Diane Holland

BDS Reform Should Put Broadband First


Getting mired in the weeds of important (but sometimes mind-numbing) details of FCC proceedings can distract from the big picture goal we all share: making sure broadband is available to all businesses and consumers throughout the nation.


Accomplishing this will take a continuing commitment from providers that have already invested billions of dollars to build modern fiber networks. Increasing investment in new broadband infrastructure will directly create jobs, economic opportunities and more competition. Accomplishing this will require a different mindset from some business broadband providers that have depended on government-mandated price controls and network access that amount to corporate welfare, enabling them to purchase and repackage others’ services rather than build their own networks.


Their short-sighted (and misguided) view is that this business model brings more competition. The truth is these mandates discourage investment in building business broadband networks. Less broadband investment and infrastructure building means there will be less real, sustainable competition.


Today’s business broadband, or Business Data Services (BDS), marketplace is markedly different from when these services were known as “special access” just a few years ago. New competition from cable companies and others means that “incumbents” now have less than half the market.


A regulatory update to reflect this new marketplace reality is undoubtedly overdue. Rather than just replacing the current regulatory structure with one that classifies markets as either competitive or non-competitive, the FCC also needs to consider the type of competition. Providers with sunk investment in modern network facilities are on solid ground, ensuring their ability to innovate and expand for years to come. But “ersatz” competitors that rely on wholesale purchase of outdated services are clinging to an unsustainable business model. Why? The end game is more fiber and new technologies for everyone. Growth comes from investment and building better networks, not relying on the competition and the government to keep you in business.


Those asking the FCC to keep or even add more price controls under the guise of promoting competition are pushing the agency the wrong way. Federal micro-management of business services is not going to incent new investment.


By opening up the Universal Service Fund to support broadband, the FCC put all of its chips behind the investors and builders of broadband in rural areas, betting that they will help get more Americans online. Likewise, the agency’s IP transitions proceeding is all about setting the regulatory stage for new services and technologies to replace old ones.


Prolonging the price regulation of Ma Bell’s old business services will only slow the progress of upgrading networks and services that America’s businesses depend on. It will take money and other resources away from providers that would rather be investing, building and innovating.