Modernize policy to encourage business broadband competition

Federal Communications Commission (FCC) Chairman Tom Wheeler is an advocate for competition – urging deployment of faster and more ubiquitous broadband networks, and increased consumer choice, through investment and innovation.

In a proceeding this spring dealing with business services, the commission will need to decide whether to update its policies in a manner consistent with these goals.  This review comes at a time when competition in the market for business communications is booming.  Companies like Google, Comcast, Level 3 and others are building new fiber-optic, cable, and fixed wireless networks to compete with traditional companies such as AT&T, CenturyLink and Verizon in offering business services to corporate customers, including connections to cell towers.

{mosads}This new competition is leading to a virtuous cycle of innovation, investment, increased choice, economic growth, and job creation. It is creating a dilemma, however, for companies that compete in the business communications market by leasing copper network facilities from telephone companies at regulated discount rates, and reselling these services at a profit. Copper networks, which average 1.5 megabits per second, can’t provide the speed and capacity necessary for today’s business communications needs – which typically include broadband Internet access, advanced applications, and managed solutions. As one cable industry competitor is pointedly advertising, “you can’t build the business of tomorrow on the network of yesterday.” 

The market is shifting to those capable of offering the most advanced networks, as it should.  And, the traditional service providers such as AT&T, Verizon and CenturyLink are shifting with it – innovating, investing, and building the broadband networks of tomorrow, today.        

So we need the FCC to innovate with us.  As the market has changed, so should regulation, otherwise the commission risks discouraging the very investment, innovation, and facilities-based competition it desires.

Historically, resale providers have considered the traditional telephone companies to be their principal competition and, at the same time, their sole source of supply. Viewing themselves as being without options, resellers have been zealous proponents of federal regulation.  While there may have been a time when resellers’ choices were limited, that is no longer the case. Today, they can seek to lease facilities not only from telephone companies, but from cable companies, fiber-based service providers, and fixed wireless networks, as well – taking advantage of the vibrant competition in the marketplace to achieve volume discounts, long-term service guarantees, and favorable terms.  Or, they can build their own networks, as many competitors are doing. 

Nevertheless, some resellers are demanding that the FCC force telephone companies – and telephone companies alone – to continue operating antiquated copper networks, and to offer wholesale services at regulated, below-market rates.  To do so, however, would delay broadband deployment on the part of telephone companies, slow innovation, and discourage investment – both by telephone companies and other broadband competitors – by artificially making it more economic to lease facilities than to build them.

There is no need for the FCC to distort the market in order to assure competition. Indeed, speaking on behalf of USTelecom members, we deeply value our reseller customers.  We want them to continue purchasing our network services rather than switching to our competitors, and we intend to compete aggressively for their business.  We urge the FCC to recognize that the marketplace has changed, and that the robust competition for business communications today is exactly the kind of competition the commission desires. We ask the FCC, therefore, to innovate with us by modernizing its policy and regulation.

McCormick is president of USTelecom.