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

FCC HQ

Three incumbent carriers – Frontier Communications, Sprint and Windstream – are lining up in favor of the price cap proposal for business data services (BDS) made by Verizon and Incompas.

In a joint letter submitted to the FCC this week, representatives for the three telcos said that they agree with implementing a price cap on TDM, or legacy, based BDS – also known as special access. And while the original Verizon-Incompas proposal called for a two-year transition period to implement new BDS pricing, the letter suggested 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.

“In light of the buying and purchasing power that the largest ILECs and their affiliates have in the BDS marketplace, and the uniquely large impact that abrupt regulatory changes would have on the business operations of smaller ILECs, Frontier, Sprint, and Windstream have agreed that these proposed transition-related rules should function as a ‘default’ to which certain modifications to the transition mechanism are warranted,” the providers said.

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In short, the carriers suggested three types of price caps:

  • The default transition, which would apply to all price-cap ILECs that don’t qualify for the other two proposed methods.
  • The first modified transition, which would apply to a price-cap ILEC that meets two conditions: it is not the largest price-cap ILEC in the state, and it serves a top 100 MSA (metropolitan statistical area) in the state with at least 25 percent of all ILEC broadband connections in the MSA.
  • The second modified transition, which would apply to a price-cap ILEC that does not serve at least 25 percent of all ILEC broadband connections in any top 100 MSA in the state, or that operates in a non-contiguous area.

Verizon-Incompas’ default transition would mean that ILECs subject to a price cap under new rules – if the FCC proposes them – have to adjust their pricing within a two-year period. That would include a one-time adjustment to what the providers call an “X-factor,” the amount by which prices would be further reduced.

The other two modified plans offer easier transitions that presumably would not be as hard on smaller providers’ bottom lines. For example, the first modified transition wouldn’t require a price cap adjustment in the first year at all.

While the letter was careful to point out that the carriers don’t agree with everything in Verizon and Incompas’ proposal, it did signal a willingness to find a middle ground as the road to a vote on new BDS rules ramps upward.

“Today’s agreement between Frontier, Windstream, and Sprint builds on the framework introduced by Verizon and INCOMPAS during the FCC’s proceedings on Business Data Services,” said Sprint in a media statement. “Recognizing the unique needs of smaller incumbent carriers serving rural America, as well as the need for BDS reform, these companies agreed to a modified implementation plan that would allow rural carriers greater flexibility in making the changes needed to ensure competitive pricing for these critical inputs to broadband services. While the parties did not agree on all aspects of reform, today’s announcement will provide the FCC with a path forward—one that is capable of opening the BDS marketplace to competition. This agreement marks a significant step towards providing needed rate relief, benefiting the deployment of next generation network technology.”

Likewise, Frontier released a statement saying that while it still has its own concerns with the FCC's proposed BDS regulation, “yesterday’s filing by Frontier, Windstream and Sprint reflects a consensus approach which affords the smaller price-cap carriers a reasonable transition period to adjust to potential reductions to BDS rates.”

For more:
- see the FCC filing

Related articles:
Verizon-Incompas BDS proposal may be Wheeler's likely gambit as vote nears: analyst
Verizon-Incompas special access proposal gets support from state and local groups
Verizon, Incompas may draw fire from AT&T, CenturyLink on new BDS proposals

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