The FCC’s Special Access Proposal Is Infected with Special Pleading

The Free State Foundation By Randolph J. May and Seth L. Cooper

Critical investment in next-generation broadband technologies is now threatened by new rate controls on special access services proposed by the Federal Communications Commission. “Business data services” (BDS) has replaced “special access” as the Commission’s new term for the broad class of advanced services targeted by its rate regulation proposal.

It’s no wonder the Commission opted to change the terminology. This whole decades-long proceeding has been driven in large part by “special access.” That is, special access to the Commission’s administrative processes by some favored parties engaging in special pleading to obtain special rent-seeking treatment. While Chairman Wheeler may be smart to ditch the “special access” label, a name change isn’t going to alter what is fundamentally wrong with the agency’s proposal.

Here’s what is really going on in the newly-denominated BDS proceeding. Special rent-seeking privileges are sought primarily by a segment of BDS competitors who serve business enterprises, not everyday residential or retail consumers. New rate controls would give these special interest pleaders price cuts on wholesale access to their competitors’ facilities, including advanced IP-based broadband networks.

Prompted by the continued special interest pleading, the Commission is proposing rate controls based on problematic analyses that disregard existing competitive forces. And by virtue of a last minute data dump, the Commission, in effect, curtailed the opportunity to prevent useful public comment on critical peer reviews that supposedly support its preferred analysis.

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investinbbandThe FCC’s Special Access Proposal Is Infected with Special Pleading