October 13, 2016 at 4:39 pm ET
Competitive Carriers Quietly Irked by Exemption in FCC’s Bulk Data Rule
Telecommunication industry representatives rushed last Friday to respond to the Federal Communications Commission’s release of a new plan regulating the price of bulk data services to businesses.
The $40 billion “business data services” industry, or BDS, powers everything from ATM and retail transactions to cell towers. The commission’s new proposal hopes to spur market competition by putting price caps on the services utilizing older technology that runs at slower speeds, while leaving newer Ethernet technology untouched.
But one longtime industry supporter of FCC intervention in the BDS marketplace has been conspicuously silent on the new plan.
INCOMPAS, a telecommunications trade group representing Sprint, T-Mobile and other competitive carriers, still hasn’t released a public statement on the commission’s six-day-old announcement — even though the group played a central role in industry-wide negotiations.
A source familiar with the competitive carrier community says the carriers felt blindsided by the FCC’s decision not to include Ethernet bulk data services under the proposed price caps.
While the companies are still pleased with FCC Chairman Tom Wheeler’s decision to cap prices on the older, largely copper-based technology, they had expected him to model the commission’s final proposal on a hard-earned compromise reached over the summer between INCOMPAS and Verizon Communications — a historically incumbent carrier and a business rival of many of the trade group’s members.
“Verizon/INCOMPAS was a compromise forged around a forward-looking technology neutral framework consistent with principles set by the FCC for the BDS proceeding,” INCOMPAS CEO Chip Pickering said in a statement provided to Morning Consult.
Pickering added that the compromise “has the support of leading consumer and school organizations and virtually the entire wired and wireless industry.”
The “technology neutral framework” in the Verizon/INCOMPAS agreement called for price caps on any bulk data service operating in a noncompetitive market with speeds of under 50 megabits per second.
By abruptly taking Ethernet out of the equation — a move hailed by AT&T and other incumbent carriers, who have continually opposed any form of price caps — some competitive carriers now feel like the FCC pulled the rug out from under them by asking for their advice and then ignoring it.
“The FCC openly encouraged companies to work together and answer tough questions,” the source familiar with competitive-carrier discussions told Morning Consult. “It’s a bit of a head scratcher why Wheeler came down in favor of those throwing stones at the process, rather than those working to support his agenda.”
The source characterizes the negotiations between Verizon and INCOMPAS members over the summer as long and intense. They were conducted with the understanding that the commission would adopt, with few changes, a compromise reached by so many disparate industry players.
An FCC spokeswoman did not immediately respond to a request for comment on Thursday, but senior FCC officials told Morning Consult last week that the commission’s proposed rule on bulk data tracks closely with the Verizon/INCOMPAS deal.
The Schools, Health and Libraries Broadband (SHLB) Coalition, an advocacy group that had previously expressed strong support for the commission’s bulk data plan, turned on Wheeler last week over his failure to place Ethernet under the proposed price caps.
“The FCC must bring prices for BDS services under control,” the group wrote in a statement on Friday. “SHLB believes these efforts should be applied in a technology-neutral way to both TDM and Ethernet services.”
“The FCC has fallen far short on reducing costs, and this proposal threatens to cut off the future of education,” the SHLB statement added.
INCOMPAS and competitive carriers won’t go quite that far, despite their similar concerns over a lack of Ethernet in the rule. They are pleased that the FCC is proposing price caps on the older technology, and they want to continue working with the commission on the Ethernet issue ahead of a probable vote later this month.
“Addressing market power abuse is an important first step for the FCC, and we continue to fight for policies that promote the future of competition,” Pickering told Morning Consult in the email. INCOMPAS member Sprint released a statement last Friday “commending” Wheeler “for moving forward with plans to reform the broken BDS market.”
Industry representatives plan to talk to Wheeler and other FCC commissioners in the coming weeks, with an eye to promoting new provisions to develop an eventual framework regulating Ethernet bulk-data prices.
The rule is currently on circulation at the FCC, but is not on the docket for the commission’s open meeting scheduled for Oct. 27. It could theoretically be passed by a majority of commissioners at any time.