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Ending the decade long battle over special access reform

It’s no secret that Federal Communications Commission Chairman Tom Wheeler arrived on the job under the mantra of “competition, competition, competition.” And with accomplishments like the Open Internet order and the rejection of the merger between Comcast and Time Warner Cable, he’s made good on those words. 

But perhaps what demonstrates that commitment more than anything else is his approach to the difficult issues that have long been ignored, the issues in the back of the Commission’s closet. Set-top boxes, the modernization of the Lifeline program, and the technology transition are all critical components of our broadband future, usually deemed too complicated to confront by former agency leaders. Wheeler has embraced them all, including one of the most technical, weedy issues on the FCC’s agenda – special access reform.”

{mosads}Earlier this month, Chairman Wheeler took a critical step forward, signaling that relief from decades of monopoly and duopoly control over the special access marketplace is finally on the horizon. Years of advocacy by Public Knowledge and countless other stakeholders throughout the broadband community have finally landed special access, or what the Chairman calls “business data services,” squarely within the Commission’s sights – at a time when the broadband economy needs it most.

Business data services are the critical foundation for the broadband economy. These dedicated, high-speed lines connect everything from businesses and retailers to schools and libraries. Even ATMs and cell phone towers use these dedicated lines to relay the information needed to withdraw money from your bank or connect your smartphone. While these business data services are essential to nearly everyone throughout the economy, they unfortunately fall under the control of a few huge incumbent providers. These gatekeepers leverage their massive dominance over the marketplace – 73 percent which is controlled by only one provider – to drive up prices and push out competition.

The current FCC proceeding seeking to end this monopoly control was opened a decade ago, in 2005, the same year YouTube posted its first video. Since that time, economists estimate that the lack of competition in this market has cost the American economy billions of dollars. In fact, a recent study from the Consumer Federation of America determined that since 2010 alone, these largely monopoly or duopoly-controlled markets have resulted in U.S. economic losses totaling $150 billion.

Where does the money go? The vast majority of these overcharges are funneled into the pockets of large, incumbent carriers. Data collected by the FCC show that a whopping 73 percent of the marketplace is controlled by one provider, 24 percent is controlled by duopolies, and only a tiny fraction have more than 2 choices of providers. The market is so consolidated that 99 percent of census blocks across the country are considered “highly concentrated” under the Department of Justice’s “competition” index.

Everyone from small businesses to large enterprises are impacted; however, local governments, schools and universities, libraries, and hospitals – not to mention the consumers who all rely on these services – pay the price for this. Organizations are forced to pass these inflated costs to consumers in the form of hidden fees, or in the case of libraries and schools, they often have no choice but to go without these services.

The good news is that for the first time, the Commission has everything it needs to open this marketplace to competition and we’re encouraged by the Chairman’s commitment that has landed this decades-old issue on the FCC’s open meeting agenda. During this week’s meeting, we urge Chairman Wheeler to begin laying the policy groundwork that will result in true competition for business data services.

Through his willingness to tackle the hard issues, Wheeler has made clear that the job of the FCC is to recalibrate the balance of power between broadband gatekeepers and American businesses and consumers. There is still much left to be done, but we are well on our way to a more competitive broadband economy.

Kimmelman is president and CEO of Public Knowledge and former chief counsel for competition policy of the Department of Justice’s Antitrust Division.


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