FCC Takes Action on Rural Business Data Service Rate Regulations

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The FCC has released a Report and Order, Further Notice of Proposed Rulemaking, and Second Further Notice of Proposed Rulemaking addressing the issue of business data services (BDS) in rural markets. In April 2018, the Commission adopted a Notice of Proposed Rulemaking which sought comment on adjusting the treatment of BDS for rate-of-return carriers receiving model-based or other fixed high-cost support to a framework akin to the approach for price cap carriers. A year earlier, in April 2017, the Commission adopted a framework for BDS for price cap carriers. The U.S. Court of Appeals for the Eighth Circuit largely affirmed this approach and instructed the Commission to narrow the issue of notice for deregulation of price cap carriers’ transport services nationwide. The FCC’s Report and Order: (1) provides an opportunity for eligible rate-of-return carriers to move their legacy BDS to incentive regulation that is similar to the price-cap regulation adopted in 2017; (2) relieves electing carriers’ lower speed TDM-based services (i.e., “end user channel terminations”) that go to end-user customers of ex ante regulation in areas deemed competitive by a competitive market test; (3) eliminates ex ante pricing regulation of electing carriers’ higher speed TDM-based BDS (above DS3) and their packet-based BDS; and (4) 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 in the Report and Order. The Second Further Notice of Proposed Rulemaking addresses the remand of the Eighth Circuit’s decision in 2017 and seeks comment on a proposal to remove pricing regulation of the TDM transport services of price-cap carriers.

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