The FCC became interested in the subject after looking into special access rates charged by telecoms AT&T, Verizon, CenturyLink and Frontier. It decided to force those companies to change certain tariffs within 30 days, finding them "unjust and unreasonable." However, the commission has no power over the special access rates charged by cable companies, which only entered that market recently. After concluding its investigation, it elected to include them in the regulation fun for the first time.
The National Cable & Telecommunications Association (NCTA) and cablers like Comcast are (trying) to have none of this. Their main argument is that they just entered the wholesale market, and the FCC traditionally doesn't regulate prices for newcomers. "In this upside-down new regime, a competitive cable provider that currently holds a 10 percent share in a market would be treated the same as a dominant incumbent provider serving 90 percent of that market," says Comcast Senior VP David Cohen.FCC Commissioner Tom Wheeler (Bloomberg via Getty Images)
The FCC, however, wants to ensure that prices don't spiral out of control in non-competitive markets. In a statement, it said that "competition in this essential market is uneven ... [which could] stifle the ability of business customers to innovate and compete." It pointed out that excessive wholesale prices could have an especially negative effect on future 5G cellular networks, which will eat up a lot more data than LTE. The decision to regulate cable companies' business data prices was unsurprisingly endorsed by telecoms like Verizon and Sprint, too.
The decision (proceeding 05-25) was, unsurprisingly, passed by a narrow vote, with the Republican commissioners protesting it robustly. The FCC doesn't plan to regulate all special access markets, however. Rather, it's coming up with a way to test regional markets, and both cable and telecom operators considered to be in non-competitive areas would see stricter regulations. It will take several months to determine the final rules, and the commission is now taking public comments.