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FCC Abandons Plans for BDS Reforms, Delays Voting Process

T VZ CTL FTR

Trades from $3

The surprising victory of Republican nominee Donald Trump as the next U.S. president is starting to show its impact on telecom policy parameters. On Nov 16, the U.S. telecom regulator Federal Communications Commission (FCC) abandoned its plans to reform Business Data Services (BDS) market by dropping the voting procedure on proposals made by its Chairman Tom Wheeler.

The FCC took this sudden decision after a group of Republican lawmakers asked Wheeler to refrain from acting on "controversial" issues like BDS during his final months in office. Notably, Donald Trump will take over charges of White House on Jan 20, 2017.

The BDS market, where telecom and cable MSOs (multi service operators) provide a host of different network related services to business entities of different sizes, have been a lucrative source of revenues in the recent years for the service providers. More significantly, these service providers have been generating handsome revenues from the small and medium businesses by often charging steep price. At present, BDS is a $45 billion market opportunity per annum.

The FCC has proposed rules to regulate pricing in the market, citing low competition. According to LightReading, the FCC’s proposal include: (1) no more tariffs (2) No more classifying telecom providers as either dominant or non-dominant carriers (3) Implement a new Competitive Market Test to determine where competition exists (4) imposition of technology neutral regulations (5) Institute price caps on access to legacy TDM networks in non-competitive markets (6) in non-competitive markets wholesale prices should be set in relation to retail prices for any given service.

However, such proposals have been criticized by the industry players and several industry organizations. Their argument being that the new BDS regulations will cause more harm than good, discouraging further network investments, costing jobs and reducing economic output. Incumbent service providers like AT&T Inc. (T - Free Report) , CenturyLink Inc. (CTL - Free Report) and Frontier Communications Corp. (FTR - Free Report) together with several cable MSOs have vehemently opposed this proposal.

Surprisingly, Verizon Communications Inc. (VZ - Free Report) and Incompas, the trade group serving competitive telecom networks were supporters of the FCC move. Verizon currently carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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