The election of Donald Trump was a heavy blow to CLECs and smaller ISPs. Former FCC Chairman Tom Wheeler had been a kindred spirit they could turn to reliably create regulations almost on an as needed basis. That empathy for competitive carriers has almost certainly been lost under the auspices of new Chairman Ajit Pai. But independent carriers are not going away and certainly are going to pressure the new Commission to respond to their concerns. That was made clear in a February 13^th letter from the association INCOMPAS to Chairman Pai detailing the steps competitive carriers want the FCC to take to better enable broadband deployment.

As might be expected, INCOMPAS requested more equitable wholesale prices to enable carriers to extend their networks to reach more end user customers.

Importantly, the Commission needs to also recognize and address the footprint barrier to new last-mile deployment to certain business locations. A key feature of the enterprise broadband markets is the interdependency of demand, i.e., the fact that many customers have multiple locations and seek a single provider to serve them all. There are a large number of business locations where there simply is no economically viable case for competitors to build out last-mile facilities. The large number of multi-location customers for dedicated services creates a substantial barrier to entry when competitors can serve some, but not all, locations on their own last-mile facilities. To compete, carriers must have an extensive network footprint to be able to offer services widely.  In fact, many competitors have made significant investment in their own networks. Nonetheless, given the bleak reality that last-mile facilities are uneconomic to duplicate in many instances, the footprint-barrier can only be overcome though reasonable wholesale access policies and pricing that enable providers (including incumbents attempting to compete outside their incumbent territories) to extend the geographic reach of their networks to off-net locations to create the multi-location service packages that this customer segment demands and encourage deployment where economically feasible. (INCOMPAS February 13, 2017 letter to FCC, Enabling Competitive Broadband; WT Docket No. 16-138, WC Docket No. 16-132, IB Docket No. 16-131, PS Docket No. 16-128; WC Docket No. 05-25; WC Docket No. 16-143, RM-10593, pp 6-7)

Interestingly, the natural vehicle for ensuring equitable wholesale prices would be in the Business Data Services proceeding where Wheeler was about to issue an order filled with new regulations for special access. That order is now off the table and it is unclear what replaces it. How the Commission handles the regulation of special access and Ethernet going forward may be one of the most fascinating stories of 2017.

The other requests by the competitive carriers involve issues that get little publicity but cumulatively hurt their ability to compete with the former Bell Operating Companies (BOCs) and larger ISPs. For example, pole attachments remain a competitive stumbling block:

[O]ne way the Commission can remove regulatory barriers is by reforming its pole attachment rules. It is critical that federal, state, and local regulatory agencies work to facilitate access to rights-of-way and infrastructure, such as conduit and poles. Reform of these rules is necessary because current make-ready processes do not allow affordable, timely, or efficient construction of competitive networks. Some carriers are taking more than 90 days to complete their make-ready work and there are no “shot clocks” to ensure that “attachers” complete their work on a timely basis, leaving competitors in an untenable state of limbo as they seek to deploy their networks and begin service. (Id. at 2-3.).

In addition, competitive carriers are having difficulties reaching customers in multi-dwelling units (MDUs).

Incumbents have used a number of contractual methods to stymie deployment of BIAS and competitive video services to MDUs. For instance, incumbent providers and property owners have used marketing arrangements, 7 with exclusive rights to advertise their services in building common areas, on MDU websites, and in new resident materials, and other contractual mechanisms to effectively deny (or create a perverse incentive to deny) competitive access. Additionally, property owners have demanded revenue sharing arrangements with competitive providers.8 Competitive broadband and video providers that are unable or unwilling to participate in this kickback scheme are denied access to MDUs. (Id. at 3-4).

Even if they do, access to inside wire remains an issue:

Moreover, wiring exclusivity arrangements have allowed incumbent MVPDs to prevent utilization of existing inside wiring even after a customer has ceased service. As you are aware, the incumbent provider is required by law to either make the wiring available to another MVPD or remove it. However, incumbents enter into agreements with MDUs to lease this fallow wiring on an exclusive basis, forcing competitive providers into the difficult position of having to choose between installing duplicative in-unit wiring or not serving the building at all. (Id. at 4).

Finally, INCOMPAS requests the Commission to recognize that smaller carriers must have access to affordable video services to meet the needs of their customers.

The Commission has long recognized that consumers prefer to purchase broadband and linear video services together in a bundled product and when offered together, broadband adoption increases by 24%. In an effort to compete in the residential broadband marketplace, competitive network providers must provide linear video services—not just broadband services—in order to achieve higher broadband adoption rates. Obtaining video programming rights at affordable rates and under reasonable terms is an essential prerequisite to offering linear video service. (Id., at 5).

While all of these concerns expressed by the competitive market are legitimate, the question remains whether the Commission will address them? While the answer to this question is unknown, the more pressure competitive put on Pai by lobbying and initiating complaints when justified, the more likely he is to take action.

By Andy Regitsky, CCMI