The Federal Communications Commission (FCC) announced new guidelines to ease pricing rules in business data services market in the U.S. to enable growth.
Businesses, non-profits, and government institutions use business data services (BDS) connectivity for reliable communications. Lower bandwidth services, such as DS1s and DS3s, are a segment of the BDS market referred to as special access.
Traditional special access services offered by local phone companies have been subject to FCC price regulation. But legacy networks, which operate on yesterday’s copper-based “TDM” technologies at relatively low speeds, are becoming obsolete.
High-bandwidth applications, like video and teleconferencing, are driving demand for high-speed Ethernet packet-based networks. Lightly-regulated competitive carriers make investments in such networks, which now account for nearly half of the $45 billion BDS marketplace. The growth of cable-based BDS is approximately 20 percent annually.
FCC said legacy regulation inhibits the investment required for the transition of BDS from legacy TDM networks to high-speed Ethernet connectivity.
Competition for packet-based services at speeds exceeding 45 Megabits per second (the top speed of TDM “DS3” services) is widespread, making pricing regulation counterproductive for these services
Price regulation for legacy TDM-based BDS in areas deemed competitive may stifle investment and inhibit the transition to modern IP services. The Order adopts a competitive market test which determines that pricing regulation is no longer required when either of the following conditions are met:
# 50 percent of the buildings in a county are within a half-mile of a location served by a competitive provider, or
# 75 percent of the census blocks in a county have a cable provider present
FCC said ILECs in counties meeting the competitive market test will not file tariffs with the FCC. However, rates must continue to be just and reasonable
FCC said in counties that do not meet the competitive market test, the Order retains price regulation for lower speed TDM connections to end-users. The FCC Order allows ILECs to offer volume and term discounts, as well as contract tariffs
The FCC Order levels the regulatory playing field for ILECs by extending uniform forbearance from certain rules that had previously been granted unevenly. This change includes forbearance from tariffing for all packet-based BDS
The Order updates price cap regulation where it remains by reducing the cap annually by 2 percent on a going-forward basis to account for productivity gains.
FCC said packet-based and TDM telecom services continue to be subject to statutory requirements that rates, terms, and conditions be just and reasonable, enforceable through the complaint process. The FCC Order concludes that certain business data services constitute private carriage rather than common carriage
