FCC’s Wheeler: There needs to be fair access to backhaul

FCC Chairman Tom Wheeler told attendees during this week’s CCA Annual Convention that as it looks to wrap up its work on business data services (BDS) regulations this year, the regulator said that wireless operators need access to competitively priced wireless backhaul services.

Whether it is dark fiber or lit services, the advent of 5G wireless will become an opportunity for a host of existing and new players to offer a mix of new services. Of course, it will also require wireless operators to deploy more cells required to deliver services in millimeter wave bands that are limited by distance.

“Regardless of the spectrum allocation, 5G will require a lot more cells, particularly at the higher frequencies,” Wheeler said during the CCA event. “These small cell sites will need to be connected, so we’ll need a lot more backhaul.”

However, Wheeler added that while 5G is a key opportunity, the wireless industry will need more backhaul options for existing 4G and even emerging Internet of Things (IoT) traffic.

“If there is going to be universal wireless coverage, there needs to be fair access to backhaul,” Wheeler said. “In many areas, competition in the supply of backhaul remains limited, and that can translate into higher costs for wireless networks, higher prices for consumers and an adverse impact on competition.”

The need for cost effective backhaul solutions is tied into the FCC’s ongoing review of the business data services (BDS) marketplace. Wheeler, who is expected to step down after the next president takes office, has maintained that the FCC will complete its BDS proposal this year.

“Before the end of this year, I will present the Commission with a reform proposal that will tackle this issue and encourage innovation and investment in what we now call Business Data Services, while ensuring that lack of competition in some places cannot be used to hold back wireless coverage,” Wheeler said.

FCC Commissioner Clyburn echoed Wheeler’s thoughts in a separate speech, saying that backhaul costs are currently too high because there’s a lack of choice in some markets.

“Backhaul is a significant part of wireless providers’ bottom line, and I have heard numbers as high as 30 percent of operating expenditures devoted to backhaul by mobile providers,” Clyburn said. “In too many areas, the incumbent LEC is the only provider offering backhaul. That can mean gross market power, inflated prices and bad deal terms.”

BDS reform has drawn fire from competitors and incumbent telcos alike.

Incumbent telcos like AT&T and CenturyLink said the FCC is relying on old data that does not reflect the current competitive realities, including the growing presence of cable operators.

Interestingly, a war of words has emerged between CenturyLink and a joint BDS proposal made by Verizon and industry advocacy group Incompas. Following its initial proposal to the FCC in April, Verizon and Incompas in June outlined eight additional elements that they said provided a framework for BDS.

CenturyLink, which filed a motion to strike earlier BDS proposals, called the Verizon/Incompas revised proposal another flawed effort that merely reflects changes in Verizon’s business structure.

For more:
- read Wheeler’s speech

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Level 3: Verizon/Incompas proposal will help the FCC establish a sound business data services regulatory regime