WASHINGTON, Oct. 31, 2016 /PRNewswire/ -- In a scathing
review of the Federal Communications Commission's (FCC) latest
proposal for new regulation of business data services (BDS),
telecom provider CenturyLink says the proposal "suggests an intent
to ignore" information in the record that demonstrates competition
in the market.
In the new filing with the FCC, CenturyLink said the "record
clearly establishes the presence of strong BDS competition" and the
Commission "not only ignores this evidence, but declines to conduct
any analysis of the BDS geographic market at all.
Despite the FCC's assurance to members of Congress in September
that all available information—including unprecedented market tests
performed over several years and with the use of significant
resources—would be considered, the proposal reflects the
Commission's intent to ignore the information on the record of
competition in the marketplace."
In the proposal, the Commission suggests enforcing a one-time
rate reduction of 11 percent on broadband providers, phased in over
three years. However, the proposal lacks transparency, as the
announcement of the 11 percent rate reduction is a significant
understatement to the additional rate reductions that will also be
imposed by additional, undisclosed measures in the proposal.
The "Fact Sheet" issued by the Commission did not reveal that
providers in many cases will be subjected to an additional
preliminary rate reduction, before then complying with the 11
percent reduction initially discussed. Data shows that in some
cases, the combination of these two rate reductions on top of one
another can get as high as 19 percent in lost revenue for
providers, taking away from revenue that would otherwise go towards
future broadband investment and the creation of jobs.
The layering of these reductions on top of one another is buried
within the proposal, and has the potential to seriously damage
providers' ability to recover from lost income; this drastic rate
cut would cripple many providers' ability to continue providing
quality service, much less have money left to invest in broadband
innovation for the future.
"The Commission's lack of transparency in what they're trying to
accomplish places an enormous and unnecessary burden on the
communication process, and the trust between all parties involved
in this proposal," said John Jones,
Senior Vice President, Public Policy and Government Relations for
CenturyLink, a member of Invest in Broadband for
America.
While the rate reductions have serious potential to discourage
investment in broadband, CenturyLink's letter asserts the FCC's
approach to the rate calculations have no basis in economics.
Mark Schankerman, PhD., of the
London School of Economics, and
Pierre Regibeau, PhD, an economist
specializing in matters of industrial organization and law,
published a report analyzing the FCC's proposed rate
reductions. In the report, Schankerman and Regibeau explain
that the data used in their proposal "reflect[s] fundamentally
arbitrary allocations of joint costs that have no justification
from an economic perspective."
As CenturyLink's letter to the Commission points out, analysis
that relies on arbitrary data produces flawed results. Flawed
regulation, in turn, leads to damage to the broadband
investments.
"With so much at stake for the broadband industry, the
Commission cannot afford to ignore the facts when it comes to
market competition. Further, assigning rate reductions based on
arbitrary data is simply reckless. This proposal is littered with
flaws, and the FCC must take more time to address the potential
damage to broadband investment – and the jobs those investments
support," states Jones.
CenturyLink's letter, along with Schankerman and Regibeau's
report, can be viewed here.
The "Invest in Broadband for America" coalition
(investinbroadband.org) is made up of CenturyLink,
Inc. (NYSE: CTL), Cincinnati Bell, Inc. (NYSE: CBB),
Consolidated Communications, Inc. (NASDAQ: CNSL), FairPoint
Communications, Inc. (NASDAQ: FRP) and Frontier Communications
(NASDAQ: FTR).
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/centurylink-files-letter-with-fcc-detailing-dangers-of-proposed-bds-order-300353930.html
SOURCE Invest in Broadband for America