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NCTA Has Major Problem With Special Access Proposal

The National Cable & Telecommunications Association has taken aim at FCC chairman Tom Wheeler's support for a proposal by Verizon and INCOMPAS that the FCC potentially regulate cable special access (business broadband) rates.

In meetings with FCC officials, according to an ex parte filing, NCTA executives said they had significant concern with "the possibility that the rates charged by cable operators and other facilities-based competitors in the market for business data services could be subject to 'ex ante rate regulation.'"

Rather than considering the incumbent telcos (LECs) as the de facto dominant carriers and regulating them, the proposal, which Wheeler has echoed in his own special access reforms proposed last week, would potentially regulate ILECs or their telco competitors (CLECS) or cable operators in the interests of competition.

Wheeler has called that a tech-neutral approach. The NCTA called it off base.

"[A]ny finding that competitive entry has been insufficient to affect the prices offered to consumers (e.g., because competitors do not offer the same range of services or their networks have limited geographic reach) necessarily means that the incumbent LEC remains dominant and should be regulated accordingly."

Verizon, INCOMPAS and Wheeler all propose moving away from a dominant/nondominant model of determining where regs are appropriate.

The NCTA said it is not endorsing routine rate regs on anyone, saying the market for business broadband had never been more competitive, thanks in part to cable, whose share has grown "substantially." But it said that where prices are not responding to completive pressures, it makes more sense to continue regulating incumbent rates rather than impose rate regs on new entrants.

Wheeler recently defended the "tech-neutral" approach as a way to spur 5G build-outs, but the NCTA said that theory is "backwards."

"If 5G services will need denser and more robust backhaul starting a few years from now," NCTA told the FCC officials, "the Commission should be taking steps now to encourage the construction of those facilities. But what provider is going to pursue this market opportunity if the 'reward' for taking the risk of building new fiber facilities is an obligation to provide access to wireless carriers at rates established by the Commission?"

The FCC is basing its special access reforms on a major, years-long data-collection effort. The NCTA, which has had issues with that collection in the past, said, "[I]t would be wholly inappropriate for the commission to reach any tentative conclusions about the state of the marketplace or the appropriate course for regulation based on a non-public analysis prepared by a single entity."