Comcast Comments

Matthew T. Murchison 555 Eleventh Street, N.W., Suite 1000 Direct Dial: +1.202.637.2136 Washington, D.C. 20004-1304 [email protected] Tel: +1.202.637.2200 Fax: +1.202.637.2201 www.lw.com FIRM / AFFILIATE OFFICES Barcelona Moscow Beijing Munich Boston New Jersey Brussels New York Century City Orange County June 28, 2016 Chicago Paris Dubai Riyadh Düsseldorf Rome Frankfurt San Diego Hamburg San Francisco Hong Kong Shanghai VIA ECFS Houston Silicon Valley London Singapore Marlene H. Dortch Los Angeles Tokyo Madrid Washington, D.C. Secretary Milan Federal Communications Commission 445 Twelfth Street, SW Washington, DC 20554 Re: Business Data Services in an Internet Protocol Environment, WC Docket No. 16-143; Investigation of Certain Price Cap Local Exchange Carrier Business Data Services Tariff Pricing Plans, WC Docket No. 15-247; Special Access Rates for Price Cap Local Exchange Carriers, WC Docket No. 05-25 REDACTED – FOR PUBLIC INSPECTION Dear Ms. Dortch: Pursuant to the Protective Orders in the above-captioned proceedings,1 Comcast Corporation (“Comcast”) submits the redacted public version of the attached comments via electronic delivery. Comcast will separately submit a Highly Confidential version of this filing via hand delivery. The {{ }} symbols denote Highly Confidential Information. 1 In the Matter of Investigation of Certain Price Cap Local Exchange Carrier Business Data Services Tariff Pricing Plans, Order and Protective Orders, WC Docket No. 15- 247, DA 15-1387 (rel. Dec. 4, 2015); In the Matter of Special Access Rates for Price Cap Local Exchange Carriers, Modified Protective Order, WC Docket No. 05-25, DA 10-2075 (rel. Oct. 28, 2010); In the Matter of Special Access Rates for Price Cap Local Exchange Carriers, Second Protective Order, WC Docket No. 05-25, DA 10-2419 (rel. Dec. 27, 2010); In the Matter of Special Access Rates for Price Cap Local Exchange Carriers, Order and Data Collection Protective Order, WC Docket No. 05-25, DA 14- 1424 (rel. Oct. 1, 2014). Marlene H. Dortch June 28, 2016 Page 2 Please contact the undersigned should you have any questions regarding this matter. Respectfully submitted, /s/ Matthew T. Murchison Matthew T. Murchison of LATHAM & WATKINS LLP Counsel for Comcast Corporation Attachments REDACTED – FOR PUBLIC INSPECTION Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. 20554 In the Matter of ) ) Business Data Services in an Internet Protocol ) WC Docket No. 16-143 Environment ) ) Investigation of Certain Price Cap Local ) WC Docket No. 15-247 Exchange Carrier Business Data Services Tariff ) Pricing Plans ) ) Special Access for Price Cap Local Exchange ) WC Docket No. 05-25 Carriers ) ) AT&T Corporation Petition for Rulemaking to ) RM-10593 Reform Regulation of Incumbent Local ) Exchange Carrier Rates for Interstate Special ) Access Services ) COMMENTS OF COMCAST CORPORATION Matthew A. Brill Kathryn A. Zachem James H. Barker David M. Don Matthew T. Murchison Mary P. McManus Alexander L. Stout COMCAST CORPORATION Nicholas L. Schlossman 300 New Jersey Avenue, NW LATHAM & WATKINS LLP Suite 700 555 Eleventh Street, NW Washington, DC 20001 Suite 1000 Washington, DC 20004 Lynn R. Charytan Brian A. Rankin Beth A. Choroser COMCAST CORPORATION One Comcast Center 55th Floor Philadelphia, PA 19103 REDACTED – FOR PUBLIC INSPECTION TABLE OF CONTENTS Page INTRODUCTION AND SUMMARY ............................................................................................1 BACKGROUND .............................................................................................................................7 A. Comcast Has Invested Heavily Over the Last Decade in Support of Its Entry into the BDS Marketplace ..............................................................................7 B. Comcast Offers a Variety of Business Data Services ............................................10 1. Comcast Provides an Array of Retail BDS Services to Business Customers ..................................................................................................11 2. Comcast Also Offers a Variety of Wholesale BDS Services ......................13 3. Many of Comcast’s BDS Offerings Are Private Carrier Services .............15 C. Comcast Offers BDS in an Increasingly Competitive Marketplace ......................17 D. Despite Substantial Investments, Comcast and Other Cable Providers Remain New Entrants with Limited Market Share and Geographic Reach ..........20 DISCUSSION ................................................................................................................................22 I. THE COMMISSION SHOULD FOCUS ON PROMOTING BDS COMPETITION BY REMOVING BARRIERS TO ENTRY AND INVESTMENT ..................................................................................................................22 II. THE COMMISSION SHOULD AVOID TAKING ANY STEPS THAT WOULD CREATE NEW BARRIERS TO ENTRY AND INVESTMENT ....................................27 A. The Commission Should Not Subject Competitive BDS Providers to Rate Regulation ..............................................................................................................27 1. Proposals To Impose Rate Regulation on Cable BDS Providers Stem from Deeply Flawed Assumptions .....................................................28 2. Subjecting Competitive BDS Providers to Rate Regulation Would Cause Significant Harms and Depart Dramatically from Precedent ........40 3. The FNPRM’s Rate Regulation Proposal Relies on a Flawed Approach to Assessing Competition ..........................................................51 4. The FNPRM’s Rate Regulation Proposal Would Cause Serious Administrability Problems .........................................................................54 REDACTED – FOR PUBLIC INSPECTION B. The Commission Also Should Refrain from Imposing Wholesale Obligations on Competitive BDS Providers ..........................................................56 III. THE COMMISSION LACKS AUTHORITY TO SUBJECT NON-DOMINANT BDS PROVIDERS TO RATE REGULATION AND OTHER RULES ..........................60 A. The Commission Cannot Compel Comcast To Offer BDS on a Common Carrier Basis...........................................................................................................61 1. Comcast Offers Many of Its BDS Services on a Private Carriage Basis ...........................................................................................................62 2. The Commission Cannot Demonstrate That All BDS Providers Have Market Power Sufficient To Compel Common Carriage .................66 B. Abandoning the Well-Established Dominant/Non-dominant Framework for BDS Would Be Arbitrary and Capricious ........................................................72 IV. A RATIONAL REPLACEMENT OF THE PRICING FLEXIBILITY TRIGGERS TO GUIDE THE TRANSITION FROM LEGACY REGULATION OF INCUMBENT LECS MAY BE WARRANTED ........................................................79 CONCLUSION ..............................................................................................................................82 3 REDACTED – FOR PUBLIC INSPECTION Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. 20554 In the Matter of ) ) Business Data Services in an Internet Protocol ) WC Docket No. 16-143 Environment ) ) Investigation of Certain Price Cap Local ) WC Docket No. 15-247 Exchange Carrier Business Data Services Tariff ) Pricing Plans ) ) Special Access for Price Cap Local Exchange ) WC Docket No. 05-25 Carriers ) ) AT&T Corporation Petition for Rulemaking to ) RM-10593 Reform Regulation of Incumbent Local ) Exchange Carrier Rates for Interstate Special ) Access Services ) COMMENTS OF COMCAST CORPORATION Comcast Corporation (“Comcast”) submits these comments in response to the Further Notice of Proposed Rulemaking (“FNPRM”) adopted on April 28, 2016 in the above-captioned proceedings.1 INTRODUCTION AND SUMMARY The FNPRM, in exploring the appropriate treatment of business data services (“BDS”), begins with the bedrock proposition that “competition is best” and represents the “single best 1 See Business Data Services in an Internet Protocol Environment; Investigation of Certain Price Cap Local Exchange Carrier Business Data Services Tariff Pricing Plans; Special Access for Price Cap Local Exchange Carriers; AT&T Corporation Petition for Rulemaking to Reform Regulation of Incumbent Local Exchange Carrier Rates for Interstate Special Access Services, WC Docket Nos. 16-143, 15-247, 05-25, RM-10593, Tariff Investigation Order and Further Notice of Proposed Rulemaking, FCC 16-54 (rel. May 2, 2016) (“FNPRM” or “Tariff Investigation Order”). REDACTED – FOR PUBLIC INSPECTION way of ensuring that consumers benefit.”2 And in light of this “deeply rooted preference for preserving and enhancing competition,”3 the Commission appropriately seeks “to facilitate the continued evolution of the type of robust competition that will result in ever-improving services for American businesses and consumers.”4 Yet one aspect of the FNPRM presents a stark and alarming threat of thwarting this paramount objective. While the Commission seeks to revise the price cap regime that applies to dominant incumbent local exchange carriers (“LECs” or “ILECs”), the FNPRM inexplicably introduces the prospect of subjecting new entrants in the BDS marketplace to rate regulation and other heavy-handed mandates. The FNPRM is far from clear on exactly how the Commission would translate this ill-founded idea into a set of rules; the item raises the specter of regulating

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