FCC Action on Rural Business Data Services

The Federal Communications Commission is allowing certain rural telecommunications carriers the opportunity to transition from rate-of-return regulation to light-touch incentive regulation for their business data services. Recognizing the importance of business data services to the nation’s economy, the FCC in 2017 modernized its regulation of those services for large carriers – known as price cap carriers – to encourage deployment of modern, packet-based services. To bring that modernization to rural America, this Order builds on the 2017 framework, which was recently upheld almost entirely by the US Court of Appeals for the Eighth Circuit. The carriers eligible for this modern framework are those that are receiving fixed rural universal service support, typically through a cost model, a framework that is a more efficient alternative to traditional, cost-based mechanisms. This Order:

  • Provides an opportunity for eligible rate-of-return carriers to move their legacy business data services to incentive regulation that is similar to the price cap regulation adopted in 2017. Legacy business data services are those that operate at lower speeds – 45 Mbps (DS3) or less – and use a network protocol known as “time-division multiplexing,” or TDM.
  • Relieves electing carriers’ lower speed TDM-based services that go to end-user customers of ex ante pricing regulation in areas deemed competitive by a competitive market test. These services are known as “end user channel terminations.”
  • Eliminates ex ante pricing regulation of electing carriers’ higher speed TDM-based business data services (above DS3) and their packet-based business data services.
  • Forbears from requiring electing carriers to comply with cost support, cost assignment and jurisdictional separations requirements.

The Further Notice of Proposed Rulemaking seeks comment on creating a pathway to ending ex ante pricing regulation for the lower speed TDM-based transport services of rate-of-return carriers opting in to the incentive regulation framework the Commission adopted today. These services provide higher volume connections between points of traffic aggregation on the network rather than serve end-users. In addition, a Second Further Notice of Proposed Rulemaking addresses a remand in the Eighth Circuit’s decision on the 2017 rules by seeking comment on a proposal to remove pricing regulation of the TDM transport services of price cap carriers.


FCC Action on Rural Business Data Services