FCC to Consider Special Access (Business Data Services) in April 2017

Among items the Federal Communications Commission will start to address at its April meeting is a potential change of course on special access (business data) regulations. The FCC is expected to begin a process of deregulating (removing price controls) in areas with competition, while maintaining price controls where there is not competition.

In all likelihood, that will mean price regulation is removed in urban areas, but often retained in rural markets. The big new change, after several decades of competition, is the emergence of cable TV companies as the primary new suppliers in markets dominated in the past by telcos.

The last FCC chairman and commission favored more regulation of special access services, though no action was taken, as the change of presidential administration also clearly meant leadership of the FCC would change.

But the FCC had seemingly been on course to institute lower prices for millions of small businesses, schools, and libraries, with an 11 percent reduction in prices phased in over three years. Critics argued the new price caps would further diminish investment, as demand already is moving away from special access and towards Ethernet access alternatives.

In principle, what is at stake is the proper regulatory stance for an important legacy service that nevertheless is in a declining state, with lots of competition in many--if not virtually all--larger markets. In fact, executives of independent business data service providers have noted for some years the fact that cable TV operators have taken leadership of the special access market away from independent providers who used to compete with the legacy telcos (primarily AT&T, CenturyLink and Verizon).

The new chairman now says he favors relaxing pricing rules where there is competition in the market.  Controversy about special access markets has been a staple of the U.S. regulatory environment for decades.

The FCC has been studying the business data services (special access, primarily T1 and DS3) market for more than a decade. “The extensive record compiled by the Commission's excellent staff shows substantial and growing competition in many areas of the country, thanks to new market entrants like cable companies,” said FCC Chairman Ajit Pai. “Where this competition exists, we will relax unnecessary regulation, thereby creating greater incentives for the private sector to invest in next-generation networks. But where competition is still lacking, we'll preserve regulations necessary to prevent anti-competitive price increases.”