Brendan Bordelon

When the Federal Communications Commission unveiled a new regulation to regulate the $45 billion “business data services” market, many in the industry were surprised the rules didn’t include price caps on newer, Ethernet-based technology. A nonbinding agreement reached summer 2016 between two key players — incumbent carrier Verizon and the competitive-carrier trade group INCOMPAS — included Ethernet price caps. The goal for both the FCC and some in the industry is to curb anti-competitive pricing of the bulk data connections that power ATMs, retail transactions and cell phone towers. Most observers — including some inside the FCC itself — expected the commission’s final rule to track closely to the Verizon/INCOMPAS deal. The rule, which is actually quite different from that agreement, is currently on circulation among the five commissioners. A vote on it could come at any time, but it has not been included on the docket for the commission’s open meeting on Oct 27.

There are competing reasons why the commission excluded Ethernet price caps in the rule, apparently. The main reason is that a thorough examination of its marketplace data showed insufficient evidence that the Ethernet market was noncompetitive. Recent data revealed an uptick in Ethernet competition, driven in part by the entrance of cable companies into the bulk data marketplace. It would be premature to regulate the price at this point. Apparently, there are additional reasons, beyond the main argument about inconclusive data, that explain why the commission didn’t include Ethernet price caps in its latest version. The FCC lacked the pricing data that would make the caps capable of effectively withstanding a legal challenge. In addition, apparently some regulators were concerned by unworkable provisions in the Verizon/INCOMPAS proposal to cap Ethernet prices by census blocks. What’s more, apparently regulators were worried about industry reaction to earlier FCC orders that exempted some bulk data providers from regulation.

Telecommunication companies Sprint, Frontier Communications and Windstream Services released a joint filing to the Federal Communications Commission expressing their support for upcoming FCC rules that may place price caps on the data services that power transactions at retail outlets and ATMs. They simultaneously urged the commission to adopt a tiered approach to the new rules for business data services, or BDS, that would favor smaller carriers.

The filing marked an about-face for Frontier, which has long resisted changing the market in which bulk data connections are sold directly to businesses from phone companies. Frontier said the latest agreement is satisfactory. “Yesterday’s filing by Frontier, Windstream, and Sprint reflects a consensus approach which affords the smaller price-cap carriers a reasonable transition period to adjust to potential reductions to BDS rates,” spokesman John Puskar said in a statement.

Federal Communications Commission Chairman Tom Wheeler said his agency will vote on new rules on business data services “by the end of the year.” “Action on this issue is a long time coming, but that time has arrived,” Chairman Wheeler told an audience at the National Cable and Telecommunications Association’s annual convention in Las Vegas (NV).

An FCC proposal aiming to revamp the business data services (BDS) market, also known as “special access,” was adopted by the agency in April. The proposed rule would impose price caps on the bulk data connections that telecommunication companies provide to businesses, particularly in markets deemed uncompetitive. “In many areas, competition in the supply of backhaul remains limited,” Chairman Wheeler said. “And that can translate into higher costs for wireless networks, higher prices for consumers, and an adverse impact on competition.” He said the FCC’s proposal will “encourage innovation and investment” while “ensuring that lack of competition in some places cannot be used to hold 5G hostage.” Chairman Wheeler said the commission’s proposal is “supported by the nation’s leading wireless carriers, save one.”

House Committee on Oversight and Government Reform Chairman Jason Chaffetz (R-UT) said that his panel will soon issue a report on the federal government’s use of simulated cell phone towers, also known as “stingrays.” “You’d be shocked — shocked — at what your federal government is doing to gather your personal information,” Chairman Chaffetz told an audience at the American Enterprise Institute. Chairman Chaffetz was at AEI to discuss his committee’s latest report on a series of wide-ranging cyberattacks against the Office of Personnel Management from 2012 to 2015, which saw the personal information of 22.1 million Americans with ties to the federal government stolen by hackers. The probe found that the hacks occurred because of OPM leaders’ repeated failures to heed inspector general warnings that its cybersecurity infrastructure was lacking. The committee report also found that OPM leaders failed to implement basic, required security controls and deploy high tech anti-hacking tools once it became evident that hackers had penetrated their databases.

Chairman Chaffetz said that his committee’s upcoming report on the federal collection of personal information through “stingrays” has even more outrageous findings. “They can’t keep it secure. That’s the point,” he said. “I don’t trust them, they’re not doing the basics, and they want to collect more data.”

Federal Communications Commissioner Mignon Clyburn really wants you to know she’s not one of those “inside the Beltway” types. That may seem hard to believe coming from the daughter of Rep Jim Clyburn (D-SC), a congressman since 1993 and the No.3 Democrat in the House. But until she took the FCC job in 2009, Commissioner Clyburn never left her home state for more than a few weeks at a time. “I did not come up to DC to be like a lot of others (respectfully, this sounds a little tough) that I see in DC, who always want to be picture perfect, wrapped up in a bow, and ready for presentation,” Commissioner Clyburn says. “I am very different if you to compare me to my colleagues,” she said. Referring several times to her “Southern accent,” she said, “I am very much outside of the Beltway.” Commissioner Clyburn’s quiet and poised demeanor strikes a sharp contrast to FCC Chairman Tom Wheeler, the physically imposing FCC Chairman who exudes a larger-than-life political presence. Yet for nearly six months in 2013, Commissioenr Clyburn sat in Chairman Wheeler’s chair. She was acting FCC Chairwoman while Congress deliberated over Wheeler’s confirmation. There was a historic nature to her chairmanship.