FCC Succeeds in Ending Price Caps on Business Data Lines

The Federal Communications Commission (FCC) accelerated its deregulation push on Thursday under the Republican regime. It is a well- known fact that residential broadband market is not competitive and this is precisely because of the financial stranglehold that providers have over the federal and state regulators and lawmakers. The condition of Business Data Services (BDS), a segment that is responsible for connecting retailers, schools, ATMs, cell towers etc. to the internet at large is even worse.

For years, the consumer groups were complaining about the atrocities that this segment was facing because of the monopoly control of few players. They were forced to pay sky-high rates for the basic connectivity. The FCC data itself depicts that 73% of this special access market is controlled by a single player, which can be Verizon, AT&T or CenturyLink. From the remaining 27% market, 24% is under duopoly control and only 3% have a choice of more than two service providers.

After the segment suffered from this dictatorship for 10 years, finally last year Tom Wheeler started exploring the means to change special access rules. On Thursday, the regulators on a 2-1 Republican-led vote eased the limit on TV-station ownership. This has paved the way for mergers and acquisitions in the segment. It has also provided room for companies like CBS Corp, Sinclair, Comcast Corp, and Nexstar Media Group Inc. to grow.

The president of the National Association of Broadcasters trade group, Gordon Smith said in an emailed statement, “This represents a rational first step in media ownership reform policy allowing free and local broadcasters to remain competitive with multinational pay TV giants and broadband providers.”

With this vote passed, the decision taken by FCC under the Democrats in 2016 has been reversed. Ajit Pai, the FCC Chairman who is a Republican has criticised that decision as it led to tightening of the ownership limits.

Speaking on Thursday’s vote, he said, “Today, the FCC is wiping the slate clean by restoring the practice of discounting audience size for stations that formerly used UHF technology, and preparing to examine the cap.

The only Democrat in the FCC, Mignon Clyburn, however, expressed her dissent saying that it will benefit the ambitious broadcasters enabling the big one getting even bigger in the process. She said that under the new procedure less than 10 percent of potential customers will be benefited from price controls.

With now price caps eliminated, the small business broadband service providers especially in the rural areas will immediately hike their prices. This will force the cash-strapped institutions to pay more for the vital connectivity. Hence, it will cause more harm than benefit to them.

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