Excerpt from a letter sent by USTelecom to FCC Secretary Marlene Dortch:
The Commission should reject demands to force a mandatory “wholesale” discount structure on the business data services (“BDS”) marketplace. Under the volume and term-based discount structure that has evolved under Commission supervision, competing carriers already had 51% of the market in 2013. Grafting a new “wholesale” discount on to the current structure does not reflect how BDS is sold and provisioned and would be counter to the Commission’s longstanding goals of facilities-based competition. As Chairman Wheeler recently noted, “if you’re going to get competition, competition is a facilities-based issue, it is not an ersatz unbundling issue.” Similarly, the May Further Notice in this proceeding concludes “we do not consider competition over resold lines as a material competitive restraint.” At the end of the day, making resale artificially more attractive by mandating a special discount (“ersatz unbundling”) for a favored class of resellers will result in more resale and less investment in the real facilities-based competition that matters.
Perhaps most importantly, the mandated special discount for resellers rewards resale over investing in building facilities. As the FCC and Chairman Wheeler have recognized, facilities-based competition creates real competitive pressure that benefits consumers, produces jobs and leads to innovation. For the foregoing reasons, the Commission should reject requests to impose a special “wholesale” discount on the BDS industry.