FCC Plan Would Revamp Oversight of Bulk Data Service Provided to Businesses
April 07 2016 - 10:30PM
Dow Jones News
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)
Copyright (c) 2016 Dow Jones & Company, Inc.
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