March 30, 2017 / 7:42 PM / 5 months ago

FCC to vote to reform $45 billion business data market

Ajit Pai, Chairman of U.S Federal Communications Commission, delivers his keynote speech at Mobile World Congress in Barcelona, Spain, February 28, 2017.Eric Gaillard

WASHINGTON (Reuters) - The Republican head of the Federal Communications Commission on Thursday proposed easing regulatory requirements in the $45 billion business data services market, a win for companies like AT&T Inc, CenturyLink Inc, Verizon Communications Inc and others.

The proposal is a blow to companies like Sprint Corp and others that claim prices for business data are too high and backed a plan under President Barack Obama that would have cut prices but was never approved.

Small businesses, schools, libraries and others rely on business data services, or special-access lines, to transmit large amounts of data quickly, for instance connecting banks to ATM machines or gasoline pump credit card readers. Wireless carriers rely on them for the backhaul of mobile traffic. Reuters reported details of the proposal Wednesday.

FCC chairman Ajit Pai said in a blog post the commission will vote April 20 to reform the rule that telecommunications experts say would deregulate the market in most of the country but would retain regulations in some places.

"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," Pai said.

Consumer groups Public Knowledge and Consumer Federation of America called Pai's proposal a "bonanza" for big telecommunications companies that "will drain consumer pocketbooks of tens of billions of dollars per year." 

Under President Barack Obama, then FCC Chairman Tom Wheeler in April 2016 proposed a sweeping reform plan for business data services that aimed to reduce prices paid.

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 three years.

Sprint, which backed Wheeler's proposal, told the FCC in a March 22 letter that "thousands of large and small businesses across the country are paying far too much for broadband because of inadequate competition."

Sprint argued "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."

AT&T argued Wheeler's plan was "little more than a wealth transfer to companies that have chosen not to invest in last mile fiber infrastructure."

Reporting by David Shepardson; Editing by Cynthia Osterman

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