New FCC Rules Seek End to Monopoly Pricing on 'Business Data Service'

NEWS ANALYSIS: The Federal Communications Commission wants to end monopoly pricing for business data services, which are critical to cell tower operations, ATM networks and other dedicated network access.

FCC BDS Rules 2

The chances are, you've never heard of Business Data Services, probably because it's a new name recently coined by the Federal Communications Commission in place of what was previously called "special access."

The chances are you've probably not heard of special access either. While it hasn't received much attention, it's one of the last remnants of the old monopoly days of telecommunications in the United States.

Business Data Services are those network connections that live in the background of nearly everything we do. These services connect most cell towers to the public switched telephone network; they provide communications to banks for their ATMs; they're used by schools and libraries and by companies that need a fast connection to the internet.

In the case of cell towers, they form a particularly tricky situation in which cell towers for one company may be forced to use a network provided by a company that competes directly with them.

In addition, Business Data Services are almost always a monopoly in certain areas, except when they're part of a duopoly. As you can imagine, this means that users of these network services are at the mercy of the telecom companies that provide them both in terms of pricing and provisioning. That means that if Verizon doesn't feel like making a fair deal for a Sprint cell tower, for example, it doesn't have to.

Back in the days of the failed AT&T–T-Mobile merger in 2011, special access (as it was called then) was a major issue. To try to resolve the issue, T-Mobile contracted for Gigabit Ethernet services from third-party companies as a way to avoid special access charges.

That was when the FCC decided to restart its inquiry into this form of telecom network access. Five years later, after issuing an official notice of proposed rulemaking and a comment period that closed on August 9, the Commission is ready to move forward.

While the FCC invited comments from the incumbent carriers who provide BDS and from public interest organizations, the general direction planned by the commission was already clear. The FCC believed that competition is lacking in the BDS market and that if competition isn't forthcoming, then the pricing and policies of the service providers must not be allowed to stifle innovation and competition.

The FCC also believes that any regulation of these data services needs to be technology neutral and must allow for the needs for today's marketplace as well as any new markets that emerge in the future. In addition, the FCC has found that the tariffs filed by the four major communications providers have terms and conditions that are "unjust and unreasonable, and had the effect of decreasing facilities-based competition and inhibiting the transition to new technologies."

Wayne Rash

Wayne Rash

Wayne Rash is a freelance writer and editor with a 35 year history covering technology. He’s a frequent speaker on business, technology issues and enterprise computing. He covers Washington and...