Updated later on June 28 with new information from USTelecom
Some stakeholders may have been surprised several weeks ago when Verizon acted independently of AT&T and other major telecom providers with regard to business data services, instead making a joint filing with competitive carrier association Incompas. But a new Verizon, Incompas filing yesterday reveals a position that diverges considerably more from that of AT&T and other carriers than the first filing suggested.
Among other things, Verizon and Incompas want the FCC to define a business data service “non-competitive” if it does not provide speeds of at least 50 Mbps. Additionally the Verizon, Incompas proposal recommends that price caps be applied to TDM-based business data services from incumbent price cap carriers and that prices for packet-based business data services deemed non-competitive should be reduced.
Verizon is itself an incumbent price cap carrier in parts of the U.S. But as Telecompetitor has previously noted, the company appears to have made the determination that it has more to gain from business data services regulation on the wireless side of its business than it has to lose on the wireline side of the business. Verizon is a major purchaser of business data services from other carriers outside its local service territory to connect cellsites.
USTelecom Straddling the Rift
The Verizon, Incompas filing comes at a time when the FCC is poised to regulate the business data services market. The commission revealed plans to move in that direction back in April, arguing that the business data services market lacked competition in many areas, although two of the five commissioners oppose the plans.
Several of the nation’s largest incumbent price cap carriers also oppose the plans. Just last week AT&T, CenturyLink and several other large carriers made a filing with the FCC arguing that the market data on which the FCC based its competitive analysis underestimated the level of competition.
USTelecom, the association that traditionally represents AT&T, Verizon and other incumbent telcos, appears to be attempting to straddle the rift between the opposing camps. The association stopped short of issuing a statement in support of AT&T and other carriers with regard to the filing about the FCC’s data analysis. Instead the association issued a press release that simply provided information about the filing and quoted a CenturyLink executive.
The Verizon, Incompas Filing
Recommendations of the Verizon, Incompas filing include:
- Competitive analysis would be done by census block
- Business data services delivering speeds less than 50 Mbps would be considered non-competitive. Services at speeds above 1 Gbps would be considered competitive.
- The FCC should use “the recent data collection” in determining market competitiveness and should schedule periodic updates of this information.
- Only facilities-based providers should be considered in determining the competitiveness of a market.
- The commission should periodically review thresholds for determining whether services are competitive.
- The FCC should use “ex ante” price regulation for business data services deemed non-competitive.
- Price caps should apply to TDM-based business data services in areas served by price cap ILECs. There should be a one-time adjustment to these rates implemented over no more than a two-year period to account for a previous rate freeze. Going forward there should be an annual rate adjustment based on an “X-factor” of 4.4% minus inflation.
- Prices for packet-based business data services deemed non-competitive should be reduced. Verizon and Incompas would support a technology-neutral benchmark approach that “does not discourage new entrants from entering markets and building facilities to compete with existing providers.” Benchmarks should be reduced annually by 4.4% minus inflation to reflect “increased efficiencies.” The FCC should review this periodically.
Update: Several hours after this post was published, USTelecom released a statement noting that the association had recently completed a survey of business customers showing that “business customers are benefiting from broad competition, and shifting frequently among providers and different broadband and data services in a market characterized by rapid technological change and exploding demand for higher capacity.” The statement goes on to say that the goal of the FCC business data services proceeding “should be to . . . eliminate regulatory barriers to investment and competition.”
