FCC Plan Would Revamp Oversight of Bulk Data Service Provided to Businesses

Federal regulators said Thursday that they would seek to revamp their oversight of an obscure but important part of the telecommunications market, the bulk data service that telecom companies provide to businesses, including each other.

Details of the new plan being advanced by Federal Communications Commission Chairman Tom Wheeler hadn't yet been made public as of Thursday evening. The agency said it would vote on the plan at its April 28 meeting.

But even before the proposal emerged, industry groups began battling each other over how far it should go and which sectors should be swept up.

Smaller telecom companies reached an understanding with giant Verizon Communications Inc. to recommend replacing the current patchwork of regulation with "a permanent policy framework for all dedicated services," one that would be "technology-neutral," according to a joint statement. The current regulatory system has been criticized for focusing on older market players and technologies, leaving them feeling disproportionately targeted.

That announcement prompted a swift response from the cable industry, which said Thursday evening that such a move would target their firms. Some cable companies fear they might now face more regulation than in the past, since they represent a newer technology.

"The FCC should reject any call to impose new, onerous regulations on an industry that is stepping up to offer meaningful choices to business customers," the National Cable & Telecommunications Association said in its own statement. "The FCC will not achieve competition if it burdens new…entrants with regulation."

The so-called special-access market has proved to be a particularly difficult regulatory puzzle for the FCC to solve, at a time of rapid transformation in the telecom industry generally.

Some critics believe the FCC went too far in deregulating the market in 1999, the last time the agency made a major policy pronouncement.

For years, telecom companies such as Sprint Corp. and Level 3 Communications Inc. have griped that the big phone companies like AT&T Inc. and Verizon Communications Inc. have taken unfair advantage of their power in the market. AT&T and Verizon, along with CenturyLink Inc. and Frontier Communications Corp., dominate the special access market because they effectively control the wires that were built by the legacy AT&T monopoly, which was broken up by the government in 1984.

Some smaller companies, for example, accuse the carriers of requiring them to make large volume commitments or face big fees. Sprint, which uses the special access to connect its cell towers, says it has had to pay huge termination fees to the larger carriers when it switched several thousand cell towers to alternative providers.

AT&T and the other large carriers have denied the allegations and said the market is generally competitive.

In addition, companies of all sizes have complained that the FCC deregulatory scheme adopted in 1999 was both overly complicated and ineffective at determining areas where the market still needed stronger oversight. As a result, the FCC already has taken some steps toward a new system of stronger oversight.

Adding to the problems, the 1996 Telecommunications Act gives the FCC authority to police competitive behavior in the telecom market, but the agency's jurisdiction over these types of contracts primarily covers older technologies. AT&T, Verizon and other carriers have invested in newer network technologies that aren't subject to FCC oversight in this way.

Write to John D. McKinnon at john.mckinnon@wsj.com

(END) Dow Jones Newswires

April 07, 2016 22:15 ET (02:15 GMT)

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