2005 was an awfully long time ago, when the world looked a lot different than it does today.  Beyoncé hadn’t gone solo yet and was still topping the charts with Destiny’s Child – Lemonade wouldn’t be released for eleven more years.  The last reboot of the Star Wars franchise was still in theaters with Star Wars Episode III: Revenge of the Sith (remember Jar-Jar Binks?).  Mr. & Mrs. Smith was a box office hit, signaling the birth of “Brangelina.”  Myspace was the darling of the social networking world. And Blackberry phones were the latest craze.

2005 was also the year in which the FCC launched its Business Data Services docket. Competition in what were then called special access services was growing but there was debate on just how pervasive it was.  However, that debate was mostly fueled by rhetoric – there was a dearth of factual evidence on the full extent of BDS competition.

This week, after the largest data collection in FCC history, the Commission is finally moving forward toward resolution of this decade-plus-old proceeding based on an incredibly robust factual record.

And what that record makes clear is that BDS competition has exploded – new entrants have built out their own fiber-based networks, and cable companies have aggressively targeted the business services marketplace with fiber-based Ethernet, Ethernet-over-HFC, and high-speed best efforts broadband made available through DOCSIS 3.0 and DOCSIS 3.1 (technologies delivered, in large part, over cable’s existing HFC networks).  As of 2013 there were 491 facilities-based companies providing BDS in the enterprise market.

Competitive LECs, not including cable providers, earned $23 billion of the $45 billion in BDS revenues in 2013.  And cable’s share of this sector has been increasing at a rapid pace.  Cable business data services are reported to have grown at approximately 20% annually for the past several years, with services that compete directly with BDS products offered by both incumbent and competitive providers.

The data show that there are competitive facilities blanketing the country, fighting for business customers nearly everywhere customers buy these services.  By 2013, competitive providers had already deployed facilities-based networks in more than 95% of MSA census blocks with BDS demand. The record clearly shows that competitive facilities within a half a mile of a customer location materially impacts prices, and, virtually all (98.7%) buildings where customers use BDS are indeed within a half mile of competitive facilities.  On this evidence alone, btw, the Commission would be justified in finding that legacy BDS services are competitive everywhere.  And let’s not forget that the incumbent providers’ legacy services are on the road to extinction as customers continue to transition to higher-speed and more flexible Ethernet services.

Given this competitive landscape, the Commission finally will align its regulation of legacy BDS services (DS1s and DS3s) with economic realities.  The Commission’s order imposes a light-touch regulatory regime on all legacy transport services (where competition for these services is pervasive), while implementing a fact-based Competitive Market Test for legacy BDS last mile connections.

Applying this sensible market test proposed by the FCC will ensure that the BDS marketplace will continue to flourish in areas where competition has taken hold and that existing controls remain in place where the Commission determines that competition is still needed.  These commonsense reforms are grounded in the FCC’s massive data collection and the voluminous record.  And the time to act is long overdue.

Yet, as this proceeding is drawing to a close, some are still arguing for an additional delay, suggesting that resolution of this proceeding is contrary to the facts and will slow the deployment of 5G services.  These objections miss the mark (and ignore the massive pile of competitive data compiled by the FCC).  Removing unnecessary regulatory burdens will increase investment, particularly in fiber facilities, and create jobs.  And, in the end, that incremental fiber investment will be essential to the deployment of the next generation of wireless technologies.

 

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