Verizon, Incompas propose new 8-point special access plan, encourage facilities-based competition

Verizon (NYSE: VZ) and Incompas have come together again to propose a new 8 element outline for a framework for Business Data Services (BDS).

In a letter to the FCC, the service provider and the industry group said that while they have not come to an agreement on all elements to implement the framework, the pair supports a common approach that can address current and future competition frameworks.

Among the many proposals the pair proposed is measuring the amount of facilities-based competitors in a census block and new pricing regimes for TDM and packet-based services.

While Incompas and Verizon could not come to an agreement on how define a facilities-based service provider, the organizations agreed that "a census block should be deemed competitive by measuring the number of facilities-based providers in the census block."

Under this construct, an ILEC such as Verizon or AT&T (NYSE: T) would be classified as a single facilities-based provider in all census blocks within the service provider's service area. However, a competitive provider that only uses UNEs or offering best-effort services would not be deemed as a facilities-based provider.  

The proposal also calls to place price caps on TDM-based Business Data Services in areas served by price cap ILECs.

"We agree that there should be a one-time adjustment to these rates (implemented over no more than a two-year period) to account for the freeze in rates under the CALLS Order, and that going forward there should be an annual adjustment to rates based on an X-factor of 4.4 percent minus inflation," Incompas and Verizon said.

Additionally, the organizations say that prices for Packet-Based Business Data Services deemed non-competitive should be reduced.

"We would support accomplishing this through a benchmark price approach for such Business Data Services that satisfies the objectives of Sections 201 and 202 of the Communications Act; is applied in a way that is technology-neutral and that does not discourage new entrants from entering markets and building facilities to compete with existing providers; and which may recognize differences in bandwidth, term, and class of service," Incompas and Verizon said.

This latest proposal follows an earlier pact Verizon and Incompas developed in April to regulate special access services.

A number of competitive providers such as TDS Telecom, which operates as a CLEC in markets outside of its traditional wireline territory, spoke out in support of the joint proposal.

"The Incompas/Verizon proposed framework aims to bring more competition to the business data services marketplace, something TDS has been working toward for decades," said Jim Butman, group president for TDS Telecommunications, in a statement. "While challenging issues remain between the parties, the search for common ground and what is best for business consumers, as well as these companies, will continue during the FCC's ongoing docket process."

Under the FCC's proposal that was in its further notice of proposed rulemaking in April, the regulator called out four main elements: driving competition, technology neutrality, technology transitions, and rules that address today's and tomorrow's marketplace needs.

"Business Data Services FNPRM identified four principles— which INCOMPAS and Verizon support—that should underpin that new framework," Verizon and Incompas said. "First, competition is the best way to ensure customers benefit, but where it is inadequate, price regulation is appropriate to ensure non-competitive market conditions do not disadvantage business customers and their ability to compete and innovate in downstream markets."

But not everyone is happy about the FCC's BDS proposals.

NCTA, the industry trade association representing cable operators, said in a blog post that the FCC's BDS regulatory proposals will delay 5G deployments and prevent service providers from building out new networks to support necessary backhaul.

In particular, the NCTA was responding to FCC Chairman Tom Wheeler's speech made during the National Press Club last week that a lack of backhaul competition could delay 5G wireless deployments. The industry trade group said that it would file comments explaining its concerns that it has with elements of the FCC's NPRM on BDS.

"Given that there is no factual or theoretical reason to think that market forces will result in insufficient investment in fiber for 5G backhaul, regulation of the rates for such service can only have negative consequences," NCTA said in a blog post. "In particular, regulation designed to artificially push prices below market levels will discourage companies from investing in new fiber facilities. That will result in less fiber in the ground and fewer sellers in the marketplace – exactly the situation Chairman Wheeler says he wants to avoid."

For more:
- see the joint Verizon, Incompas letter (PDF)

On the hot seat: Verizon's Silliman on creating regulatory balance for special access, privacy, net neutrality

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