A summary of a proposed order to reform BDS regulation was issued by Chairman Thomas Wheeler on October 7, 2016. The summary explains that BDS, also known as special access, “are enterprise data services that are a fundamental part of the U.S. economy.”2 The Further Notice of Proposed Rulemaking (FNPRM)3 issued in May 2016, which sought comment on the approach the FCC was then considering, pledged reform that is technology neutral. The Chairman’s recent proposal, however, is very much technology specific. It targets legacy circuit-switched DS1 and DS3 services4 for ex ante rate reductions. For modern packet-based services, it proposes extensive new regulations but not ex ante rate reductions. For both circuit- and packet-based services, it prohibits some contract terms and conditions.

The summary states that the Chairman’s intent is to “Promote Competition and Investment in Packet-based Services”: “The Order applies a light-touch regulatory approach that promotes continued investment.”5 In other words, the summary recognizes that regulation is likely to reduce investment, and apparently attempts to skew investment toward packet-based services by avoiding immediate rate regulation of those services. Even if one were to accept the premise that it is the FCC’s job to skew investment from an obsolete technology to its state-of-the-art successors, the implementation suggested by the summary is deeply flawed.

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