Competitive BDS Market Means Potential Rate Hikes

by | Oct 5, 2017 | Blog, News | 0 comments


After the election of Donald Trump as president, congressional Republicans began to pressure the U.S. Federal Communications Commission (FCC) to drop its plans to push through a 2016 proposal that would have capped prices on business data lines.

This past April, the FCC voted to deregulate the providers of the business data lines connecting broadband service to many small businesses, schools, hospitals, and ATM machines.

The deregulation of business data services (BDS) could mean broadband price hikes for those businesses. The BDS market, which generates an estimated US$45 billion a year for AT&T, Verizon, and other telecom carriers, provides the backhaul that connects mobile towers to the wired internet.

Republicans have long argued that pricing regulations are largely outdated, with high-speed fiber and cable services beginning to compete with traditional copper-based BDS networks, sometimes called special access.

Small businesses, ATM providers, and other customers who depend on low-speed, sub-50Mbps broadband service are most likely to be hit with cost increases because 86 percent of those low-speed customers across the U.S. have only one broadband option, said Chip Pickering, CEO of INCOMPAS, a trade group for small telecom carriers.

It’s interesting to note that that statistic comes from the FCC’s own analysis of the business data service market, collected in about 2013. But just last year the FCC noted that an estimated 73 percent of BDS customer locations are served by just one provider, and only 3 percent have more than two providers.

The about face comes with the appointment of FCC Chairman Ajit Pai. The FCC has long attempted to achieve “perfect” competition in the BDS market, but failed, FCC Chairman Ajit Pai said. He added that it’s time for the agency to stop “micromanaging” the market.

This past July, the FCC’s Wireless Bureau denied a request by INCOMPAS and others that it stay its decision to deregulate BDS.

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