The U.S. Federal Communications Commission voted on Thursday to effectively deregulate the $ 45 billion business data services market in a win for companies like AT&T Inc (T.N), CenturyLink Inc (CTL.N) and Verizon Communications Inc (VZ.N) that will likely lead to price hikes for many small businesses.
The 2-1 vote is a blow to companies such as Sprint Corp (S.N) and others that claim prices for business data are too high and backed a 2016 plan under former President Barack Obama that would have cut prices.
It marked a significant step in FCC Chairman Ajit Pai’s aggressive agenda to roll back many existing telecommunications rules and Obama era regulations.
Small businesses, schools, libraries and others rely on business data services, or special-access lines, to transmit large amounts of data quickly.
The services are used, among other applications, to connect banks to ATM machines or gasoline pump credit card readers. Wireless carriers rely on them to get data from an end user to a node in a major network or the so-called backhaul of mobile traffic.
Thursday’s vote scrapped most regulatory requirements in the business data services market, although some price caps in areas with little competition will be retained.
Democratic FCC Commissioner Mignon Clyburn, who accused her Republican colleagues of siding with “the interests of multibillion-dollar providers,” said the ruling “opens the door to immediate price hikes” to small businesses. The rule deregulates pricing in a majority of counties and more than 90 percent of buildings using the services.
Pai defended the decision, saying regulatory requirements had threatened competition and investment.
Pai plans as early as next week to unveil plans to dismantle the Obama administration’s “net neutrality” rules, even as he favors a free and open internet under a different regulatory scheme.
He declined to discuss his plans, but said he had met this week with executives at Facebook Inc (FB.O), Oracle Corp (ORCL.N), Cisco Systems Inc (CSCO.O) and Intel Corp [L1N1HF1JM] to discuss internet issues.
In recent days, the independent Small Business Administration Office of Advocacy, the European Union and Democratic members of Congress have raised concerns about the lifting of net neutrality rules.
Under 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 phased-in 11 percent price reduction.
Sprint, which backed Wheeler’s proposal, told the FCC in a March 22 letter that “thousands of large and small businesses across the country were paying far too much for broadband because of inadequate competition.”
CenturyLink praised Thursday’s decision as something that aligned regulations with “competitive market realities.” Comcast Corp said the vote would help minimize “burdensome and investment-killing regulations, specifically on new entrants.”
Advocacy group Public Knowledge said the decision “doubles down on incumbent market power, forcing businesses, hospitals, schools, and ultimately consumers to pay more for essential connectivity.”
(Reporting by David Shepardson; editing by Andrew Hay and Tom Brown)