FCC’s proposal will result in prices shooting up.
The Republican head of the Federal Communications Commission (FCC) has proposed to lower regulatory requirements in the $45 billion business of data services.
Companies such as CenturyLink Inc, AT&T Inc and Verizon Communications and others have since long been clamouring for easing of norms.
However the proposal is a blow to companies such as Sprint Corp and others who claim that prices for business data are already very high. They had earlier the backing of former U.S. President Barack Obama who had proposed a cut in prices, which was never formally approved.
Schools, small businesses, libraries and others rely on business data services, or special-access lines, to transmit large amounts of data quickly. Wireless carriers rely on them heavily for the backhaul of mobile traffic.
In a blog post, FCC chairman Ajit Pai wrote the commission will vote on April 20 to reform the rule which telecommunications experts say would deregulate the market.
“Where this competition exists, we will relax unnecessary regulation, thereby creating greater incentives for the private sector to invest in next-generation networks. But where competition is still lacking, we’ll preserve regulations necessary to prevent anti-competitive price increases,” said Pai.
Consumers groups such as Public Knowledge and Consumer Federation of America have called Pai’s proposal a “bonanza” for big telecommunications companies. They have said the proposal “will drain consumer pocketbooks of tens of billions of dollars per year.”
In the previous U.S. administration, under President Barack Obama, the then FCC Chairman, Tom Wheeler, had proposed sweeping reforms for data service businesses which would have reduced prices across the board.
Wheeler had proposed maintaining and lowering lower price caps using legacy data systems with a one-time 11 percent reduction in prices phased in over 3 years.
With regard to the current proposal in which prices are going to jump, Sprint has told the FCC in a letter dated March 22 that “thousands of large and small businesses across the country are paying far too much for broadband because of inadequate competition.”
Sprint has stated that “a small handful of companies are overcharging the very investors and employers that are critical to our economic growth and are using anticompetitive tactics to ensure that these businesses never have access to competitive alternatives.”
As for AT&T, it has argued that Wheeler’s plan was “little more than a wealth transfer to companies that have chosen not to invest in last mile fiber infrastructure.”