FCC Passes Deregulatory Measures for BDS, Broadcasting Industries

The Federal Communications Commission on Thursday passed two measures aimed at easing regulations in the business data services and television broadcasting markets.

The first report and order, designed to allow market forces to provide competitive prices in the business data services industry, stoked the anger of Commissioner Mignon Clyburn. The panel’s lone Democratic member issued her strongest statement of objection since Republican Chairman Ajit Pai took charge of the agency in January.

“This order is one of the worst I have seen in my years at the commission,” Clyburn said at the agency’s Thursday open meeting. It’s “abhorrent” the FCC pushed the goal of “deregulation at all costs,” Clyburn added.

Clyburn predicted the order would cause “immediate price hikes” for small-business broadband service in rural areas. “Cash-strapped hospitals, schools, libraries and police departments will pay even more for vital connectivity,” she said.

Supporters argued the FCC analyzed massive troves of data on the BDS market across the country and determined there is “strong competition” in the industry, justifying deregulation. The order would allow market forces to set the prices of data lines rather than regulations, Pai and fellow Republican, Commissioner Michael O’Rielly, insisted.

BDS, estimated to be worth about $45 billion, refers to the data lines that networks and businesses — ranging from banks to retail stores — purchase from major carriers like AT&T Inc. to traffic massive amounts of data.

Before the BDS vote, the order drew concerns from the Small Business Administration’s Office of Advocacy, Democrats in Congress, industry groups representing competitive carriers and the European Union. The EU’s ambassador to the United States wrote to the FCC this week arguing the agency’s move on business data services would favor U.S. players in the industry worldwide, and could violate the United States’ compliance with World Trade Organization regulatory norms.

Pai dismissed those criticisms Thursday.

“This proceeding was launched in 2005 — a dozen years of deliberation is enough,” Pai said. “We have collected the data, we have analyzed the data, we have collected plenty of public input, and now is the time to act.”

The FCC also passed an order that reinstates the “UHF discount,” which will allow broadcasters to discount the audience they reach through ultra-high frequency airwaves when calculating compliance with the national television ownership rule. That discount will let broadcasters count only half of viewers of stations in UHF spectrum toward the rules that limit companies to owning stations that reach 39 percent of the total TV households in the U.S.

The FCC eliminated the discount last year under Democratic FCC Chairman Tom Wheeler. Clyburn called the FCC’s move on Thursday a “huge gift for large broadcasters with ambitious dreams of more consolidation.” The move will allow broadcast stations to grow larger and hurt competition and therefore consumers, Clyburn argued, adding the discount is “divorced from the technical realities of broadcast television in the digital age.”

House Minority Leader Nancy Pelosi (D-Calif.) and the top Democrat on the Energy and Commerce Committee, Frank Pallone (N.J.), wrote to Pai on Wednesday voicing concerns about the order reinstating the UHF discount, arguing there is “no technical justification for treating UHF stations” differently than VHF (very high frequency) stations.

Gordon Smith, the president and CEO of the National Association of Broadcasters, called the order’s passage a “rational first step in media ownership reform policy allowing free and local broadcasters to remain competitive with multi-national pay TV giants and broadband providers” in a Thursday statement.

Morning Consult