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October 2016

Business Data Service Reform: A No-Brainer for Both Businesses and Consumers

After a proceeding that has stretched on for more than a decade, the Federal Communications Commission’s largest ever data collection, and numerous delays, the fight over business data services (BDS) reform (previously referred to as “special access” reform) could be nearing its end. FCC Chairman Tom Wheeler has repeatedly promised the FCC is finally set to reform the BDS market this year by lowering the rates that monopoly phone companies can charge to businesses, institutions, and wireless carriers, and promoting new competition and market entry. In Sept, Public Knowledge, along with other public interest and consumer advocates sent a letter to Congress urging Members to support the FCC’s effort in making the BDS market more competitive. Oct 4, we joined 11 other public interest and consumer advocates in a letter to the FCC.

Crucially, BDS reform must address excessive pricing for both legacy TDM services and high-capacity Ethernet services. Failure to address monopoly Ethernet pricing only preserves incumbent carrier monopoly pricing and green lights anti-competitive behavior in the future. Even with a wealth of information indicating that the BDS market is broken and controlled by monopoly telecom providers, opponents are still fighting to delay or kill the common sense reforms that business customers, consumers, wireless carriers, and the vast majority of the telecom industry have coalesced around. Opponents of BDS reform are using the only tool in their arsenal – calling for more delay and questioning the FCC’s process. These are losing arguments, and tired tactics. The evidence overwhelmingly shows there are only one or two BDS providers in a majority of customer locations. The FCC must act now to create much needed incentives for competition in the BDS market while protecting consumers and promoting economic growth. For too long, businesses and consumers have been hurt by exorbitant rates while BDS providers have seen windfall profits. It’s not often that both businesses and consumers benefit from new regulations, but in this case, BDS reform is a no-brainer for both sides.

Cable service providers need to offer more than ‘dumb pipes’

[Commentary] The notion that telecommunication company carriers and other service providers have provided little more than basic connectivity has been an industry hot button for quite some time. Even now, despite a number of efforts to spice things up, most telecommunication companies and cable service providers are seen as companies that provide a very indistinct connectivity service that people only reluctantly pay for. The primary differentiators for competitive players in this space are price, price and, oh yeah, price, with maybe a bit of coverage or service quality thrown in for good measure. It’s little wonder that many consumers hold these companies in such low esteem — they just don’t see the value in the services beyond basic connectivity. It’s also not surprising that so many people are looking at cord-cutting, cord replacement and other options that attempt to cut these service providers out of the picture. But it doesn’t have to be this way.

The amount of data that telco and cable service providers have access to should allow them to generate some very interesting, useful and valuable services that consumers should be happy to pay for. Admittedly, there are some serious privacy and regulatory concerns that have to be taken into consideration, but with appropriate anonymizing techniques, there are some very intriguing possibilities. The fundamental problem is that service providers act more like utilities than companies that offer services people are happy to pay for, such as Netflix. There’s little sense of personalization or differentiation from service providers, and the aforementioned router/gateway boxes they currently force into consumers’ homes are a classic example of that utility style of thinking. Honestly, if your power company was to put a box into your home, do you think it would look much different?

[Bob O’Donnell is the founder and chief analyst of Technalysis Research LLC, a technology consulting and market research firm that provides strategic consulting and market research services to the technology industry and professional financial community.]

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