FCC BDS Project

Over the course of the past two years, a Compass Lexecon team led by Mark Israel, Dan Rubinfeld and Glenn Woroch filed several white papers and declarations in an FCC proceeding that explored whether and how to deregulate “Business Data Services” (BDS, a/k/a special access). On behalf of their clients AT&T, CenturyLink, Fairpoint, Frontier, Hawaiian Telcom, Alaska Communications and Verizon, the team analyzed an enormous dataset with detailed information on the location of BDS facilities and BDS sales, arguably the largest data collection in the Commission’s history.

The Compass Lexecon team found compelling evidence of widespread presence of facilities-based competitors in locations where there was BDS demand. Using these findings, together with their criticisms of studies alleging to find market power in BDS, the Compass Lexecon team concluded that the BDS market is competitive, at least in the vast majority of locations.

Consistent with these findings, in April 2017, the Commission passed an order granting regulatory relief from price-cap rate regulation, which had been in effect since 1999. To identify areas eligible for relief, the Commission devised a competitive market test that was based on the presence of facilities-based competitors to buildings with BDS demand, quite similar to tests that the Compass Lexecon team had proposed. As part of this proceeding, the Commission rejected proposals from other interested parties calling for much more stringent standards for regulatory relief. Further, the Commission agreed with the Compass Lexecon team that competition had grown since 2013 (the time covered by the FCC’s data), and in particular, that cable operators have emerged as a powerful competitor in the market for BDS services.

The data analysis was managed by a Compass Lexecon team led by Bobby Calzaretta that included Aren Megerdichian, Rob Oandasan, Jackie Chen and Alex Asancheyev.