Setting the Record Straight: High-Capacity Business Services
Advancing broadband adoption and deployment is a vital national objective. Broadband will create jobs, stimulate our economy and provide benefits to other industry sectors, such as health care, transportation and energy. Critical to this national objective is the investment to upgrade our communications networks for the services and applications of broadband. However, some interests are urging adoption of policies that will short circuit this investment by increasing regulation of a subset of entities that have already deployed high capacity services.
The arguments being presented by this new organization have been raised before and broadly dismissed as misleading and inaccurate. Here’s what they aren’t telling you:
They Won’t Provide Data to Back Up Their Claims
These interests have repeatedly refused to document their claims, even in response to inquiries from GAO, the FCC, and state regulators in their attempt to assess competition. Without information about the presence of competitive alternatives in the marketplace, policymakers cannot make an informed decision on the need for increased government intervention.
Even Their Own Press Releases Acknowledge Rising Competition
There are many signs that the market is growing more competitive. There are at least nine national competitors and dozens of regional competitors, including competitive fiber providers, cable companies, fixed wireless companies, and systems integrators. Prices also are substantially lower than they were in 2001. Independent third party studies from the Government Accountability Office (GAO, 2006) and the National Regulatory Research Institute (NRRI, 2009) confirm that prices continue to fall. Meanwhile, those companies asking for price control for high-capacity services are issuing press releases trumpeting new deals and competitive offerings for their own competing services.
Today’s Policy is More Nuanced and Balanced Than They Admit
Nearly 2/3 of the metropolitan statistical areas (MSAs) in the U.S. remain under price cap regulation. Only where the FCC determines that competition is adequate does the government step back and allow competition to set the prices. This approach strikes a fair balance and was set by a Democratic FCC and a Democratic Administration in 1999.
Bottom Line: They Want Policies that Minimize Their Own Investment in U.S. Broadband
The U.S. needs enormous and sustained broadband investment. One example of the new investments necessary to keep up with exploding demand for broadband is building new higher capacity connections to cell towers While some new wireless broadband companies are investing in building their own connections, others choose to buy service from existing sources. Why? Because, according to the former CTO of Sprint, these existing services from incumbent carriers are “relatively abundant and inexpensive.”
If They Win, Consumers Lose, Because Network Investment Will Be Discouraged
We have seen over and over again that greater regulation is not the path to greater investment and economic growth. Providing high-capacity services is extremely capital-intensive, and the current balanced policies have resulted in attracting an estimated $60 billion in investment each year. New price controls on special access would distort the marketplace and thwart just what the nation needs most today—investment in next-generation technology and network upgrades from a diverse array of market players.
Their Demands Should Not Come Before the Nation’s Need for Universal Broadband
Perhaps most disconcerting is the insistence that securing more sizable discounts on high capacity services offered by incumbent carriers should somehow be the top priority of the FCC. From reaching unserved areas to stabilizing universal service and intercarrier compensation, there are far more high-stakes debates with a far broader public interest.
Our view? The current policy is balanced, promotes increased investment, protects customers in areas with fewer competitive alternatives and encourages diverse investment and competition. The FCC and policymakers should not be intimidated into fast action in the absence of basic facts.
Additional Resources:
Setting the Record Straight (.pdf)
The Facts about Special Access (.pdf)
Special Access: Myths and Facts (.pdf)
The United States Telecom Association, USTelecom, is the premier broadband trade association representing service providers
and suppliers for the telecom industry. USTelecom represents companies offering a wide range of services across the communications
platforms, including voice, video and data over local exchange, long distance, wireless, Internet and cable services.