FCC changes to data services could raise costs for rural areas, commissioner argues | McClatchy Washington Bureau

Federal Communications Commissioner Mignon Clyburn ripped the FCC’s decisions Thursday to soften regulations on business data services and to reinstate a rule that could increase TV station mergers.

Clyburn, a South Carolina native and Democrat, called the party-line vote on business data services an “all-out assault on America’s small businesses, schools and local economies.”

Business data services connections support rapid data transfers from ATMs and credit-card readers, according to a 2016 President Barack Obama-era proposal to lower prices for these services. The proposal was never approved.

The FCC’s vote marks a victory for large corporations such as Verizon Communications Inc. and AT&T Inc., but could harm small businesses and communities.

“Instead of looking out for those millions of little guys, the commission has once again chosen to side with the interests of a handful of multibillion-dollar providers,” Clyburn said in her dissenting statement. “What today’s order does is open the door to immediate price hikes for small business data services. Especially hard-hit would be those in rural areas: Cash-strapped hospitals, schools, libraries and police departments will pay even more for vital connectivity, and soon we will see pressure on our rural health care funding, resulting in less bandwidth.”

Republican FCC Chairman Ajit Pai defended the vote, claiming that government regulations provide a false promise of lower prices.

“Price regulation – that is the government setting the rates, terms and conditions for special access services – is seductive,” Pai said. “But in reality, price regulation threatens competition and investment. And that’s because regulators will always struggle to set the right price. The price is too low, network owners won’t have an incentive to invest in more modern networks.”

Clyburn said the cable industry had entered the $45 billion business data services market, but she warned there will be an increase in “significant consolidations,” such as Verizon’s acquisition of X.O. Communications in 2016. More of these mergers would choke out competition, leading to price hikes, she said.

The independent U.S. Small Business Administration’s office of advocacy, which asked for a delay on the FCC vote a week ago, has shared Clyburn’s concerns about price hikes.

The FCC also voted along party lines to revisit the media ownership cap, which limits the amount of households a broadcast company is allowed to reach.

Also, the ultra high frequency discount, which the FCC abandoned in 2016, was reinstated. The UHF discount would make some media organizations less likely to reach the cap by lowering the amount certain organizations are worth.

Clyburn argued the UHF discount is an archaic rule that chokes competition among broadcast stations by encouraging more consolidation.

“Consumers benefit from competition, which motivates broadcast stations to invest in higher-quality programming and provide programming tailored to their local communities. Communities are enriched by the promotion of diversity of viewpoints, and consolidation would limit programming options for viewers and undermine local news editorial operations,” Clyburn said.

Pai countered that the FCC’s original decision to eliminate the discount had been too hasty and had led to companies that had been under the cap suddenly going over it.

“In reaching this decision, the FCC didn’t examine whether the facts justified a more stringent cap or analyze whether the cap should have been raised at the same time the UHF cap was eliminated. This was illogical and likely unlawful,” Pai said.