ITTA, USTelecom says the FCC should streamline BDS regulations for rural telcos

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ITTA and USTelecom say their streamlined regulatory paradigm will better promote competition.

ITTA and USTelecom say the regulatory regime that governs business data services (BDS) should be revised for rural telcos that the lack scale and financial power of their larger telco counterparts.

In a joint filing, ITTA and USTelecom told the FCC that legacy BDS regulations that currently apply to many rural telcos “impose unnecessary costs and prevent these carriers from offering beneficial rates, terms and conditions to their customers.”

“Continued compliance with rate-or-return-based rate regulation, including tariffing, tariff review plans and associated requirements, entails significant costs that are increasingly difficult for model-based rate-of-return carriers to recover,” ITTA and USTelecom said in an FCC filing (PDF). “Particularly for carriers that are operating pursuant to their own individual tariffs, cost studies, cost support and related regulatory compliance requirements are a significant expense.”

In April, the FCC voted along party lines to pass a report and order that it says recognizes competition in the BDS market is robust, one that critics say will drive up prices for small to medium businesses.

The regulator claimed that legacy regulation inhibits the investment required for the transition of BDS from legacy TDM networks to high-speed Ethernet connectivity. 

RELATED: FCC says BDS order will incite investment, but critics charge it will inflate service pricing for SMBs

ITTA and USTelecom say their streamlined regulatory paradigm will better promote competition by taking further steps towards implementing incentive-based “price cap” regulation. As a result, the FCC will promote the investment necessary to meet the modern communications needs of American businesses and other enterprises operating in rural America. 

Specifically, the groups say that the FCC could do away with what they say are unnecessary costs associated with model-based rate-of-return carrier provision of BDS, without causing harm to customers. The regulator can do this by making available to model-based carriers the ability to opt into recently adopted price cap rules for BDS.

Since most model-based rate-of-return carriers serve more rural markets that have limited competition for BDS, ITTA and USTelecom say “there is no reason to believe that rural counties served by price cap carriers differ from rural counties served by rate-of-return carriers with respect to the competitive BDS marketplace.”

The groups added that “regulations governing the rural areas served by rate-of-return carriers would benefit from application of the same rules recently adopted for price cap carriers.”

Under the proposed rule, model-based rate-of-return carriers will have the option to put their BDS under price cap regulation. Sub 50 Mbps TDM-based services would be regulated based on whether the particular county the model-based carrier served is classified as competitive or noncompetitive as identified by the FCC's published competitive county list.

This means that model-based rate-of-return carriers electing this option would operate based on the competitive or non-competitive classification of the county where they serve.