Year in Review: Business Data Services in peril following Wheeler’s departure

FCC headquarters

FierceTelecom is wrapping up an eventful 2016 by taking a hard look at five of the most important trends and developments that emerged in the market this year. Today’s installment analyzes the upheaval in the special access market.

The news: FCC Chairman Tom Wheeler recently announced that he will step down in January after Donald Trump takes office as president, a move that will likely be a death knell to his business data services (BDS) reform efforts.

Jefferies said in research note that BDS and other controversial reforms like "unlocking" set-top boxes will likely be abandoned under a Trump administration. “We expect regulation of BDS (formerly special access), and set top boxes (STB) to be altered (i.e. watered down), or more likely eliminated,” said Jefferies in a research note.

BDS covers a set of wholesale services that traditional telcos and, increasingly, cable operators sell to competitive providers to address off-net locations for their services. Wheeler’s goal was to ensure larger operators didn’t impose onerous prices on smaller operators, and not surprisingly his proposal received mixed reactions from traditional telcos and competitive providers.

Competitive carriers like Level 3 voiced support for Wheeler’s proposals, while traditional telcos like AT&T and CenturyLink as well as large cable operators like Comcast and the new Charter said the reforms would chill investment in new last-mile facilities.

Now, though, the special access issue appears frozen pending new leadership at the FCC.

Why it matters: Along with set-top box (STB) reform and net neutrality, BDS reform was a key pillar of Wheeler’s “competition, competition, competition” agenda.

With Wheeler and fellow Democratic commissioner Jessica Rosenworcel on their way out, a number of reports have indicated that Trump will work to shift the FCC from a Democrat to a Republican majority. When the FCC returns to a Republican majority, the efforts Wheeler championed will likely be put on the backburner or abandoned altogether.

Reforming BDS though is important for CLECs that provide small and midsized business customers with lower cost access services. Wheeler may have not been able to drive BDS reform through successfully, but he will likely go down as an FCC chairman that was not content to be a doormat to the traditional telcos’ whims on issues like BDS. Being a former leader for the powerful CTIA and earlier the NCTA, many large incumbents likely thought he would just go along with lighter touch regulations.