Under the title Out with the Old, In with the New, Federal Communications Commission (FCC) Chairman Tom Wheeler introduced sweeping changes and a Futher Notice of Proposed Rulemaking that calls for public comment on how best to construct the new regulatory framework. With this announcement, radical changes are coming to the $45 billion nationwide business data services (BDS) or special access market, which is owned by the largest providers such as Verizon and AT&T.
These services used by offices, retailers, banks, manufacturers, schools, hospitals and universities provide dedicated network connections to move large amounts of data. Consumers also use these networks indirectly when they swipe their credit card at a retail store or withdraw cash from an ATM. Mobile networks use BDS for backhauling mobile traffic. Industry competitors such as T-Mobile and Sprint have been calling for these changes for years, arguing that they are at a disadvantage because of the contracts.
Under the plan, early termination fees have been eliminated for corporate customers. These charges lock corporate clients to their current providers by cutting into the savings achieved from switching to competitors. The FCC is also eliminating a tactic known as “tie-ins” where broadband providers would offer service to a business customer in one part of the country only if that customer also bought service in a different region.
It also opens up a process to create new rules that will allow the FCC to impose pricing regulations on markets it deems uncompetitive. Some considerations could include the number of providers in an area, the speeds that are offered, and whether there’s enough service to meet the needs of different businesses. The new rules will probably also apply to cable companies that are a relatively new competitor in the market for business broadband.
Meanwhile, a study Assessing the Consequences of Additional FCC Regulation of Business Broadband released by Economists Incorporated argued that additional regulation could reduce investment by large incumbent carriers such as AT&T in some markets. It also implied that competing carriers would also be driven to stop investing, in favor of repackaging and reselling business broadband from the larger providers.
The new FCC proposals may also benefit business broadband providers by rolling back some burdensome requirements. Under these changes, competitors that offer new connection technologies such as fiber optics with wider lanes for data traffic, will be able to secure a foothold in the market. On balance, these changes will give retailers, banks, universities and other businesses more flexibility to choose a provider and drive more competition.Tags: FCC