Just Because the FCC Is Cutting TDM Access Costs, Don’t Assume It Will Happen

Brian Washburn – Service Director, Business Network and IT Services

Summary Bullets:

• The FCC is getting ready to release an Order forcing double-digit rate cuts to DS3/DS1 special access services over three years.

• Enterprises looking for cost savings have a surer bet moving to Ethernet on broadband and/or fiber access alternatives wherever available.

The U.S. Federal Communications Commission (FCC) appears finally to be in the home stretch of a move to force incumbent carriers to reduce rates for certain types of access. Specifically, after much back and forth on details, the proposal is now tilting to an 11% blanket rate decrease in access costs implemented over three years, from July 2017-2020, and by 3% per year after that (adjusted by inflation). These new price protections cover dedicated access services at speeds below 45 Mbps — that puts a bull’s-eye on the venerable DS3 and DS1 circuits. Also planned are new price protections for buyers, and more power for the FCC to handle complaints.

Cable Operators Get the Go-Ahead to Buy Local Exchange Competitors

Brian Washburn

Summary Bullets:

• FCC forbearance paves the way for cable providers to acquire CLECs operating in the same footprint. For business services, cable providers could blanket entire markets instead of dealing with patchworks of franchise territories.
• The survival tactics honed by CLECs in the last 15 years of competition could be a big marketing, sales and customer service/support shot in the arm for cable operators’ business services practices.

As of September 2012, the FCC will no longer prevent cable companies and competitive local exchange carriers (CLECs) from owning each other. That prohibition goes back to the Telecommunications Act of 1996: cable operators and local exchange carriers serving the same footprint could not own more than 10% interest in each other, or have any management control over the other. Fifteen years ago, the idea made sense. Cable and Bell companies had started to square off in competition that benefited consumers; the prohibition kept competitors in the same footprint from merging to become utterly dominant. In this case, the law of unintended consequences prevented cable providers from getting into the telco business by buying CLECs, or telcos from getting into the video business by buying a cable overbuilder. Comcast managed acquisitions of providers Cimco and New Global Telecom, but had to go through detailed regulatory reviews.