Today, the FCC issued its Report and Order and Further Notice of Proposed Rulemaking (“Order”) in the special access proceeding. In this Order, the FCC continues the process of reviewing its special access rules to ensure that they reflect the state of competition today and promote competition, investment, and access to dedicated communications services for businesses across the country that rely on special access services in delivering their products and services to American consumers. The FCC also initiates a comprehensive mandatory data collection effort, including an extensive list of questions and definitions, but the timetable for response to these questions is deferred until the Wireline Competition Bureau (“Bureau”) provides instructions for the questions and sets the deadlines. The Commission also seeks comment on a proposal to use the data to evaluate competition in the market for special access services.
A number of parties have expressed concerns over their ability to answer the FCC’s data requests. We are continuing to work with a number of clients on these issues, and would be happy to assist you with your responses to the request when they are issued by the Bureau. Please feel free to contact us if you have any questions or would like to discuss strategy with respect to your responses to the FCC’s data request or the special access proceeding generally.
Scope of Order. Providers and purchasers of special access service and certain other services will be required to submit data, information and documents to allow the FCC to conduct a comprehensive evaluation of competition in the special access market. For the purposes of the data collection, mass market Internet access services (e.g., DSL or cable modem service) are not included in the FCC’s definition of special access. In addition, carriers that filed the FCC Form 477 in 2012 to report the provision of “broadband connections to end user locations” must respond to some questions.
Services Covered. Information collected will include the full array of traditional special access services, including DS1s and DS3s, and packet-based dedicated services such as Ethernet. To ensure that it collects data on services that enterprise customers may view as substitutable, the FCC “defines the scope of [its] data collection to include best efforts business broadband Internet access services, which [it] define[s] as best efforts Internet access data services with a capacity equal to or greater than a DS1 connection that are marketed to enterprise customers (including small, medium, and large businesses, as well as existing special access customers).” Data collection is structured somewhat differently for best efforts and special access services to minimize the burden on submitters.
Providers and purchasers that must respond. Data will be collected from all providers and purchasers of special access services as well as some entities that provide best efforts business broadband Internet access services. “Providers” means any entity subject to the FCC’s jurisdiction under the Communications Act that provides special access services or a connection that is capable of providing special access services. Rate-of-return carriers that are not subject to the FCC’s pricing flexibility rules are not considered a “provider” within its rate-of-return service area. “Purchasers” means any entity subject to the FCC’s jurisdiction under the Communications Act, as amended, that purchases special access services.
The FCC will obtain data from special access providers and purchasers of all sizes but it will not require entities with fewer than 15,000 customers and fewer than 1,500 business broadband customers to provide data regarding their best efforts business broadband Internet access services.
Geographic Scope. With some exceptions, data will be collected on a nationwide basis to ensure the most comprehensive and accurate assessment of competition in markets for special access services subject to the FCC’s pricing flexibility rules.
Temporal scope. The data collected will be for calendar years 2010 and 2012 and will pertain to the market structure, price, and demand (i.e., observed sales and purchases). The FCC explained this time series of data will assist it in assessing potential competition.
Nature of Data to be Collected. The FCC explained that the data, information, and documents required to conduct a robust analysis of special access competition fall into five general categories: (1) market structure data, (2) pricing data, (3) demand data (i.e., observed sales and purchases), (4) terms and conditions data and information, and (5) competition and pricing decision data, information and documents.
Because best efforts business broadband Internet access services generally deliver those services throughout their footprint over the same network facilities they use to deliver mass market broadband Internet access, the FCC stated that it will not collect this data at the same level of granularity as the FCC seeks for location and facilities data for special access. The FCC explained that subject to certain exceptions it will require entities that submitted data in connection with the State Broadband Initiative (SBI) Grant Program and offer best efforts business broadband Internet access services to identify, on a granular but not location-by-location basis (ideally, at the census block level), the geographic areas in which they offer those services. The FCC further requires such entities to submit a price list for the best efforts business broadband Internet access services that they offered within their footprint.
The FCC explained that to understand the impact of competition in the special access market, it is important to grasp the effects of potential, as well as actual, competition. To this end, it is requiring the production of information that will illuminate those factors that affect providers’ decisions to expand existing networks, e.g., the non-price factors that may impact where special access providers build new facilities, business rules for deployment, a sample of historical deployment, points of collocation, fiber network maps, availability and use of UNEs, internal analysis of pricing decisions, a selected set of responses to RFPs, and internal competitive analysis.
Role of the Bureau. The data collection inquiries the FCC adopted are attached to the Order; however, recognizing the complexities associated with ensuring that the specific questions asked meet the Commission’s needs as expressed in the Order, navigating the Paperwork Reduction Act (“PRA”) process, and actually collecting, cleaning, and analyzing the data, the FCC delegated limited authority to the Bureau to: (a) draft instructions to the data collection and modify the data collection based on public feedback; (b) amend the data collection based on feedback received through the PRA process; (c) make corrections to the data collection to ensure it reflects the Commission’s needs as expressed in the Order; and (d) issue Bureau-level orders and Public Notices specifying the production of specific types of data, specifying a collection mechanism (including necessary forms or formats), and setting deadlines for response to ensure that data collections are complied with in a timely manner, and (e) take other such actions as are necessary to implement the Order. The FCC emphasized that “[a]ll such actions must be consistent with the terms” of the Order.
Effective Date of the Order. The Order, with all attachments, is effective sixty (60) days after publication in the Federal Register, except for those rules and requirements (including responses to the data requests) involving PRA burdens, which shall become effective upon announcement in the Federal Register of Office of Management and Budget (“OMB”) approval and an effective date of the rule(s). We expect that OMB review and approval process may take 3 to 6 months and cannot begin until after the Bureau generates instructions and possibly refines questions based on public input. Thus, it will likely be the second half of 2013 before parties are required to begin responding to the data requests.
Further Notice of Proposed Rulemaking. The FCC also seeks comment on a market analysis that it intends to undertake in the coming months to assist it in evaluating whether the pricing flexibility rules result in just and reasonable special access rates and what regulatory changes may be needed. The FCC anticipates that the analysis will be a one-time assessment of the competitive conditions in the special access market; however, it does not foreclose the possibility that further analyses in the future may be needed. In addition, the FCC seeks comment on how the special access pricing flexibility rules might change after it conducts its market analysis and seeks comment on what steps the FCC should take where relief has been provided under its existing rules and where the data and its analysis demonstrate that competition is not sufficient to discipline the marketplace. Finally, the FCC seeks data and information on the terms and conditions offered by incumbent LECs for special access services to facilitate it's understanding of competition in the special access market and its ability to craft rules that properly address the state of the marketplace.
Comment dates on the approach that should be taken in analyzing the special access market and terms and conditions are 30 days after the Order is published in the Federal Register with replies due 30 days later. Comment dates on the possible changes to the FCC's pricing flexibility rules after the proposed one-time, multi-faceted market analysis are August 19, 2013, with replies due on September 30, 2013.
If you wish to further discuss this order please do not hesitate to contact me or my colleagues:
If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers:Lipman-Andrew
This article was originally published by Bingham McCutchen LLP.