US Telecom, a trade association representing large and mid-size broadband service providers and suppliers for the telecom industry, and ITTA, a trade association advocating for wireline broadband service providers, have jointly-filed a petition for rulemaking with the FCC requesting that “model-based rate-of-return carriers be permitted to opt into existing price cap regulation for their provision of BDS [(business data services)], subject to certain conditions.” In April 2017, the FCC, under new Chairman Ajit Pai, released a report and order deregulating BDS pricing rules, but only for a subset of service providers. Specifically, the FCC’s newly promulgated rules impact only price cap carrier BDS and specifically exclude model-based rate-of-return carriers. Furthermore, these new rules impact regulation of only TDM-based providers and not packet-based providers. For practical purposes, this means that any price cap ILEC offering at least DS3 speeds and serving a “competitive” county will be relieved of ex ante pricing regulation, in large part because the Commission now believes that “the future of business data services are readily scalable, so competitive LECs are generally very willing to deploy such services beyond their footprints because they can expect to earn increasing revenues from their initial investment with few additional costs.” Under the new regulatory regime, any counties that are deemed “non-competitive” will have TDM-based ILECs still facing regulatory burdens while CLECs or cable companies will not face such regulatory. The joint petition argues that model-based BDS providers, including USTelecom and ITTA’s members, should be allowed to opt-in to the same deregulated framework not made available to price cap carriers.
