Originally published at The Street.

FCC’s Rush to Regulate Nearly Obsolete Technology Hurts Broadband

by Bruce Mehlman

When does deregulation become re-regulation?

To watch this happen in real time, take a close look at the Federal Communications Commission, which is poised to re-impose price regulation on a market for a nearly obsolete technology at its Nov. 17 public meeting.

The FCC has been looking to re-regulate this market since 2005.

How did we get here? In 2012, to help break the impasse, the FCC started collecting data, once again, in a surgical approach toward considering whether to regulate an emerging competitive and complex market.

Casting data and deliberation to the wind, the agency recently reversed course to instead embrace a machete-like approach that will lop off entire types of technology and declare all markets for business services un-competitive across the country.

Through a “fact sheet” the agency seeks to re-regulate legacy time-division multiplexed copper-based business communications services in all markets across the country, while ignoring its own market data showing vibrant competition in this market throughout the U.S. And it is pushing for a vote this month on whether to impose price regulation on all antiquated copper-based business services offered by incumbents nationwide.

No evidence exists on the lack of nationwide competition. Highlighting the absurdity of the FCC’s approach, just focus on one issue in the agency’s proceeding: fiber interoffice transport networks that competitive local exchange carriers and others deploy in competing to offer services to businesses.

The FCC’s own data show that competitive providers offer transport networks in more than 95% of Census blocks where there is demand for business data services, covering about 99% of America’s businesses. Even excluding cable company competitors from this analysis, limiting it just to CLECs, the comparable figures are 83% and 92%.

And, as one would expect, in the business centers of larger cities, there is even more competition. In many places, more than 20 different communications providers offer competitive transport services, but the FCC is still pushing for nationwide price regulation.

In fact, competition is so pervasive that not even CLEC competitors have called for nationwide price regulation on these services, yet the FCC wants to impose it anyway.

We appear to live in a world where an expert regulatory agency that doesn’t like the results of the data it collects can just choose to ignore it.

There is an old saying that “the plural of anecdote is data,” but for the FCC the opposite is true: Cherry-pick data for the anecdotes that support a case and call it fact.

In defense of its fact sheet findings, the agency maintains only that “evidence of market power is strongest” in legacy TDM markets.

To use the proper legal term here, the FCC’s proposed action is arbitrary. It bears no connection to the data.

Across the country, competitors and incumbents compete side-by-side. Deregulation worked.

Yet now a partisan majority on the FCC intends to just do what it wanted from the start, data be damned.

Does all this matter to anyone other than purchasers or sellers of BDS services?

Yes, it does because if the FCC is going to say with a straight face that it is willing to impose price regulation even in situations with dozens of competitors in a market, what does that say about its attitude or potential attitude toward other parts of the industry? What company is safe from fear that it, too, could become subject to price regulation and decide, therefore, that investment and innovation in the U.S. telecommunication market is just not worth it?

If adopted, this dictate from the FCC won’t increase competition in the newer market for Ethernet services. It won’t encourage new investment and new builds but the opposite.

It will instead send the discouraging signal that the FCC isn’t willing to follow data that doesn’t support its preferred conclusion, that some competitors are more favored than others and that investments aren’t secure. Not a great showing after 12 years of work, with a hurried vote to wrap up an agenda before the new president comes in.

Through a path that is as duplicitous as it was circuitous, the FCC has ended up further back than its starting place. By seeking to end a proceeding promoting deregulation with imposing re-regulation, the FCC has simply failed.


Atlanta-Sandy Springs-Roswell, GA: 25

Chicago-Naperville-Elgin, IL-IN-WI: 28

Dallas-Fort Worth-Arlington, TX: 25

Detroit-Warren-Dearborn, MI: 16

Houston-The Woodlands-Sugar Land, TX: 22

Los Angeles-Long Beach-Anaheim, CA: 15

Memphis, TN-MS-AR: 21

Miami-Fort Lauderdale-West Palm Beach, FL: 14

St. Louis, MO-IL: 22

Washington-Arlington-Alexandria, DC-VA-MD-WV: 24