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Wealth Transfer in FCC’s BDS Proceeding

11.10.2016

USTelecom strongly urges the Federal Communications Commission to reject policies that would encourage resale of business data services, rather than taking a forward-looking approach to encouraging competition and investment in an already-diverse marketplace. “Backward-looking regulations that encourage resale by making it cheaper will only serve to transfer wealth from small incumbents to often large (and growing) ‘competitors,’ which hardly seems like an appropriate regulatory goal,” USTelecom said in a recent filing.

In a recent meeting with FCC officials, USTelecom said the record shows there is no evidence of market power that would allow the commission to legally regulate prices for Ethernet at any speed. Another policy failure is the lack of a competitive test to determine where to impose price cap regulation.

USTelecom said the commission cannot justify imposing new pricing rules everywhere indiscriminately, given ample evidence of BDS competition in the record as well as past agency findings that BDS is competitive in some areas of the country. USTelecom and others have proposed a two-competitor test that could be used to target regulation only to areas that lack competition on an interim basis until the FCC collects enough additional data to establish a competitive test.

USTelecom also questioned the commission’s basis for regulating transport prices as part of its price cap reform. Claims that channel terminations to end users and transport services, which connect circuits and other points of presence, cannot be separated for purposes of price cap regulation are “simply untrue” since the commission has treated these services separately for years, the filing said.

 

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