Wheeler Seeks 'Fresh Start' on Special Access, Calls 'BDS' Market Key to 5G

Wheeler said he is in “significant accord” with the proposal of Incompas and Verizon Thursday calling for a new special access approach. He said “the marketplace is changing, fast,” with new technologies and entrants such as cable playing a growing role in the business data service (BDS) market, and sometimes altering the competitive dynamics.

BDS is key for 5G wireless and the IOT, Wheeler said, calling U.S. 5G leadership a national priority. Densely packed 5G cell sites will require expanded backhaul, a BDS service, he said. “Without a healthy BDS market, we put at risk the enormous opportunity for economic growth, job creation and U.S. competitiveness that 5G represents,” he said, but competition is “uneven” despite cable entry and growth. The comparison of BDS to oil by Public Knowledge Senior Vice President Harold Feld is apt, Wheeler said: Like oil, the cost of BDS is built into virtually everything that uses telecommunications, even if consumers never buy it directly.

Wheeler called for a “competition-triggered deregulation framework" for BDS that discards dominant/nondominant classifications while deregulating competitive markets. He said it would be built on four principles that he outlined last week in a blog post: promoting competition, technological neutrality, the IP transition and regulation that is consistent with the market, including by ending tariffing for all BDS products. He proposed the FCC develop a new test to identify markets where “current and potential competition is bringing material competitive effects to customers,” removing the need for regulation beyond traditional telecom oversight. But in areas without competition, "we should ensure that business customers are not overcharged and competition not unfairly disadvantaged,” he said. A draft tariff order would outlaw ILEC provisions that impose “all or nothing” contract decisions or “excessive” penalties on business customers, he said.

Wheeler said his policy proposals were “not set in stone,” even if the principles are firm. “We are asking a lot of questions” in the proposal, he said. “We want to listen, and to learn, and, ultimately and quickly, to act.”

There is a “growing consensus” in the telecom industry, which is “almost united” in seeking a more pro-competitive special access framework, Incompas CEO Chip Pickering said, speaking at a panel session before the Wheeler speech. With Verizon's decision to join with Incompas (which includes Sprint and T-Mobile as members) in making a joint proposal, three of the four major wireless providers along with others, including major U.S. tech and international telecom players, now recognize the critical importance of revamping special access, given its role as an economic input, Pickering suggested.

Senior officials of Incompas member companies said the special access market suffers from too little competition but they welcome the FCC's move. Sprint's Chief Operating Officer-Technology Gunther Ottendorfer said FCC-collected industry data showed that 97 percent of the business market is either a monopoly or duopoly, leading to high costs and slow and unreliable wholesale provisioning timelines. Level 3 Chief Technology Officer Jack Waters said his company has connections to 42,000 buildings, but still relies on partners to reach many others. He called the Wheeler draft item “a great step for our industry.” BT Americas Senior Vice President Colin Spence said the last mile remains the “choke point.” The commission is moving in the right direction, he said.

In his speech, Wheeler called watching video the new national pastime, with consumers looking to mix and match packages of programming, but he also said there are threats to the market. “Notably, it can be artificially blunted by incumbent pay-TV providers, who can play both ends against the consumer in the middle by supplying broadband connectivity to online providers while at the same time competing with the emerging video providers for viewers,” he said.

Wheeler said the FCC's set-top proposal is needed to stimulate competition in the retail market and would protect both copyright and consumer privacy. Some see shortcomings in the proposal, he said. “Whether these concerns are more than a smoke screen for their overall opposition to the idea of competitive set-top boxes will be determined by whether there is input about how best to write language to accomplish our goals of protecting copyright and privacy,” he said. “We clearly believe our proposal protects both copyright and privacy, but if it can be made better, we are open for suggestions.”

Citing net neutrality, Wheeler said broadband must be “fast, fair and open.” He noted the commission is reviewing broadband provider zero-rating and data-cap practices. “There is no definite end date or predetermined outcome for this inquiry, but there are principles,” he said. “Here's one obvious principle that has been a constant underpinning of FCC precedent for decades: An incumbent should not be able to use its position as a gatekeeper to unfairly discriminate against unaffiliated content or services that may, today or tomorrow, pose a competitive threat to the incumbent's own business. It's a simple concept.”