FCC's special access debate raises ire of 9 rural U.S. senators

As FCC Chairman Tom Wheeler progresses with his review of the special access market, a group of nine rural market senators have asked the regulator to consider new data that has emerged in conducting its analysis of the market.

The group, which includes eight Democratic and one Independent senator, said that new regulation will only serve the public interest if the commission relies on the most accurate information.

“As you work toward a final rule, it is especially important for rural states like ours that the Commission use all the available data, including the data submitted earlier this year by the major cable operators, to both measure competitive markets accurately and ensure that the regulations for noncompetitive markets are based on the real cost to provide service,” the group of senators, led by Jon Tester (D-Mont.) wrote in a letter to FCC Chairman Tom Wheeler. “Rural communities depend on robust investments in business data services to connect small businesses and anchor institutions, support wireless data service, and enable economic development. Without these investments, our rural constituents will face significant challenges in accessing the 21st century global economy.”

Joining Tester were eight other signers including: Maria Cantwell (D-Wash.), Patty Murray (D-Wash.), Heidi Heitkamp (D-N.D.), Michael Bennet (D-Colo.), Amy Klobuchar (D-Minn.), Bob Casey (D-Pa.), Angus King Jr. (I-Maine), and Tammy Baldwin (D-Wisc).

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Washington state Gov. Jay Inslee expressed his own concerns about the FCC data in a separate letter to Wheeler.

“In particular, I share the concerns expressed to you in the recent letter, submitted by the Washington Utilities and Transportation Commission (UTC), that the Commission should use all the available data, including the data submitted earlier this year by major cable operators, to both measure competitive markets accurately and ensure that potential regulations in less competitive markets properly reflect marketplace conditions,” said Inslee in a letter.

These letters emerge after a group of service providers, including AT&T, CenturyLink, Cincinnati Bell, Consolidated, FairPoint and Frontier helped form the "Invest in Broadband for America" coalition as the latest effort to encourage FCC to reconsider its business data services (BDS) proposal.

Earlier this year, this group of providers filed a motion to strike what it says is an "irretrievably flawed" data framework in the FCC's BDS proposal, saying that cable operators understated their capabilities to serve the Ethernet services market.

John Jones, SVP of public policy and government relations for CenturyLink, a member of the coalition, said if service providers are forced to cut their rates because of the proposed FCC rules it could hinder rural broadband expansion.

“The fact is that rural communities have been the last to benefit from the growth of high speed internet and this proposal will only exasperate the situation when investment evaporates," Jones said.

One of the issues raised in the motion to strike was a revelation that a group of cable providers, including Charter Communications, Comcast and Cox Communications, did not clearly or fully report that they were able to provide at least 22 times more business data services using metro Ethernet than were reflected by the original data in 2013.

Comcast revealed that it had not reported locations connected to nodes that it updated to provide Ethernet-over-HFC service as of 2013. The MSO later filed a list of all business locations that could be served via Metro Ethernet-enabled head ends. Likewise, Cox Communications, which was one of the first MSOs to enter the business services market in the 1990s, had 28,000 fiber-lit buildings and 300,000 HFC-serviceable buildings as of early 2014.

In a more recent filing, Comcast said after meeting with the FCC that imposing new rules on emerging competitive providers like itself would put a chill on new fiber network investments.

“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,” Comcast said in a FCC filing. “Going forward, rate regulation would have a similarly harmful impact on Comcast’s investments.”

For more:
- see the release
- see this FCC filing (PDF)

Related articles:
CenturyLink: Cable operators have 22 times more Ethernet-capable locations than BDS data lists
AT&T, Comcast: Special access market is already competitive
CenturyLink, Frontier lead new special access coalition targeting BDS proposal

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