Close Enough to Build: New FCC Data Confirm Business Broadband is Competitive

Thursday, April 28th, 2016

Competition to serve businesses that need specialized connections for data and the Internet–what the FCC calls Business Data Services (BDS) – is strong pretty much everywhere those businesses choose to locate. A variety of companies have been competing for these customers for decades and relatively new entrants like cable companies have brought a new competitive dynamic to the marketplace. Last week the FCC provided some new data that shows just how easy it would be for the competitive local exchange provider (CLEC) industry to connect to more businesses–were they not diverting significant time and resources to trying to convince the Federal Communications Commission (FCC) to help them avoid this work by granting them special favors.

A big part of determining how well the FCC’s existing BDS rules are working depends on whether those rules support a competitive market. A key question is whether competition is present only where a competitor is actually serving a customer, as some CLECs argue, or whether, as we (and the Department of Justice and FCC) believe, competition also exists where the competitor is close by and could serve customer should it win the business. In communications parlance, the question is: are competitors close enough to build short laterals from their existing fiber networks to enough buildings where BDS are in demand to create a broadly competitive market. An initial analysis of the FCC data showed that competitive facilities were located in census blocks containing 99 percent of all businesses with demand for BDS.

Newly released FCC data show that throughout the country, facilities-based competitive providers are plenty close enough to compete for nearly every location where a customer wants BDS, according to a filing submitted by USTelecom members AT&T and CenturyLink.

The FCC’s new information shows that there are in fact two or more CLECs either in or very close to the majority of buildings with BDS demand. CLEC economic analysis suggests that a half mile is sufficiently near a fiber ring for a CLEC to construct its own lateral connection to a building and therefore compete for the customers in that building. As of 2013, among buildings with BDS demand:

  • 93 percent had two competitors with fiber in the building or within a half mile;
  • 78 percent had two competitors with fiber in the building or within 500 feet.

Buildings that, as of 2013, had only an incumbent provider connection are an average of only 364 feet from the closest CLEC fiber network, or about a block away in a typical metropolitan city. Half of these buildings were within 88 feet of the nearest CLEC network, slightly more than the length of two buses. In fact, the newly released tables show that AT&T served 85 percent and CenturyLink served 86 percent of their total bandwidth, respectively, in buildings in their regions that have at least two additional providers that either are in or have fiber within 1,000 feet of those buildings.

Another point of contention rests on whether services offering less than 50 Mbps are “competitive.” The commission’s new tables show nearly 60 percent of AT&T’s and CenturyLink’s sub-50 Mbps service capacity was in buildings that were within 1000 feet of at least two competitors’ fiber facilities. “It has been clear for some time that the data collection effort overwhelmingly refutes the CLECs’ case” that these services are not competitive, the filing said.

Competition in the BDS marketplace is even more intense than these data suggest. First, the FCC’s data reflect the state of competition in 2013. Three years later, competition is growing, and the evidence even more overwhelmingly refutes CLEC complaints. Moreover, the FCC’s new data did not take into account the vast majority of cable business services, delivered over cables hybrid-fiber coax network, which would show an even greater number of competing networks within close proximity to most commercial buildings in the country.

By Patrick Brogran