By a party-line vote of 3-2 last Thursday, the FCC launched further rulemaking proceedings that aim to replace the FCC’s current regulatory approach to business data, or “special access,” services with a new “technology-neutral framework that classifies markets as either non-competitive or as competitive.”  Valued at $45 billion, the U.S. special access market sources the high-capacity broadband connections used by thousands of businesses to facilitate ATM and credit card transactions and a host of other essential services. 

Citing data collected over a period of years in the FCC’s long-running special access proceeding, the FNPRM concludes that “competition in this essential market is uneven, and . . . the FCC’s existing rules have failed to identify markets where competition is lacking, even as they have failed to identify competitive markets.”  As such, the FNPRM seeks public input on ways in which the FCC can reform and modernize the special access rules in accordance with four principles.  These principles state that (1) technology neutrality should be at the core of any new regulatory framework, (2) barriers “to the transition to new technologies” should be removed, (3) new policies should “meet the needs of both today’s and tomorrow’s marketplace,” and (4) where competition is found to be lacking, “market conditions must not be allowed to stifle the ability of business customers to innovate and compete.” 

While the FNPRM proposes that “tariffs should not be used in the future as part of the regulation of broadband data service in either competitive or non-competitive markets,” comment is requested on safeguards to protect consumers in non-competitive markets that include “the use of price regulation and the prohibition of certain tying arrangements that harm competition.”  Defining competitive markets as “those in which material competitive effects are present,” the FNPRM also seeks comment on which factors should be used to assess competition.  The proposed technology-neutral framework would also extend the rules to providers of special access services in the cable industry. 

Although FCC Chairman Tom Wheeler asserted that the FCC’s goal is to achieve “a level playing field,” FCC Commissioner Michael O’Rielly lamented the agency’s plan to subject cable providers to special access rate and other regulation in the name of technology neutrality.  Emphasizing that “cable’s entry into the market for business data services over the last few years has resulted in improved services and lower prices,” a spokesman for the National Cable & Telecommunications Association voiced disappointment “that Chairman Wheeler is responding to this unquestionably positive development by asking the commission to consider imposing onerous new rate regulation on these competitive services.”