FCC takes BDS proposal off November agenda as presidential transition ramps

FCC

As Congress and the White House transition to the new Donald Trump administration, a group of Republican lawmakers asked FCC Chairman Tom Wheeler to refrain from acting on "controversial" issues like business data services (BDS) during his final months in office.

The letter comes ahead of the FCC’s November meeting during which the commission was scheduled to vote on various revisions for a regulatory framework for BDS and other issues like set-top box reform.

Reps. Fred Upton (R-Mich.), who serves as chairman of the House Energy and Commerce Committee, and Greg Walden (R-Ore.), the chair of the Communications and Technology Subcommittee, jointly submitted a letter (PDF) to FCC Chairman Tom Wheeler telling him that the FCC should instead focus its attention on more near-term issues like the wireless incentive auction.

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“The successful completion of the auction will provide needed spectrum to meet Americans’ wireless broadband needs and ensure that Americans continue to enjoy the local news and national programming broadcasters provide,” the congressmen wrote. “We strongly urge you to concentrate the Commission’s attention and resources only on matters that require action under the efforts to foster the success of the broadcast incentive auction.”

Industry insiders say that Wheeler will likely step down not long after Donald Trump is inaugurated on Jan. 20.

While Trump has not given specific details about his technology policy agenda, he has hired Jeffrey Eisenach, a staunch supporter of light-touch regulation, as an aide to help solidify his stance on broadband issues. Trump has also hired Senator Marsha Blackburn, a key AT&T ally, to be part of his presidential transition team.

The lawmakers said that the FCC put some initiatives on hold eight years ago when top Democrats made a similar request following the election of President Barack Obama.

“As Rep. Henry Waxman and Senator Jay Rockefeller noted during the 2008 Presidential transition, it would be counterproductive for the FCC to consider complex and controversial items that the new Congress and new Administration will have an interest in reviewing,” they wrote.

Not surprisingly, the FCC’s removal of the BDS proposal from the November agenda is drawing a mixed response from telcos that have vocally opposed it and competitive industry groups that say pricing reform is needed.

CenturyLink, which has advocated a balanced approach that recognizes the state of competition in the BDS market, applauded the FCC’s decision to not move forward with its proposal.

The telco claimed if the FCC BDS plans were to go through it would have to reduce “Ethernet rates in the company’s eight interstate service guides by between 37 percent and 89 percent, with a company-wide weighted average reduction of these standard rates of 49 percent.”

“We are pleased with the FCC’s decision not to enact new regulations for broadband data services and other proceedings today,” said John Jones, SVP of public policy and government relations for CenturyLink, in a statement provided to FierceTelecom. “We believe the communications industry will continue to be competitive, innovative and market-driven without the burden of regulation. We look forward to working collaboratively with the new administration and the FCC to take our nation’s telecommunications and technology infrastructure to the next level of security, reliability and speed.”  

Verizon, which had developed a joint proposal with industry group Incompas, would not comment on the FCC’s action to FierceTelecom.

Industry groups were equally divided on the FCC’s decision to not vote on the BDS proposal during its meeting.

The Internet Innovation Alliance (IIA), a Republican-led think tank that’s been critical of the FCC’s agenda, said that they appreciated that the regulator was not acting hastily to pass what they said was a half-baked idea.

“I commend Chairman Wheeler for not rushing through a midnight regulation that was not ready for prime time, unsupported by the data and opposed by many experts and political leaders—and which would have harmed broadband investment,” said IIA co-chairman Bruce Mehlman in an e-mail to FierceTelecom.

However, Public Knowledge said the BDS issue could have been put to rest if the FCC kept it on their agenda.

“We are disappointed that the FCC will not act on the previously announced November agenda,” said Harold Feld of Public Knowledge. “While respecting the tradition that the FCC should generally wait for the new administration before acting on any new initiatives, these items were essentially completed and ready to move. It seems absurd that if Chairman Wheeler had scheduled the meeting on Election Day, we would have already resolved the decade-old proceeding on legacy business data services pricing.”

Wheeler’s revised BDS proposal has been nothing but controversial since it emerged in October. Traditional telcos and cable operators argued that the new regulations would cause them to reduce network investments, while competitive providers said the measures would ensure fair pricing for business customers. 

While the proposal called for a light-touch regulatory regime for next-gen Ethernet and packet-based services, for which new competition from cable and CLECs is emerging, TDM services would continue to be governed by existing “price cap” regulation.

Under Wheeler’s proposal, the FCC proposed implementing a one-time 11 percent price decrease that would be phased in over 3 years, beginning in July 2017. Specifically, this includes 3 percent in the first year, 4 percent in the second year, and 4 percent in the third year. This was below the 15-percent cut proposed in the Verizon/INCOMPAS proposal.

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