Price Cap Business Data Services; Regulation of Business Data Services for Rate-of-Return Local Exchange Carriers

FEDERAL COMMUNICATIONS COMMISSION <CFR>47 CFR Parts 61 and 69</CFR> <DEPDOC>[WC Docket Nos. 21-17, 17-144; FCC 25-44; FR ID 309561]</DEPDOC> <SUBJECT>Price Cap Business Data Services; Regulation of Business Data Services for Rate-of-Return Local Exchange Carriers</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> Federal Communications Commission. <HD SOURCE="HED">ACTION:</HD> Proposed rule. <SUM> <HD SOURCE="HED">SUMMARY:</HD> In this document, the Federal Communications Commission (Commission) seeks comment on its proposed rules to eliminate rate regulation and tariffing obligations for business data services provided by incumbent local exchange carriers in light of technological and marketplace changes and recent Executive Orders and Commission initiatives. The Commission alternatively seeks comment on updates to its regulatory framework and competitive market tests to better align with current market conditions based on current data. </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> Comments are due on or before October 6, 2025, and reply comments are due on or before October 20, 2025. </EFFDATE> <HD SOURCE="HED">ADDRESSES:</HD> Interested parties may file comments and reply comments on or before the dates indicated in this document in WC Docket Nos. 21-17 and 17-144 by any of the following methods: • <E T="03">Electronic Filers:</E> Comments may be filed electronically using the internet by accessing the Electronic Comment Filing System (ECFS): <E T="03">https://www.fcc.gov/ecfs/filings/standard.</E> • <E T="03">Paper Filers:</E> Parties who choose to file by paper must file an original and one copy of each filing. If more than one docket or rulemaking number appears in the caption of this proceeding, filers must submit two additional copies for each additional docket or rulemaking number. • Filings can be sent by hand or messenger delivery, by commercial courier, or by the U.S. Postal Service. All filings must be addressed to the Secretary, Federal Communications Commission. • Hand-delivered or messenger-delivered paper filings for the Commission's Secretary are accepted between 8:00 a.m. and 4:00 p.m. by the FCC's mailing contractor at 9050 Junction Drive, Annapolis Junction, MD 20701. All hand deliveries must be held together with rubber bands or fasteners. Any envelopes and boxes must be disposed of before entering the building. • Commercial courier deliveries (any deliveries not by the U.S. Postal Service) must be sent to 9050 Junction Drive, Annapolis Junction, MD 20701. Filings sent by U.S. Postal Service First-Class Mail, Priority Mail, and Priority Mail Express must be sent to 45 L Street NE, Washington, DC 20554. • <E T="03">People with Disabilities.</E> To request materials in accessible formats for people with disabilities (Braille, large print, electronic files, audio format), send an email to <E T="03">fcc504@fcc.gov,</E> or call the Consumer and Governmental Affairs Bureau at (202) 418-0530 (voice) or (202) 418-0432 (TTY). <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> Christopher Koves, Associate Division Chief, Pricing Policy Division, Wireline Competition Bureau, (202) 418-8209, <E T="03">Christopher.Koves@fcc.gov.</E> </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> This is a summary of the Commission's Notice of Proposed Rulemaking and Third Further Notice of Proposed Rulemaking ( <E T="03">NPRM and Third FNPRM</E> ) in WC Docket Nos. 21-17, 17-144; FCC 25-44, adopted on August 4, 2025 and released on August 8, 2025. The full text of this document is available at the following internet address: <E T="03">https://docs.fcc.gov/public/attachments/FCC-25-44A1.pdf.</E> <E T="03">Paperwork Reduction Act.</E> This document does not contain proposed new or substantively modified information collection requirements subject to the Paperwork Reduction Act of 1995 (PRA), Public Law 104-13. In addition, therefore, it does not contain any proposed new or substantively modified information collection burden for small business concerns with fewer than 25 employees, pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107-198. <E T="03">Providing Accountability Through Transparency Act.</E> Consistent with the Providing Accountability Through Transparency Act of 2023, Public Law 118-9, a brief plain-language summary of this document will be published on: <E T="03">https://www.fcc.gov/proposed-rulemakings.</E> <HD SOURCE="HD1">Synopsis </HD> <HD SOURCE="HD1">I. Introduction</HD> 1. Today, we continue to promote competition and economic growth by proposing to further streamline and eliminate outdated, unnecessary, burdensome regulations in the provision of legacy business data services (BDS) offered by telephone companies. The Commission has long recognized the importance of BDS to businesses, schools and libraries, non-profit organizations, and state and local governments. Because local telephone companies (incumbent local exchange carriers) held local monopolies on circuit-switched telephone service, historically the Commission relied on dominant carrier regulation under Title II of the Communications Act of 1934, as amended (the Act), to ensure that the rates, terms, and conditions of service were just and reasonable and not unreasonably discriminatory. In response to the growth of competition in the provision of BDS, the Commission has, in recent years, streamlined its regulation of these services to forbear from unnecessary regulatory burdens on legacy circuit-based services and to promote long-term innovation and investment in modern packet-based internet Protocol (IP) services. 2. In the <E T="03">NPRM and Third FNPRM,</E> we build on the Commission's earlier efforts by seeking comment on further deregulating BDS in light of marketplace and technological changes and consistent with recent Executive Orders and other Commission efforts. We seek comment on eliminating ex ante pricing regulation and tariffing obligations for end user channel termination services provided by incumbent local exchange carriers (LECs or carriers). We also seek comment on deregulating and detariffing rates charged for transport services provided by rate-of-return carriers. In the alternative, we seek comment on updates to the Commission's regulatory framework and competitive market tests to better align those tests with current market conditions based on current data. <HD SOURCE="HD1">II. Background</HD> <HD SOURCE="HD2">A. Business Data Services</HD> 3. “Business data services” (BDS) refers to the dedicated point-to-point transmission of data at certain guaranteed speeds and service levels using high capacity connections to support applications that require symmetrical bandwidth, substantial reliability, security, and connected service to more than one location. Businesses, non-profit organizations, and government institutions rely on BDS to enable the secure and reliable transfer of data, for example, as a means of connecting to the internet or the cloud, and to create private or virtual private networks. 4. BDS fall into two technology categories: circuit-based and packet-based. Circuit-based BDS utilize the Time Division Multiplexing (TDM) protocol, which sends communications over a single circuit-switched channel by dividing the channel into dedicated time slots. TDM is considered a legacy technology, and TDM-based services consist primarily of DS1 and DS3 circuits with symmetrical capacities of 1.5 Mbps and 45 Mbps, respectively. Packet-based BDS, on the other hand, relies on the modern IP in which data are sent using packets, and can generally offer much higher capacities. The Commission generally has historically imposed dominant carrier regulation on carriers' legacy TDM-based BDS and abstained from regulating packet-based BDS. 5. The Commission has traditionally viewed legacy TDM-based BDS in two distinct segments: end user channel termination and dedicated transport. Channel termination refers to the last-mile, local loop, transmission links to end user locations, <E T="03">i.e.,</E> laterals. Transport involves higher-capacity connections between network aggregation points, <E T="03">i.e.,</E> middle-mile connections or feeder plant. In the BDS context, the Commission referred to “transport” as interoffice facilities and channel terminations between an incumbent LEC's serving wire center and an interexchange carrier. <HD SOURCE="HD2">B. The Commission's Regulation of Business Data Services</HD> 6. The Commission has traditionally relied on sections 201 and 202 of the Act, to impose BDS pricing regulation to ensure that “charges, practices, classifications, and regulations” for interstate communication service provided by common carriers are “just and reasonable,” and free of “unjust or unreasonable discrimination.” Under existing rules, incumbent LECs must therefore file tariff schedules specifying the rates, terms, and conditions governing their interstate service offerings. Section 204 prescribes procedures for filing streamlined tariffs with the Commission subject to Commission review and, if necessary, potential suspension and investigation should the LECs' rates be found to violate the requirements of sections 201 and 202. After full opportunity for hearing upon a complaint or an order for investigation and hearing, section 205 authorizes the Commission to determine and prescribe just and reasonable charges. 7. <E T="03">Rate-of-Return and Price Cap Regulation.</E> The Commission traditionally has used two forms of rate regulation to ensure that the rates, charges, and practices of incumbent LECs in connection with the provision of BDS are “just and reasonable” under sections 201 and 202 of the Act: rate-of-return and price cap regulation. Under rate-of-return regulation, a carrier's rates are set at levels allowing reco ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 88k characters. 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