Frontier proposes tiered BDS rate structure to reduce impact on mid-sized telcos

Frontier Communications (Frontier Communications)

Frontier Communications says that as the FCC moves forward with its business data services (BDS) proposals, the regulator should consider implementing what it calls a tiered implementation that will satisfy its reform goals while taking into consideration the impact on mid-sized telcos.

The telco said in an FCC filing (PDF) that the FCC that “one size fits all” BDS rate reductions could have a chilling effect on broadband investments and drive ILECs to cut jobs.

Under the FCC’s current BDS proposal, the regulator called for an 11 percent rate cut over three years plus additional 3 percent minus inflation annual reductions.

RELATED: Sprint, Frontier, Windstream back Verizon-Incompas price cap proposal on BDS

"Numerous FCC decisions over the past eight years have dramatically reduced revenues for the midsize carriers serving rural America at a time of increasing competition and increasing demand on broadband investment,” Frontier said in the FCC filing. “BDS rate reductions simply increase this downward revenue trajectory on companies that provide good union jobs and investment in rural America.”

Frontier noted that midsized ILECs like Frontier are seeing TDM-based network revenue decline in largely rural markets that are more challenging to serve and maintain.

“Data on the record illustrates that the midsize LECs are experiencing a decline in their TDM network utilization, making the overall network more expensive per customer to maintain,” Frontier said. “In addition, the midsize LECs face the economic challenges of serving more rural, and expensive parts of the country with lower income demographics.”

Earlier this month, Frontier joined forces with Sprint and Windstream to proposed three alternative price caps: default transition, a first modified transition, and a second modified transition.

Although the original Verizon-Incompas proposal called for a two-year transition period to implement new BDS pricing, the three carriers suggested in a letter (PDF) sent to the FCC earlier this month that additional “transition mechanisms” depending on the type of service provider and its footprint in areas where special access services are required in order to deliver wholesale data services to enterprises at competitive rates.