 89 percent of census blocks where special access is sold, and only two such providers in 8.6 percent of such census blocks. "This means that there are three providers -- the minimum number of providers necessary to discipline prices -- in less than 3 percent of these census blocks. Additionally, in Sprint’s experience, prices remain supracompetitive for services above 50 Mbps, even where there is a duopoly," it said, summarizing a meeting.
Level 3 backs Wheeler proposals to restrict the "harmful volume and term plans ('lock-up plans')" of ILECs, which the company said would benefit from "fresh look" provisions. Windstream made filings (here and here) disputing previous CenturyLink filings opposing regulation and arguing the special access market is competitive. But Tech Knowledge Director Fred Campbell questioned the FCC rationale for regulating the special access market, given data that show competitive fiber lines are often close to buildings. His opinion piece asked: "Is The FCC Prepared to Say Eighty-Eight Feet Is A Market Failure?"