The 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 President Barack Obama that would have cut prices but was never approved. "Despite data collected by the FCC indicating that approximately 73 percent of BDS locations may only being served by one provider, and the Small Business Administration raising serious concerns about its impact on small businesses, the Commission has forged ahead to the detriment of consumers".
Following a transition period, ILECs in counties meeting the competitive market test will no longer be required to file tariffs with the FCC. However, rates must continue to be "just and reasonable" or could face a court or regulatory challenge. "Regulators will always struggle to set the right price".
Comparing the regulation of the BDS market issue to Alice in Wonderland, FCC Chairman Ajit Pai said the FCC drank a potion that drove them to overregulate the market.
"This was illogical and likely unlawful", Pai said.
"Once again, chairman Pai is putting his thumb on the scale to favor monopoly [internet service providers, or ISPs] over the interests of internet users and small businesses", said Jessica J. González, deputy director and senior counsel at the open internet group Free Press.
"The commission just wrapped up and put a bow on a huge gift for those large broadcasters, with ambitious dreams of more consolidation", Clyburn said.
Traditional special access services offered by local phone companies have been subject to FCC price regulation. "And what they've essentially done here, and I guess where there's any controversy in their proposed order, is the commission is essentially relaxing what their competitive market test is for ex ante price cap regulation to the presence of simply one potential competitor within essentially one half-mile".
Pai added that strict price regulations don't encourage incumbents or competitors to invest in new networks. Price caps, he went on, discourage network operators from investing in modern networks like fiber.
The National Association of Broadcasters was quick to applaud the move by the FCC. Comcast Corp said the vote would help minimize "burdensome and investment-killing regulations, specifically on new entrants".
However, criticism of the new order is already mounting even within the FCC itself.
Commissioner Mignon Clyburn, the agency's sole Democrat, said business broadband deregulation will lead to price hikes for hospitals, schools, libraries and police departments. Moonves said the company would like to acquire more stations if the cap is lifted.
The Commission's official statement around the policy says it relied on more than 10 years of study of the business data services (BDS) market and a public record garnered from numerous requests for comment in making the decision.
"The FCC is out of touch with consumers, out of sync with businesses and out of step with our nation's internet infrastructure goals".
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.