Led by Chairman Ajit Pai, the FCC’s Republican bulk voted in April of this year to kill price caps in a county if 50 percent of potential customers “are in a half mile range from the location served by a competitive provider.” That means enterprise customers with just one option are often considered to be located in a competing market and thus no longer benefit from price controls. The choice affects Business Data Services (BDS), a dedicated, point-to-point broadband link that is given over copper-based TDM networks by necessary phone companies like AT&T, Verizon, and CenturyLink.
But the FCC’s claim that “possible competition” can rein in prices even in the loss of competition doesn’t stand up to legal scrutiny, critics of the order said.
“In 2016, after higher than 10 years of examining the highly scrutinized Business Data Services market, the FCC was poised to rein in anti-competitive pricing in the BDS market to give enterprise customers, government bureaus, schools, libraries, and hospitals with much-necessary relief from monopoly rates,” Phillip Berenbroick, senior policy counsel at customer advocacy group Public Knowledge said.
But after Republicans attained the FCC majority in 2017, “the council illegally reversed course without proper notice and further deregulated the BDS market, leaving customers at risk of paying up to $20 billion a year in excess prices from monopolistic pricing,” Berenbroick said.
“The Order concludes, contradictory to the record and established antitrust analysis, that duopoly businesses are sufficiently competitive to control market power and prices, and that potential competition can completely check market power, even by pool service providers,” the groups wrote.
CFA says its analysis shows that “half of the $40 billion in annual BDS charges are overcharges that are the result of official… market power.”
“Because nearly every business, non-profit, and government organization purchases BDS for essential connectivity, those sales are ultimately passed on and borne by customers and taxpayers,” the support groups’ brief said. Mobile phone users would also end up paying higher cyclic rates because some wireless carriers purchase BDS to supply bandwidth to their systems, the brief said.
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