FCC Initiates Rulemaking to Modernize Business Data Services Rules Impacting A-CAM Carriers

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The FCC has released a notice of proposed rulemaking that seeks comment on various new rules that would allow Alternative Connect America Model (A-CAM) carriers receiving USF support to voluntarily migrate their lower speed time division multiplexing (TDM) services, otherwise known as business data services (BDS), from rate-of-return regulation to price-cap, or incentive, regulation. This move, the Commission believes, would encourage more efficient network operations and allow carriers to avoid expending unnecessary resources on regulatory compliance.  BDS provides dedicated, reliable, secure connectivity for bank ATM networks, retail credit card readings, and other lower-bandwidth data operations.  A-CAM carriers are rural carriers whose pricing was historically governed by rate-of-return regulations, such that they reported costs annually to the FCC and were allowed a “rate-of-return” set by the FCC on those incurred costs.  In 2016, over 200 rate-of-return carriers opted to base their level of USF support on A-CAM rather than costs, leaving only their BDS under cost-based regulation. According to an FCC news release, A-CAM carriers that migrate to incentive (price-cap) regulation for BDS will no longer need to conduct expensive cost studies.  The notice of proposed rulemaking also seeks comment on several other issues impacting rate-of-return carriers and BDS.

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