FCC Moves To Make Life Easier For Business Broadband Monopolies

By now, most people understand that the residential broadband market simply isn't very competitive. They also understand that's in large part due to the lobbying and financial stranglehold many providers have over both state and federal lawmakers and regulators. But however uncompetitive the residential broadband market is, the business "special access market" (often called Business Data Services (BDS)) is notably worse. This important but overlooked segment of the telecom market connects schools, cell towers, ATMs, retailers, and countless others to the internet at large.

But consumer groups and smaller companies for years have complained that this segment suffers under an absurd amount of monopoly control, resulting in many companies and organizations paying sky-high rates for basic connectivity. According to the FCC's own data (pdf), in the lion's share of markets, 73% of the special access market is controlled by one provider (usually AT&T, CenturyLink or Verizon), 24% usually "enjoys" duopoly control, and only a tiny fraction of markets have more than two choices of BDS providers providing this key connectivity.

After ten years of industry bickering and lobbying, Tom Wheeler last year began seriously exploring changes to special access rules, including price caps on how much these monopolies and duopolies can charge smaller companies (and in wireless, smaller competitors). By and large the FCC avoids broadband price caps like the plague, and the effort to impose limits on the BDS market reflected just how incredibly uncompetitive the special access market had become. But the rules were never finalized, and new FCC boss Ajit Pai was quick to throw away the decade-long reform effort.

Instead, Pai has proposed deregulating this captive market even further, a massive win to the incumbent monopolies and duopolies that control it. In a blog post, the FCC boss was quick to insist that competition in this sector is actually growing, and his (read: AT&T and Verizon's) proposal will be sure to keep regulations in place in areas where it isn't:

"The extensive record compiled by the Commission's excellent staff shows substantial and growing competition in many areas of the country, thanks to new market entrants like cable companies. Where this competition exists, we will relax unnecessary regulation, thereby creating greater incentives for the private sector to invest in next-generation networks. But where competition is still lacking, we'll preserve regulations necessary to prevent anti-competitive price increases."

But, as with much of Pai's particular brand of FCC leadership, what the FCC boss says -- and what he does -- are often very different things. Ars Technica is quick to highlight that Pai's proposal has a rather unique definition of "competition." Namely, the proposal declares a market "competitive" if there's just one additional broadband provider anywhere in a half mile radius:

"Pai's definition of "sufficient competition" has drawn fire. The plan would treat an entire county as competitive "if 50 percent of the locations with BDS demand in that county are within a half mile of a location served by a competitive provider." A county would also be considered competitive if 75 percent of Census blocks in the county have a cable provider."

Pai is part of a segment of revolving door regulators and other industry allies that often comically deny any competition issues in the broadband space -- whatsoever. Their solution is consistently blind and blanket deregulation, laboring under the belief that less regulatory oversight -- combined with no real competition -- somehow magically forges telecom Utopia. And while deregulation certainly does aid competitive, innovative markets, blind deregulation of the telecom market time and time again only serves to make competition issues worse. Just ask a Comcast customer.

The FCC is poised to vote on the deregulation of the uncompetitive BDS market on April 20 (and likely already voted to approve this effort by the time you read this). Lawmakers like Senator Ed Markey and Rep. Ed Doyle had urged the FCC to delay the vote:

"In the BDS market, we need more protections for competitors and small businesses, not great market control by incumbents," they wrote. "We are concerned that the proposed BDS Report and Order does not adequately promote competition or apply appropriate pricing protections where competition does not exist."

BDS being an important but wonky and under the radar market for consumers and the press -- Pai should be able to ram this vote through without much public scrutiny. As such, Pai's moves to gut rules governing the BDS market are set to join a growing chorus of other "accomplishments" we've seen so far under Pai, such as making it easier for prison monopolies to rip off inmates, the dismantling of efforts to improve cable box competition, the erosion of efforts to bring broadband to the poor, and his looming attempt to kill net neutrality. You'll notice one, consistent beneficiary to Pai's agenda -- and it sure as hell isn't you.