fiber buildingCenturyLink and Frontier apparently see the current FCC administration as potentially sympathetic to their concerns about business data services regulation. In a letter filed with the FCC yesterday, the carriers asked the commission to grant them non-dominant business data service status, arguing that they do not dominate that market because they have ample competition.

The move comes just a few months after the previous FCC administration in October attempted to impose FCC oversight on packet-based business data offerings and indicated plans to continue to regulate TDM-based business services from incumbent carriers such as CenturyLink and Frontier based on price cap regulation. (The term “special access” traditionally applied only to TDM services; more recently the FCC has begun to use the term “business data” to include both TDM- and packet-based offerings that carriers sell to businesses and other carriers.)

Previously only incumbent-delivered TDM data services were under FCC pricing control and at one time the FCC granted non-dominant status to incumbent carriers in certain markets, thereby giving the carriers pricing flexibility. That changed several years ago, however, when competitive carriers who sometimes purchase connectivity from incumbents expressed concern that non-dominant status had been granted incorrectly. At that time the FCC ceased granting non-dominant status in new markets and undertook an investigation into business data service pricing that dragged on for years, ultimately resulting in the FCC’s October proposal, which was never adopted because of the change of administration resulting from the November presidential election.

Non-Dominant Business Data Service Status
In a letter filed jointly with the FCC, CenturyLink and Frontier argue that non-dominant business data service status will:

  • promote investment, particularly in rural areas
  • advance the FCC’s objectives of technological neutrality and regulatory parity
  • facilitate negotiations

On the latter point, the carriers argue that “[i]n some cases, tariffs serve as a de facto bar precluding a would-be customer from relying on [incumbent carrier] offerings because the [incumbent] lacks sufficient latitude to offer discounts from tariffed rates.”

The letter also states that competitors operate in 95.2% of all census blocks where an incumbent offers special access-type service and that among those buildings served only by an incumbent, 98.7% are “close enough to competitive facilities to experience the price-constraining effects of competition.”

Competitive carriers and some organizations representing business data service users have continued to support heavier regulation, however, arguing that incumbents still exert monopoly control. A key question may be whether the widely deployed data services that cable companies deliver over hybrid-fiber coax infrastructure are comparable with business data services delivered over traditional fiber and copper networks.

The FCC currently has just three commissioners and is dominated by Republicans Ajit Pai and Michael O’Rielly, both of whom disagreed with former FCC Chairman Tom Wheeler’s proposals on business data service regulation.

Pai has argued that the business data service market is competitive and O’Rielly stated previously that Wheeler’s proposal would have treated service provider revenues from special access services contracts as “ill-gotten gains rather than mutually agreed upon terms.”