The FCC Deregulates Most Business Data Services

by Kelley Drye & Warren LLP
Contact

Ending a decade-long examination of incumbent carrier special access and related services, the Federal Communications Commission (Commission or FCC), on May 2, 2017, released a Report & Order (the Order) setting forth a deregulatory framework for business data services (BDS).  The Commission found that, in most instances, BDS – “dedicated point-to-point transmission of data at certain guaranteed speeds and service levels using high-capacity connections” – exists in “a dynamic and increasingly competitive marketplace.”  The Order generally eliminates ex ante pricing regulation with the exception of end user channel termination services at DS1 and DS3 levels in counties that fail a competitive market test adopted in the Order, in the hope of stimulating growth and investment in new services.

Enterprises, non-profits, and government organizations use BDS for secure and reliable data transfers, as a means of connecting to the Internet and cloud services, and for private or virtual private networks.  The Commission historically referred to the relevant market for such services as the “special access” market, although its definition of BDS is broader than that historical term.

The core theory underpinning the Order is that, by eliminating price cap regulations in counties with actual or potential competition that the Commission deems “sufficient” (based on criteria related to the frequent presence of “nearby” competitors to incumbents within a county or of facilities-based cable operators providing BDS within the county), the FCC will bolster the incentives of facilities-based providers to invest in the expansion and improvement of their BDS offerings.

In defining the scope of the BDS product market, the FCC assessed which services are sufficiently similar to qualify as substitutes for one another, focusing especially on differences in price, quality, and service capability.  The Commission examined circuit-based BDS, packet-based BDS, Ethernet over Hybrid-Fiber Coax, “best-efforts” Internet access services, unbundled network elements, dark fiber, satellite services, and fixed wireless services.  The Commission also defined the relevant geographic market as being a distance of one mile.  After examining a number of factors relating to market entry, the Commission:

  • Removed price cap or any other type of pricing regulation on packet-switched BDS and also on TDM-based BDS providing services in excess of DS3 bandwidth levels;
  • Removed price cap or other type of pricing regulation on transport services;
  • Adopted a competitive market test that dictates on a county-by-county basis whether it will retain price cap regulation for incumbent DS1 and DS3 end user channel termination services in counties deemed non-competitive, subject to review of non-competitive counties after a three-year period.  That test adopted is whether 50 percent of the locations with BDS demand in the county are within a half mile of a location served by a competing provider or, alternatively, 75 percent of the census blocks in the county have a cable provider present;
  • Declined to adopt ex ante price regulation for wholesale BDS (no general pricing rules for wholesale service or mandates about the relative prices of wholesale and retail BDS);
  • Eliminated permissive detariffing of BDS by competitive carriers and after a six-month transition, eliminates mandatory tariffing for incumbent providers for BDS in competitive counties; after a 36-month transition period that commences on the effective date of the BDS Order (60 days after publication in the Federal Register) during which tariffing will be permissive for incumbents;
  • Refrained from adopting ex ante pricing regulations for the relationship between wholesale and retail rates for BDS;
  • Clarified the continued applicability of Sections 201 and 202 to BDS services, and the availability of Section 208 complaints as a primary enforcement mechanism to ensure BDS rates are just, reasonable, and not unreasonably discriminatory;  and
  • Clarified that BDS is not inherently a common carrier service and specifically found that select competitive BDS offerings constitute private carriage offerings.

The Republican Comissioners, FCC Chairman Ajit Pai and Commissioner Michael O’Rielly voted in favor of the Order, while the sole Democratic Commissioner, Mignon Clyburn, vociferously dissented.

In our companion client advisory, we summarize the primary findings and rules of the Report & Order in greater depth.

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Kelley Drye & Warren LLP | Attorney Advertising

Written by:

Kelley Drye & Warren LLP
Contact
more
less

Kelley Drye & Warren LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.
Feedback? Tell us what you think of the new jdsupra.com!