Wholesale/transport services

FCC's Wheeler: We'll Move Fast on Biz Service Regulations

WASHINGTON -- FCC Chairman Tom Wheeler today promised the competitive services industry that the agency will act quickly to eliminate business services contracts that lock customers into an incumbent's services, and also will restructure the entire way business data services are regulated to favor more competition by year's end.

Preaching to the choir here at the Incompas event, Wheeler said the Federal Communications Commission (FCC) will vote on April 28 to "declare unlawful" contract terms used in today's business services tariffs which use "all or nothing" clauses to require customers to buy all services on a single set of terms and then impose penalties if consumption drops off.

And by the end of the year, Wheeler promised a new regulatory structure that eliminates tariffs altogether and relies instead on a competitive test that determines where competition is sufficient to provide real choice to customers. Where it isn't, the new structure will be imposed that protects competitors and customers alike from being overcharged by existing providers for last-mile wholesale access or direct business access.

The new rules will cover so-called "special access services" which are the last-mile connections into customers that any service provider other than an incumbent must often buy. Incumbents are required to unbundle their services, but the prices of those offerings were deregulated in 1999. Competitive service providers, often called CLECs, complain that in many cases today's wholesale prices exceed what they can charge for retail service.

The new structure would apply to anyone offering business data services -- so incumbent telcos, cable companies and CLECs who build their own facilities -- would be under the same regulatory regime -- and would be technology-neutral, he said. "Companies and the technologies that deliver the same kind of business data services should be treated the same," Wheeler said.

While saying the FCC must still collect industry input about details of the future structure, Wheeler seemed to be leaning in favor of a proposal put forward by Incompas and Verizon Communications Inc. (NYSE: VZ) last week. That technology-neutral comprehensive approach would allow price regulation of services in markets that don't meet the technology test, under Title II rules.

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Wheeler said the change is needed because the current structure is actually slowing the transition to IP, as customers are locked into contracts for legacy TDM services, and that has a negative impact on economic development and business innovation. Investment in BDS infrastructure being restrained also puts at risk the fiber buildout that will be necessary to support 5G wireless, he said. The next generation of wireless uses millimeter waves, which travel shorter distances, and will thus need five times as much tower/base station infrastructure to support the shorter distances that its millimeter waves can travel.

The Incompas crowd applauded Wheeler enthusiastically, especially when he ended with his favorite three words: "Competition, competition, competition." He will definitely face resistance from the cable industry, however, and could find incumbents other than Verizon less interested in facing price re-regulation.

— Carol Wilson, Editor-at-Large, Light Reading

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