State Role Seen in FCC BDS Proceeding
NASHVILLE -- States should get involved in the special access debate over the competitiveness of business data services, a Level 3 official said in a session Tuesday at the 2016 NARUC Summer Committee meetings. The California state commissioner moderating the panel said her state cares about the historically federal issue and is following the FCC proceeding. Taking their expected positions on the panel, industry officials for ILECs and cable said the BDS market is competitive, while CLECs and Sprint backed regulation to spur competition.
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“There is a role for state commissions here,” said Level 3 Associate General Counsel Pamela Hollick. BDS may be an FCC proceeding, but states have significant experience analyzing local market competition, she said. “Your opinion is valuable as people who also have a great deal of experience in this hyper-level of assessing the level of competition. So your opinion adds credibility to what the FCC is doing and how they’re looking at it, and it certainly helps in terms of your role as being the protector of competition that’s developed in your states.”
The California Public Utilities Commission has been “involved extensively in special access issues,” including special access tariffs and applications for transfers of control, said Commissioner Catherine Sandoval. The issue can “be somewhat opaque to … state regulators, especially if you’re in a state where you don’t actually have state tariffs,” she said. But many state regulators are interested in the FCC proceeding and how it will affect them and their stakeholders, she said.
“This is in no way a monopoly market,” said USTelecom Senior Vice President Jonathan Banks. FCC special access data from 2013 showed 51 percent of revenue went to CLECs, and their market share has been growing year after year, he said. Every building in the U.S. is within half a mile of CLEC fiber, and 25 percent are within 88 feet, he said. NCTA Executive Vice President James Assey said the market is competitive and functioning well, as shown by falling prices in the retail market. Having two to three players in a market counts as competition, and requiring four is too much, he said. The first competitor makes the biggest difference in a market, and returns diminish with every additional competitor, he said.
But Sprint, Level 3 and Windstream panelists painted a less-competitive picture, where Verizon, AT&T and CenturyLink are dominant. Sprint has no desire to send money to its mobile competitors, but the wireless company has no choice in an uncompetitive BDS market, said Sprint Government Affairs Vice President Charles McKee. "There is very little choice even today, even after years of … predicting competition,” he said. “We’ve heard repeatedly that competition is just around the corner ... the data that the commission collected showed that … roughly 73 percent of the locations being served by BDS have only one provider, 23 percent have two and 3 percent or less have three or more.”
Reply comments on the BDS proceeding are due Aug. 9 at the FCC (see 1607210060). The commission extended the deadline in part to give more time for parties to consider a BDS framework proposed by CLEC association Incompas and ILEC Verizon. But the special access debate has a long history, panelists acknowledged. Banks called it a “long-festering debate,” while Hollick said she’s reminded of John Mayer's song, “Waiting on the World to Change.” Adjusting the lyrics, she said, "We've been waiting, waiting on the FCC to change and get it right.”