Learning from Bad Technique: The WIK-Consult Report on Business Data Services

Last May, the Federal Communications Commission launched a Notice of Proposed Rulemaking in which it set forth a “new regulatory framework” for Business Data Services (BDS), formerly known as Special Access Services. BDS are high-capacity circuits sold by facilities-based communications companies to other communications companies and businesses. The Commission has entertained complaints about BDS rates being “too high” for about fifteen years, in part because of a 1999 deregulatory policy allowing pricing flexibility for the services. But it’s not just the deregulated prices that are at issue; even those prices the Commission regulates today are claimed to be “too high.” At no risk of oversimplification, the BDS proceeding is all about rate regulation.

The need for rate regulation requires first a determination that there is market power, meaning that the observed prices or rates are above some “proper” level, usually defined with reference to economic cost or competitive outcomes. Yet, no party has provided the Commission with convincing evidence that prices are not “just and reasonable.” Instead, the unsupported claim that BDS prices “are too damn high” pretty much sums up the economic arguments, leaving the Agency little to work with and explaining its historical reluctance to intervene.

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