Comcast to FCC: BDS rate regulations could chill broadband investments

Comcast

Comcast has joined the chorus of service providers challenging the FCC’s proposals to further regulate the business data services (BDS) market, expressing fears that any new rules could hinder future investments cable MSOs could make to support wholesale and business services.

“Subjecting competitive providers to rate regulation would significantly chill further investment in broadband facilities and thus undercut the very competition the Commission seeks to promote,” Comcast said in a letter to the FCC. “We pointed to the evidence Comcast submitted demonstrating that, had it been subject to artificial reductions in rates, its financial modeling would have resulted in significantly reduced investment in Ethernet services for projects evaluated in recent years. Going forward, rate regulation would have a similarly harmful impact on Comcast’s investments.” 

While cable and telcos rarely agree on anything, Comcast added that rate regulation on ILECs could have a broader effect for other services like fiber-based backhaul for upcoming 5G wireless deployments.  

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“Even if applied only to the dominant provider, rate regulation in any market will likely impact further incentives to invest,” Comcast said. “We pointed out that such adverse investment impacts would directly undermine the Commission’s interest in promoting competitive backhaul solutions for 5G wireless services, among other harms.”

It’s hard to overlook cable’s influence on the BDS and business services segment. A series of updated filings made by Charter Communications, Comcast, Cox and Time Warner Cable, revealed that there are 22 times more Ethernet-capable locations than the data on which the FCC based its May 2 further notice of proposed rulemaking (FNPRM).

One cable MSO that’s shaking up the Ethernet market, in particular, is Charter Communications. By acquiring Time Warner Cable and Bright House, Charter took over the third place in the U.S. Ethernet race, edging out Verizon in terms of port share. The cable MSO debuted on Vertical Systems Group’s Mid-Year 2016 U.S. Carrier Ethernet Leaderboard, a report that ranks Ethernet service providers based on retail port share. For its part, Comcast retained the number five spot on the VSG Leaderboard.

However compelling these developments are, industry advocacy group Competify said that there’s still a dearth of competition in the BDS space. According to data the group collected, the vast majority of location (96 percent) and census blocks (91 percent) is controlled by one — and sometimes two — providers.

Competify added that “fewer than 1.4 percent of locations are served by at least four providers.”

For more:
- see this letter (PDF)

Related articles:
AT&T, Comcast: Special access market is already competitive
Comcast fears that FCC's special access proposals could harm new business service entrants
CenturyLink: Cable operators have 22 times more Ethernet-capable locations than BDS data lists

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