Posted on 06/05/2017 7:17:45 PM PDT by Dan Baker
My interview with one of the top US telecom legal experts discussing the impact of 2017 FCC regulatory changes in the area of Business Data Services (BDS), or telecom services mostly for businesses or inter-carrier traffic.
I recently interview Andrew Lipman, Senior Partner and head of the telecom and media group at Morgan Lewis, an international law firm of 2,000 lawyers and about 30 offices across the US, Europe, and Asia.
Andy has been practicing telecom law for over 35 years and his telecom practice, which is global in nature, is one of the largest telecom legal practices in the world.
He has been following the US telecom regulations and the FCC for many years, and I found his analysis very clear and insightful. What follows are selected highlights from my discussion with him.
Because reliability and high quality communications is vital to the US economy, telecom is a heavily regulated industry.
Indeed, a telecom's fortune is often won or lost based on how well it pushes its envelope of services while still complying with federal and state laws.
The high impact of federal regulations in the United States has turned the job of FCC Chairman into a powerful role with broad influence over the shape of the US telecom market.
And now, with the Trump administration in charge and a Republican at the helm of the FCC for the first time in eight years, recent decisions by the new FCC have somewhat reversed the course of FCC regulations in the past eight years.
The FCC recently ruled on the subject of Business Data Services (or BDS). These are high speed private line services and they includes high bandwidth data circuits, Ethernet services and other advanced services needed by enterprises or for inter-carrier traffic.
Now as of late last year, the Democrats, under Chairman Wheeler, were sympathetic to the concerns of Level 3, Windstream, CLECs, and the wireless carriers who were large lesees of private line services to towers and cell sites. Their plan was to reduce and cap the rates that the incumbent phone companies could charge for these services.
By mid November 2016, the issue came to a head and the plan was vigorously opposed by incumbent carriers such as AT&T, CenturyLink, and Frontier.
However no action was taken and so now, after the presidential election, the balance of power has shifted to the Republicans. Post-inauguration day, we now have a new FCC chairman, Ajit Pai, who was the senior Republican on the FCC during the Obama years.
And one of Pai's first actions — knowing this open BDS docket was out there — was to proceed with it, and he ruled in a 180 degree opposite direction to what Chairman Wheeler was proposing.
Chairman Pai believes the historical record clearly shows that private line services — formerly called "special access" and now BDS — are strongly competitive, in sharp contrast to the findings of the Democrats in late 2016.
So acting on that record, Chairman Pai essentially deregulated them, first deregulating business data service above the DS3 high speed circuit level, and ultimately plans to de-tariff them.
A number of carriers: Windstream, British Telecom, and others objected. But the Republican Commissioners nonetheless felt that the market is and will be sufficiently competitive to relieve these carriers from regulation. The commission said that it was not going to regulate cable companies in the provision of private line services nor regulate metro fiber companies' BDS services like those of Zayo, Light Tower, and others.
The FCC ruling on BDS will have a significant impact on the incumbent carrier side of the house.
Chairman Pai and the Trump administration clearly favor, as a general rule, light-handed regulation and also appear to favor facilities-based competitors as opposed to those who resell or bundle networks.
In general, Obama's FCC Commissioner Wheeler was more friendly to social media and Silicon Valley companies. He was a more sympathetic friend of competitors such as competitive phone companies and more willing to use regulation as a tool, which he thought necessary to protect smaller competitors and ultimately consumers.
Pai, on the other hand, believes the marketplace is the best arbiter of these issues and he favors facility-based competition. He feels that genuine competition comes from infrastructure and generates jobs. Pai looks at the FCC as a more neutral arbiter, an umpire calling balls and strikes, rather than trying to influence the decision.
Just another area Obama tinkered with to reward his supporters. So much to be done and so few years to do it all.
Allow the market to define the top dog...carriers...or, content providers.
Or any assorted combo of either/both. Or perhaps an alignment that hasn’t been conceived yet.
This is the right answer.
As a Verizon retiree I could care less.
You care if they can make payments into the pension plan.
These meteor strikes continue: witness the rise of clouds, voice over IP such as Skype, Ooma, and Vonage; and the hundreds of carrier-neutral data centers in the last several years. The giant providers AT&T and Verizon have their mobile phones, but they are still feeling deep pressure to move into content -- and somewhat follow Comcast's lead.
Agree! As a retired employee of Illinois Bell, Southwestern Bell, American Bell, AT &T, GTE and Bell Atlantic (Verizon) and pension checks from Lucent, Allcatel and now Nokia, I don’t care either.
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