Business Data Services (Formerly Special Access)
Business data services (BDS), formerly known as special access services, are high-capacity connections provided over dedicated facilities and used by businesses, schools, hospitals and a wide range of other institutions to transmit voice and data traffic. BDS includes more traditional Time Division Multiplexing (TDM) services, such as DS1s and DS3s, as well as generally higher-capacity IP-based services, such as Ethernet. Under the Communications Act, the FCC has the obligation to ensure that BDS is provided at just, reasonable and not unreasonably discriminatory rates, terms, and conditions. The Commission’s regulation of incumbent local exchange carriers’ (LEC) BDS pricing, has evolved significantly in response to the rise of competition for these services from competitive LECs and, more recently, cable providers. Over time, the Commission has granted pricing flexibility, forbearance, and relief from ex ante pricing regulation and tariffing requirements for many incumbent LECs’ BDS offerings.
In 2002, AT&T filed a petition seeking a rulemaking on BDS pricing. The Commission opened its initial BDS proceeding in 2005 with the release of the Report and Order and Notice of Proposed Rulemaking. In 2012, the Commission released an Order suspending further grants of pricing flexibility to incumbent price cap carriers for their BDS.
From 2012 to 2015, the Commission prepared and conducted a comprehensive, mandatory data collection to provide an objective basis for reviewing and reforming its regulation of BDS. The Commission released the BDS Data Collection Order in 2012, which provided the initial framework for the mandatory data collection. The Bureau released two subsequent orders clarifying the data collection in 2013 and 2014. In response, by early 2015, providers and purchasers of BDS and larger entities that provided “best efforts” business broadband Internet access service in price cap areas submitted data and narrative responses on the presence of BDS facilities into the record in the BDS rulemakings. In 2016, the Commission released a Tariff Investigation Order and Further Notice of Proposed Rulemaking resolving a BDS tariff investigation initiated in 2015 and proposing reforms of the Commission’s regulation of price cap carriers’ BDS.
In 2017, the Commission released the Price Cap BDS Order, comprehensively reforming its regulation of BDS pricing for price cap incumbent LECs. Based on the BDS data collection, the Commission found that there was widespread competition for BDS and relieved price cap incumbent LECs of most ex ante pricing regulation and tariffing requirements for their BDS. It preserved price cap regulation of relatively lower-speed TDM-based DS1 and DS3 services in areas where competition did not reach certain threshold levels, but committed to update its assessment of competition in those areas every three years.
In 2018, the Commission extended its reform of BDS regulation to certain rate-of-return incumbent LECs in the Rate-of-Return BDS Order, finding that rate-of-return carriers that received fixed universal service support (e.g., those that elected to receive support through the Alternative Connect America Model (ACAM) or the Alaska Plan) faced sufficient competition to justify allowing them to elect incentive regulation for their BDS offerings, and obtain relief from ex ante pricing regulation and tariffing requirements for their IP-based and higher-speed TDM services. The Commission also committed to update its assessment of competition in these areas every three years. The Commission provided two opportunities for these rate-of-return carriers to elect incentive regulation for their BDS offerings, the first effective as of July 1, 2019 and the second as of July 1, 2020. A total of 139 rate-of-return carriers serving 227 study areas in 40 states and one territory elected incentive regulation for their BDS (see 2020 Public Notice).
In 2019, the Commission released the BDS Transport Order which addressed the Eighth Circuit Court of Appeals’ partial remand of the Price Cap BDS Order as it related to the regulation of price cap LECs’ lower speed TDM-based BDS transport services. The BDS Transport Order affirmed the Commission’s previous conclusion that there was sufficient competition to justify elimination of ex ante pricing regulation and tariffing of those services nationwide. The BDS Transport Order also granted forbearance from DS1 and DS3 transport unbundling obligations between certain wire centers.
First Triennial Update
The Commission committed to update the results of the competitive market tests used in the Price Cap BDS Order and Rate-of-Return BDS Order every three years and delegated that task to the Wireline Competition Bureau. The Bureau announced the results of the first triennial update of the two competitive market tests in January 2020. The results of the updates are available on the Commission’s website.
Second Triennial Update
The Bureau announced the results of the second triennial update for the price cap and rate-of-return competitive market tests in January 2023. The results of the updates are available on the Commission’s website. The next triennial update will be conducted in 2026.
Principal Commission Releases
- Report and Order and Notice of Proposed Rulemaking (2005)
- Suspension Order (2012)
- Data Collection Report and Order and Further Notice of Proposed Rulemaking (2012)
- Report and Order (clarifying data collection) (2013)
- Order on Reconsideration (finalizing data collection) (2014)
- Tariff Investigation Order and Further Notice of Proposed Rulemaking (2016)
- Price Cap BDS Order (2017)
- Rate-of-Return BDS Order (2018)
- BDS Transport Order (2019)