WASHINGTON, Aug. 9, 2016 /PRNewswire-USNewswire/ -- A new
report released today by a former Federal Communications Commission
(FCC) senior economist highlights the significant harm that an FCC
proposal could do to future broadband investment—particularly in
rural communities—with new price cap regulations.
The report details that the FCC has proposed potentially drastic
rate cuts on incumbent local exchange carriers (ILECs) that provide
business broadband services. While the FCC says that the price cap
regulation would adjust provider rates to account for rural markets
that the FCC perceives to be noncompetitive, new research shows
that the FCC's market data fails to accurately represent the market
as it currently stands. As the FCC moves forward without updated
research on the areas deemed noncompetitive, the Commission leaves
the impending local and national effects that the regulation would
cause unexplored.
"Given the huge potential impacts of the proposed price
regulation of business data services—billions in lost revenue for
providers, curtailed investment by incumbents and competitors,
forgone economic benefits for business, workers, and rural
economies—it is important to craft regulation carefully in a fully
informed manner," according to the report by James E. Prieger, Professor of Economics and
Public Policy at Pepperdine
University.
The price cap regulation on providers would eliminate an
estimated $1.4 billion in revenue
from the ILECs that service rural communities, which would
discourage future investment by both ILECs and new providers
looking to enter the market. Without enough revenue to continue
supporting rural network infrastructures across the country, ILECs
lose the ability to fully support and continue investing in the
services that smaller communities across America need to remain
nationally competitive.
Prieger's report elaborates on the risks of imposing price cap
regulations without including recently updated data on
competitiveness in the business broadband market.
"The lost opportunities for revenue will lead to less broadband
investment for the communities that need it most – slowing
deployment and hurting economies that need help competing," Prieger
states in the report. "Regulators must understand that incentives
for investment are paramount to the continued health of existing
and expanding networks."
The report was sponsored by the Invest in Broadband for
America coalition. The coalition is insisting the FCC account
for acknowledgements by four of the largest cable providers
that they had significantly undercounted the number of locations
that are capable of providing business data services.
"In a rush to regulate, the FCC has missed the negative
consequences of this proposal, particularly the potential for
widening the digital divide between urban and rural economies" said
John Jones, Senior Vice President,
Public Policy and Government Relations for CenturyLink, a member of
the coalition.
Last week, a group of U.S. senators, led by Jon Tester (D-MT), expressed their own concern
with the FCC proposal, stating that rural communities "depend on
robust investments in business data services to connect small
business and anchor institutions, support wireless data service,
and enable economic development."
The "Invest in Broadband for America" coalition
(investinbroadband.org) is made up of CenturyLink,
Inc. (NYSE: CTL), Cincinnati Bell, Inc. (NYSE: CBB),
Consolidated Communications, Inc. (NASDAQ: CNSL), FairPoint
Communications, Inc. (NASDAQ: FRP) and Frontier Communications
(NASDAQ: FTR).
The report can be found here.
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/report-says-fccs-business-broadband-proposal-would-discourage-fiber-network-investments-300310834.html
SOURCE Invest in Broadband for America