Federal Communications Commission DA 17-663
Before the
FEDERAL COMMUNICATIONS COMMISSION
WASHINGTON, D.C. 20554
In the Matter of
Business Data Services in an Internet Protocol 
Environment
Technology Transitions 
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
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WC Docket No. 16-143
GN Docket No. 13-5
WC Docket No. 05-25
RM-10593
ORDER DENYING STAY MOTION
Adopted:  July 10, 2017 Released:  July 10, 2017
By the Chief, Wireline Competition Bureau:
I. INTRODUCTION
1. In this Order, the Wireline Competition Bureau (Bureau) denies the Motion for Stay of 
the Federal Communications Commission’s Report and Order in the Business Data Services Proceeding 
(the BDS Order) filed by Ad Hoc Telecom Users Committee, BT Americas, Inc., INCOMPAS and 
Windstream Services, LLC (Petitioners).
1
The Commission’s adoption of the BDS Order on April 20, 
2017, was the culmination of more than ten years of analysis of the business data services (BDS) market, 
numerous requests for comment, and a massive data collection.  Based on a careful review of that record, 
including consideration of substantial numbers of comments and ex parte presentations filed by 
Petitioners, the Commission established a regulatory framework that accounts for the dynamic 
competitive realities of the BDS marketplace, provides ample regulatory protections for all stakeholders 
in that marketplace, and creates a regulatory environment that will promote investment, innovation, and 
buildout.  Among other things, the Commission determined the appropriate level of regulation for packet-
based and time division multiplexing (TDM) BDS.  The Commission relieved packet-based services and 
transport services from ex ante pricing regulation.  It also established a competitive market test (CMT) to 
determine where ex ante pricing regulation of TDM end user channel terminations could be relieved in 
favor of competition.  At the same time, the Commission reaffirmed the applicability of the provisions of 
the Communications Act aimed at ensuring just and reasonable rates, terms, and conditions to all such 
services.  The Commission also provided for a lengthy transition period, further showing that there will 
                                                     
1
Motion for Stay Pending Judicial Review, WC Docket No. 16-143, GN Docket No. 13-5, WC Docket No. 05-25  
(filed June 23, 2017), https://ecfsapi.fcc.gov/file/106230709109889/2017-06-
23%20Motion%20for%20Stay%20(REDACTED).pdf (Motion for Stay); see also Business Data Services in an 
Internet Protocol Environment; Technology Transitions; 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 No. 16-143, GN Docket No. 13-5, WC Docket No. 05-25, RM-
10593, Report and Order, 32 FCC Rcd 3459 (2017) (BDS Order).  
Federal Communications Commission DA 17-663
2
no irreparable harm either on August 1, 2017, the effective date of the BDS Order, or any time after that.  
Upon consideration of Petitioners’ arguments for a stay of the BDS Order, we find they fail to 
demonstrate that they are likely to succeed on the merits, that they will suffer irreparable injury, or that 
the balance of the equities favors granting a stay.  Accordingly, we deny the motion for the reasons set 
forth more fully below.  
II. DISCUSSION
2. To qualify for the extraordinary remedy of a stay, Petitioners must show that:  (1) they 
are likely to prevail on the merits; (2) they will suffer irreparable harm absent the grant of preliminary 
relief; (3) other parties will not be harmed if the stay is granted; and (4) the public interest would favor 
grant of the stay.
2
  Petitioners generally challenge the CMT and the rationale underlying its development 
and application, whether the action taken in the BDS Order complies with the Administrative Procedure 
Act (APA), and the effect of the reforms adopted in the BDS Order in alleging that they will suffer 
irreparable harm absent a stay.      
3. We turn first to the Petitioners’ arguments regarding their likelihood of success on the 
merits—challenges to the Commission’s competitive findings, adoption of the CMT, and arguments 
regarding notice—and find that they are without merit.  We next find that Petitioners have wholly failed 
to demonstrate that they will suffer irreparable injury should their stay request be denied.  Finally, we find 
that a balance of the equities does not support a stay but would rather harm the public by continuing over-
regulation of the BDS market should we grant their motion and delay the implementation of the BDS 
Order.   
A. Petitioners are Unlikely to Prevail on the Merits
4. We find that Petitioners have failed to demonstrate that they are likely to succeed on the 
merits.  The heart of their substantive argument is that the Commission’s CMT, by taking account of the 
effect of a nearby facilities-based competitor and finding that the existence of at least one such competitor 
warrants the removal of one particular form of regulation (price cap regulation), violates antitrust 
principles.  Their arguments are misplaced in this rulemaking proceeding and fail to account for 
significant record evidence supporting the Commission’s market analysis and adoption of a CMT.  The
Petitioners also argue that the Commission’s light touch approach to the transport market was flawed, that 
the Commission should have applied the CMT to already deregulated packet-based services as well as 
TDM services, and that the Commission did not provide adequate notice and opportunity for comment 
before adoption of the CMT and rules governing transport services.  However, the Commission provided 
more than adequate notice for all its actions in the BDS Order and those actions are well supported by the 
record received in response to the Commission’s Further Notice and by Commission and other relevant 
precedent.    
1. Competitive Market Test 
5. Petitioners are unlikely to prevail in their challenge to the Commission’s CMT because in 
the BDS Order the Commission analyzed the market relying on more than ten years of record evidence, 
based its analysis on sound legal ground, and adequately explained its conclusions.  Moreover, 
Petitioners’ arguments regarding the CMT suffer from two major flaws.  First, Petitioners argue that the 
Commission was required to conduct a very particular form of antitrust analysis used in merger analysis, 
which Petitioners believe would favor their preferred regulatory outcome.
3
  As the Commission explains 
                                                     
2
See Washington Metro. Area Transit Comm’n v. Holiday Tours, Inc., 559 F.2d 841, 843 (D.C. Cir. 1977); Virginia 
Petroleum Jobbers Ass’n v. Federal Power Comm’n, 259 F.2d 921, 925 (D.C. Cir. 1958).
3
See Motion for Stay at 12, 16, 23.  Petitioners rely on the Horizontal Merger Guidelines to support many of their 
contentions and seem to believe that the Commission must follow the Horizontal Merger Guidelines in analyzing or 
devising the appropriate regulatory structure for the market. However, the Guidelines are just that, i.e., guidelines,
even for the antitrust agencies, and they possess only persuasive authority in the enforcement of the antitrust laws.  
(continued….)
Federal Communications Commission DA 17-663
3
in the BDS Order, particularly in this rulemaking context, the “competition analysis . . . is informed by, 
but not limited to, traditional antitrust principles designed to protect competition.”
4
  The central question 
before the Commission was whether, in the absence of one particular form of ex ante, price cap 
regulation, other regulatory methods and competition would be sufficient to constrain rates to just and 
reasonable levels.
5
  Petitioners fail to acknowledge that rulemakings raise different considerations than 
merger review, such as costs associated with traditional, ex ante price regulation.
6
  Second, Petitioners 
generally appear to conflate the market analysis in the BDS Order with the CMT.  Although the market 
analysis plays an important role in the Commission’s decision making, it is not, as the BDS Order makes 
clear, the sole factor; the Commission determined that it must take into account other policy objectives, 
such as promoting technology transitions and considering the administrative burden regulations may 
impose.  Accordingly, in the BDS Order the Commission reasonably took account of the effect on BDS 
prices of nearby facilities-based competitors in a manner consistent with the law, record, and compelling
policy objectives.  Similarly, the BDS Order makes clear that the Commission reasonably determined that 
a single competitor would be sufficient to discipline BDS rates such that continued ex ante price cap 
regulation was no longer necessary.  
a. The Nearby Competitor Standard
6. Petitioners’ challenge to the nearby competitor standard adopted by the Commission for 
use in the CMT is unsupported by the record and is therefore unlikely to prevail.  Petitioners argue that 
the Commission was wrong to find that sufficient competition exists where there is a nearby competitor, 
which it defines as one competitive provider with a network within a half mile (800 meters) of a location 
with BDS demand.
7
  As the Commission made clear in the BDS Order, customers routinely consider 
nearby providers as realistic alternatives to incumbent LEC facilities.
8
  We conclude that the 
Commission’s nearby competitor standard is well documented and supported in the BDS Order and in the 
record and therefore find the Petitioners’ arguments lack merit.
9
  We nevertheless address several of 
Petitioners’ specific allegations regarding the Commission’s nearby competitor standard.  
7. Market Participants.  Petitioners assert that neither of the types of nearby competitors 
that the Commission relied on in its two-prong CMT qualify as market participants under the 2010 
Horizontal Merger Guidelines.
10
  Petitioners’ reliance on the analysis suggested by the Horizontal Merger 
(Continued from previous page)                                                            
See Horizontal Merger Guidelines, U.S. Dept. of Justice & Fed. Trade Comm’n, § 1 (Aug. 19, 2010) (2010 
Horizontal Merger Guidelines) (noting the Guidelines “are not intended to describe how the Agencies analyze cases 
other than horizontal mergers” and emphasizing that even “merger analysis does not consist of uniform application 
of a single methodology” but rather “it is a fact-specific process”); United States v. H&R Block, Inc., 833 F. Supp. 
2d 36, 52 n.10 (D.D.C. 2011) (observing in a merger case that the Horizontal Merger Guidelines “are not binding 
upon this Court, but courts in antitrust cases often look to them as persuasive authority”).  
4
BDS Order, 32 FCC Rcd at 3467, para. 12. 
5
See 47 U.S.C. §§ 201(b), 202(a).  In conducting this analysis, the Commission may “consider technological and 
market changes as well as trends within the communications industry, including the nature and rate of change.”  
SeeApplications of Comcast Corp., General Electric Comp. and NBC Universal, Inc. for Consent to Assign Licenses 
and Transfer Control of Licensees, Memorandum Opinion and Order, 26 FCC Rcd 4238, 4248, para. 23 (2011).
6
See BDS Order, 32 FCC Rcd at 3517, para. 126 (“Even well-crafted regulations have unintended consequences, 
inhibiting competition, reducing investment, and end user benefits.”). 
7
See Motion for Stay at 10-22; BDS Order, 32 FCC Rcd at 3482, 3520-21, paras. 45, 132-33.  
8
See BDS Order, 32 FCC Rcd at 3512-3513, para. 118 n.360 (demonstrating that competitive providers employ 
extensive “proactive” sales force to win new customers from incumbent LECs and wholesalers obtain not only “on 
net” but also “near net” building lists).  
9
See id. Parts III.C. and IV.C.3.a.  
10
Motion for Stay at 12.  
Federal Communications Commission DA 17-663
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Guidelines is misplaced—the Guidelines are not binding in the merger context and certainly are not 
binding on the Commission in its exercise of rulemaking authority under the Communications Act of 
1934, as amended (the Act).  More fundamentally, Petitioners’ conclusion that competitive LECs 
(CLECs) and cable operators are not viable market participants is clearly erroneous.  
8. The Commission’s analysis of competitive conditions in the BDS industry led it to define 
the relevant market as the area within a half mile of a customer location.
11
  Companies with facilities 
within a half mile are already market participants.  Petitioners nonetheless appear to find it dispositive 
that the Commission “expressly disclaims that a second wireline provider … is a rapid entrant.”
12
  But 
Petitioners misunderstand the concept of entrants in competitive analysis.  An entrant is a firm that may, 
at some future point in time, compete for customers within the market.  In this proceeding, the 
Commission determined that firms that have facilities within a half mile of a service location are already 
market participants because they are likely to respond to RFPs and similar requests for service and 
therefore are currently competing for customers within the market.
13
  The Commission’s finding was 
based on significant record evidence of the buildout strategies of various BDS competitors, including 
those of competitive LECs and cable providers.
14
  Moreover, the BDS Order makes it clear that the 
Commission did consider the costs and ability of providers to deploy facilities.
15
  Indeed, the Commission 
recognized that many competitive providers have facilities significantly less than a half mile from 
buildings with demand for BDS, with half of such buildings located within 88 feet of competitive fiber,
16
and that competitors into account the current demand at any location, the likely growth in future demand, 
and the opportunity to incrementally extend their network to other nearby locations.
17
9. Petitioners’ reliance on a particular view of antitrust authority as binding authority on the 
Commission, and their suggestion that the Commission’s previous treatment of certain proposed mergers 
should be controlling, is misplaced in this rulemaking context.
18
  The analysis that led the Commission to 
adopt the CMT as part of the BDS rulemaking is very different from the analysis it employs when 
conducting a merger review.  In the BDS proceeding, the Commission was not considering a transfer of 
an FCC license within the limited context of transaction-specific facts.  Instead, it reasonably considered
the long-term costs and benefits of tariffing and other ex ante pricing regulation in an increasingly 
dynamic market that remains subject to continuing Commission jurisdiction under Title II of the Act.  
                                                     
11
BDS Order, 32 FCC Rcd at 3482, para. 45.
12
Motion for Stay at 12-13 (emphasis in original).  
13
BDS Order, 32 FCC Rcd at 3479-83, paras. 39-47.
14
See id.
15
As both the BDS Order and the Further Notice make clear, the Commission’s choice of a half mile distance is 
supported by considerable record evidence from a range of market participants, including competitive LECs and 
incumbent LECs, as well as the Rysman Paper.  See BDS Order, 32 FCC Rcd 3479-81, paras. 40-41; 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 Corp. 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, 31 FCC Rcd 4723, 4822-36, 4814-15, para. 211 (2016) (Further Notice).  Competitive LECs 
that provided support for the Commission’s half mile distance included Windstream.  See BDS Order, 32 FCC Rcd 
at 3482, para. 45 n.146.  
16
BDS Order, 32 FCC Rcd at 3481, para. 42.
17
Id. at 3482, para. 44.
18
See Motion for Stay at 22-23.
Federal Communications Commission DA 17-663
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10. In the BDS Order, the Commission relied on its “conclusion that a ‘nearby BDS 
competitor’ provides sufficient competition to forgo” federal tariffing requirements under the CMT.
19
  
The Commission recognized that “competitors outside of the customer’s location can affect pricing 
because the winning bid represents the competitive offer that others must beat, even if that competitor 
does not already have facilities in the customer’s building.”
20
  The Commission also found that 
competitive pressure often exists outside of the geographic ranges specified by the CMT.
21
  Moreover, the 
Commission purposefully understated the competitive pressure present in the BDS market by excluding 
from the CMT competition from other types of service providers, finding that “[a]lthough our competitive 
market test takes into account competition only from providers of copper, fiber, and coax last-mile 
facilities, in many locations there are likely more competitors present than the two captured by the test, 
such as providers of fixed wireless last-mile services, including providers of emerging 5G last-mile 
transmission technology, which promises to be widespread.”
22
  As such, the Commission deliberately 
chose a conservative and administrable approach to formulating a regulatory framework based on a 
nearby competitor standard, which is appropriate in a rulemaking, as opposed to a merger review, context.  
11. Petitioners specifically challenge the basis for the second prong of the CMT and question 
whether cable operators can be effective market participants in the business data services market.  We do 
not find merit to Petitioners’ suggestion that the Commission should have ignored or severely discounted 
the impact of competition provided by cable operators in BDS markets.  Petitioners initially assert that 
“the Commission never contends that cable ‘competitors’ under the CMT’s second prong are actually in 
the market.”
23
  This is a plain misreading of the BDS Order.  In it, the Commission reviewed the record 
evidence of cable providers’ fiber and hybrid fiber coaxial (HFC) services and found that while HFC-
based, best-efforts service is distinguishable from traditional BDS in some senses, substitution 
nonetheless occurs.
24
  More importantly, the Commission found that the underlying facilities used to 
provision such best-efforts services “are being repurposed to provide business data services.”
25
Indeed, 
there is ample record evidence that the presence of HFC facilities makes it easier for cable providers to 
build laterals to customer locations.
26
  
12. In fact, in the BDS Order, the Commission summarized the substantial record evidence of 
cable operators’ investments in networks that can and are being repurposed to provide business data 
services and the revenues cable derives from those investments.
27
  The Commission found that cable 
providers are rapidly expanding their market share in the business data services market and the record 
shows many customers, including wholesale customers, are willing to use cable last mile facilities, 
                                                     
19
BDS Order, 32 FCC Rcd at 3512, para. 117.
20
Id. at 3482-83, para. 46.
21
Id. at 3480-81, para. 41.
22
Id. at 3515, para. 122.
23
SeeMotion for Stay at 13.
24
See BDS Order, 32 FCC Rcd at 3473-75, paras. 27-31. 
25
Id. at 3474-75, para. 31. 
26
See BDS Order, 32 FCC Rcd at 3513-14, para. 119; Letter from Matthew A. Brill, Counsel to Comcast, to 
Marlene H. Dortch, Secretary, FCC, WC Docket No. 05-25 et al., at 2 (filed Mar. 13, 2017) (Comcast Mar. 13, 2017 
Letter) (explaining that “the existence of HFC facilities can facilitate Comcast’s ability to construct new fiber 
connections to customer locations more rapidly and at lower cost than if Comcast lacked nearby HFC facilities. That 
is because Comcast’s HFC network consists of extensive fiber connectivity between the network core and local 
nodes, which then are connected to customer locations by coaxial cable.”). 
27
See BDS Order, 32 FCC Rcd at 3485-88, paras. 55-62.  
Federal Communications Commission DA 17-663
6
including their HFC facilities, to meet their business data service needs.
28
  Importantly, recent trends in 
the market confirm the Commission’s judgment that cable is an active participant in the market and that 
its presence is serving to intensify price competition in the BDS market.
29
  
13. Petitioners’ assertion that cable operators “will not and cannot commit to using their 
cable networks to provide BDS in any significant quantity” and “cable cannot sell EoHFC [Ethernet over 
Hybrid-Fiber Coaxial] in any significant quantity”
30
misreads and contradicts the basic trends in the 
business data services market, assuming, contrary to record evidence, that cable providers cannot, and 
will not, further utilize EoHFC networks to provide BDS in increasingly significant quantity.
31
  Further, 
EoHFC networks represent opportunities for lower cost expansion in, and nearby, geographies, as 
opposed to greenfield entry and expansion.
32
  The fact that cable companies’ BDS revenues for their 
HFC-based service have grown at double-digit rates demonstrates that cable companies do not risk 
overwhelming their HFC networks’ capacity by expanding their business data services customer base.
33
  
14. As the Commission noted in the BDS Order, in recent years, cable operators have 
invested billions of dollars in their networks to provide business data services and have experienced 
substantial BDS revenue growth as a result.
34
  Other public analysis of the industry over the same 
timeframe arrives at a similar conclusion.
35
  It was reasonable for the Commission, based upon the record, 
to treat nearby cable networks as competitively relevant, and its use of nearby cable providers for 
purposes of the second prong of the CMT is well grounded in a substantial body of record evidence.  
Finally, application of the cable prong of the CMT accounts for less than a single percent of the locations 
                                                     
28
See id. at 3485-88, paras. 55-62 (detailing evidence of cable’s aggressive expansion in the BDS market); Letter 
from Curtis Groves, Counsel for Verizon Communications, Inc., to Marlene H. Dortch, Secretary, FCC, WC Docket 
Nos. 05-25 et al., at 5 (filed Mar. 1, 2016) (detailing Verizon’s competitive response to cable industry’s capture of 
Verizon’s retail and wholesale wireline business customers); Sean Buckley, Sprint Ropes in Ethernet over Copper, 
Ethernet over DOCSIS into Ethernet strategy, FierceTelecom (May 15, 2016), 
http://www.fiercetelecom.com/story/sprint-ropes-ethernet-over-copper-ethernet-over-docsis-ethernet-strategy/2016-
05-15 (reporting Sprint announced launching “Ethernet over DOCSIS options … It is the same Ethernet access, but 
just instead of using fiber we’ll use existing copper in the ground or the cable plant that Comcast, Cox, and others 
offer services on . . . .”).
29
See, e.g., Moffett/Nathanson, U.S. Communications Infrastructure, U.S. Telecommunications, U.S. Cable & 
Satellite, U.S. Communications Infrastructure, Telecom, & Cable: Commercial Wireline…  The Case of the Missing 
Revenue, at 1, 15-16 (June 16, 2017) (Moffet/Nathanson June 2017 Report) (pointing out that “cable operators have 
been incrementally more aggressive in pursuing new business” and noting the revenues flatlined likely because of 
cable’s aggressive pricing and customers “transition[ing] away from legacy services toward next generation 
services”).   
30
Motion for Stay at 13, 18.  
31
See BDS Order, 32 FCC Rcd at 3474-75, paras. 30-31. 
32
See id. at 3467-73, 3785, 3798, paras. 13, 28 n.81, 28-29, 55-56, 83; Comcast Mar. 13, 2017 Letter at 2; Sean 
Buckley, Comcast, Charter Lead Cables Challenges to Telcos in the Business Services Sector, FierceTelecom (Dec. 
15, 2016), http://www.fiercetelecom.com/telecom/comcast-charter-lead-cable-s-challenge-to-telcos-business-
services-sector (“[C]able operators enjoy a largely local presence with an embedded base of traditional hybrid fiber 
coax (HFC) cable that they can rapidly use to scale higher speed services and voice to local business customers”).
33
See, e.g., Letter from Matthew A. Brill, Counsel to Time Warner Cable Inc., to Marlene H. Dortch, Secretary, 
FCC, WC Docket No. 05-25, at 2 (filed on Mar. 3, 2016).  
34
See BDS Order, 32 FCC Rcd at 3485-88, paras. 55-62.  
35
Moffett/Nathanson June 2017 Report at Exh. 2 (showing cable BDS market share growing from 2 percent in 2007 
to 14% in 2016) and at 5 (“Cable has posted blistering growth rates, which remain in the mid-teens [percentages] 
even after tapering off in recent years as the base of business has grown.”).  
Federal Communications Commission DA 17-663
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that the Commission determined to be in counties deemed competitive, so its practical effect on an 
independent basis is very slight.
36
  We therefore find Petitioners are unlikely to prevail on this issue.   
15. Barriers to Entry.  Petitioners allege the Commission failed to analyze all barriers to 
entry and consider all record evidence on that point.
37
  Some of Petitioners’ arguments stem from their 
confusing the BDS Order’s market analysis and its competitive market test.  The Commission found that 
providers with network facilities within a half mile of a location generally incur lower barriers to 
facilities-based entry, in part, due to being in close proximity to the customer’s location already.
38
  
Similarly, cable provider facilities that are in the same census block as a location with BDS demand also 
are considered by the Commission as being competitively relevant.
39
  The Commission, in the BDS 
Order, as well as in the earlier Further Notice, therefore, addressed the issue of barriers to facilities-based
entry extensively, including discussing the applicable timeframe, likelihood, and sufficiency of entrants, 
as well as the evidence of actual entry that has been taking place and predicted to continue.
40
  
16. As to timeframe or timeliness of entry, Petitioners assert that the Commission’s 
estimation that a facilities-based entry of a nearby competitor is likely to occur in the near to medium 
term – i.e., within three to five years – makes the competitor “not a timely entrant.”
41
  In the BDS Order
the Commission made it clear that although facilities-based entry may take a year or two in some 
circumstances, the existence of the nearby competitor “generally tempers prices in the short term.”
42
  The 
BDS Order further states: 
[A] business data services competitor does not need to be already offering service in 
a given building to constrain a supplier at that location.  A nearby business data services 
competitor constrains pricing by responding to RFPs and participating in similar customer 
service bidding requests, which creates a pricing floor without any physical presence of 
the potential competitor in the nearby geography.
43
Moreover, the 2010 Horizontal Merger Guidelines focus on the combined factors of whether entry would 
be timely, likely, and sufficient, as the Commission did as part of its analysis.
44
  There is no explicit 
                                                     
36
See BDS Order, 32 FCC Rcd at 3526, para. 142.
37
See Motion for Stay at 14-22.
38
See BDS Order, 32 FCC Rcd at 3482, 3512-13, paras. 45, 118.
39
Id. at 3520-21, para. 133 (“Given the high sunk cost nature of cable broadband networks, we find when a cable 
provider is capable of providing Internet broadband service within any census block, then generally they have the 
incentive to make the incremental investment necessary to serve locations with BDS demand in that census block, 
especially over the medium term.”).  
40
See id. at 3483-90, paras. 49-67; see also Further Notice, 31 FCC Rcd at 4822-36, paras. 224-30 (2016). 
41
Motion for Stay at 14-15 & n.43 (citing cases on timeliness of entry in other industries but failing to show how 
conditions in those industries are like those in the business data services).  
42
BDS Order 32 FCC Rcd at 3467, para. 13.  
43
Id. at 3490, para. 67.  
44
We also note that the 2010 Horizontal Merger Guidelines abandoned an explicit two-year timing requirement for 
entry as part of the revision of the 1997 Horizontal Merger Guidelines.  Compare 2010 Horizontal Merger 
Guidelines § 9 (silent on specific timing requirement) with 1997 Horizontal Merger Guidelines § 3.2 (“The Agency 
generally will consider timely only those committed entry alternatives that can be achieved within two years from 
initial planning to significant market impact.”).  
Federal Communications Commission DA 17-663
8
regulatory or legal shot-clock for entry under the Communications Act or otherwise, as Petitioners 
suggest, particularly in a non-merger context.
45
  
17. Regarding the likelihood of entry, Petitioners fault the Commission for not considering 
the “economic value of demand” for low bandwidth DS1s and DS3s and failing to accord more weight to 
a CostQuest study.
46
  Petitioners’ argument ignores the substantial discussion in the BDS Order on 
various strategies providers employ to justify extending laterals to less profitable locations, including 
such factors as marketing to additional nearby customers and requiring longer contract terms to recoup 
investment.
47
  There is ample record evidence that competitive providers routinely build for demand as 
low as 10 Mbps and, in fact, some cable providers undertake “proactive fiber buildouts” even before 
securing the first paying customer in the market.
48
  Regarding the CostQuest study, the study’s 
conclusion—that “an economically rational CLEC will not self-deploy to serve a single customer with 
less than 1 Gbps of capacity per building” —is predicated on the case of building a network ring, not a 
lateral from an existing network.
49
  Accordingly, the CostQuest study is only marginally relevant, if at all, 
to the Commission’s analysis of buildout costs from an existing network ring.  Petitioners also argue that 
in addition to buildout costs, providers also encounter other challenges, such as gaining access to 
buildings and rights of way.
50
  Although some commenters mentioned these potential obstacles to 
buildout, they neither documented nor quantified them in the record.  Imposing widespread regulations 
based on such residual buildout costs would greatly increase the social cost of regulation.
51
18. Business Density.  Petitioners also fault the Commission for “failing to take any steps to 
approximate demand” or to incorporate “an approximation of demand into its test” by using business 
density or some other proxy for demand to determine whether it would be profitable to extend a lateral to 
a particular location.
52
  Petitioners also note that the Commission used business density analysis in its 
2012 Suspension Order.
53
  Petitioners, however, advocate inconsistently on this point.  For example, some 
competitive LECs—including one of the Petitioners—opposed using business density in their comments 
submitted in this proceeding.
54
  
                                                     
45
Petitioners cite Commission precedent specifying or suggesting timeframes shorter than three to five years.  See 
Motion for Stay at 15 n.44.  While such timeframes may provide guidance, they are not binding in nature as 
Petitioners suggest.  The Commission has not restricted its own discretion to consider longer timeframes, 
particularly in rulemakings such as this one.  
46
Motion for Stay at 19-20. 
47
BDS Order, 32 FCC Rcd at 3481-82, 3520, paras. 42-43, 132.  The Commission also recognized that “rapidly 
increasing bandwidth demands will place an ever increasing demand for [BDS] services.”  Id. at 3461, para. 3.  
48
See XO Jan. 27, 2016 Comments, Decl. of George Kuzmanovski at para. 18; Comcast June 28, 2016 Comments at 
9. 
49
Letter from Jennie B. Chandra, Vice President of Public Policy and Strategy, Windstream Corporation, to Marlene 
H. Dortch, Secretary, FCC, WC Docket No. 05-25 et al., Attach. A at 2 (filed June 8, 2015) (CostQuest White 
Paper).  The other filings that Petitioners cite state that only a fraction of the CostQuest White Paper’s claimed 
requirement of 1 Gbps capacity is necessary for build-out.  See Motion for Stay at 19 n.60.  
50
See Motion for Stay at 17-18.  
51
See BDS Order, 32 FCC Rcd at 3517-19, paras. 125-29. 
52
Motion for Stay at 21, n.66. 
53
Id. (referring to Special Access for Price Cap Local Exchange Carriers; AT&T Corp. Petition for Rulemaking to 
Reform Regulation of Incumbent Local Exchange Carrier Rates for Interstate Special Access Services, WC Docket 
No. 05-25, RM-10593, Report and Order, 27 FCC Rcd 10557 (2012) (2012 Suspension Order)).
54
See Birch et al. June 28, 2016 Comments at 51 (stating “there is no guarantee that the businesses in denser areas 
will be of the type or size that require Business Data Services” and therefore “business density is not even an 
effective indirect proxy for the presence of competitors”) (emphasis in original); see also Comcast June 28, 2016 
(continued….)
Federal Communications Commission DA 17-663
9
19. While the Commission found business density metrics to be useful as a diagnostic tool in 
analyzing the discrete markets it examined in the 2012 Suspension Order,
55
and while it sought comment 
in the Further Notice on including a similar metric in its CMT,
56
it ultimately declined to incorporate 
business density metrics into the CMT.  Density alone cannot predict competitive deployment.  For 
example, a cell tower located along a rural highway may be an attractive investment option for providers 
despite being in a low-business density area.  Moreover, business density is not a fixed variable and 
would require reevaluation on an ongoing basis, raising administrability concerns, which were an 
important concern in the Further Notice and comments filed in response.
57
  
b. Effect of a Single BDS Competitor 
20. Petitioners challenge the Commission’s determination that a single BDS competitor will 
discipline incumbent LEC rates.
58
  We find that the Commission’s adoption of a single competitor 
standard is a reasonable response to the record collected in this proceeding and well within its discretion 
and therefore find Petitioners are unlikely to prevail on the merits of this issue.  
21. Petitioners cite precedent acknowledging potential competitive harms that can arise from 
a market with two participants, particularly the Commission’s Qwest Phoenix decision.
59
  The Qwest 
Phoenix decision, however, dealt with a two-competitor market as of 2010.  Since then, that market has 
seen dramatic changes with the large-scale entry of cable in the business data services market.  Moreover, 
Qwest Phoenix was principally concerned with the level of competition in mass market 
telecommunications services, not business data services.  To the extent that the Qwest Phoenix decision
addressed business data services, its characterization of the 2010 market is fundamentally different than 
the Commission’s characterization of the current BDS market in the BDS Order, reflecting the changed 
circumstances in the market with cable entry.  The Commission based its decision in Qwest Phoenix on 
specific factual findings that the local cable provider was connected to “relatively few enterprise 
customers” and that “other competitors likewise have few lit buildings.”
60
  The Commission further 
concluded that “Cox’s last-mile network . . . could not readily serve most . . . enterprise businesses”
61
and 
that therefore “Qwest has not demonstrated that there exists significant actual or potential competition for 
enterprise services.”
62
  By contrast, in the BDS Order, the Commission found a dynamically evolving 
(Continued from previous page)                                                            
Comments at 53 (asserting that “looking only at demand in a market” by using a business density metric “would 
entirely ignore the level of competitiveness on the supply side”) (emphasis in original).
55
2012 Suspension Order, 27 FCC Rcd at 10585-86, para. 51.  
56
Further Notice, 31 FCC Rcd at 4846, para. 293.  
57
See BDS Order, 32 FCC Rcd at 3504-05, para. 99 n.305.  Administrability is an important factor the Commission 
considers when choosing among regulatory options.  
58
Motion for Stay at 22-29. 
59
Motion for Stay at 24-26; Petition of Qwest Corp. for Forbearance Pursuant to 47 U.S.C. § 160(C) in the 
Phoenix, Arizona Metropolitan Statistical Area, WC Docket No. 09-135, Memorandum Opinion and Order, 25 FCC 
Rcd 8622, 8637, para. 30 n.91 (2010) (Qwest Phoenix Order).  The Qwest Phoenix decision identifies the Bertrand 
Model as a type of duopoly that “can yield a competitive outcome assuming homogeneous products and no capacity 
constraints.”  Qwest Phoenix Order, 25 FCC Rcd at 8637, para. 30 n.88.  Petitioners assert that the BDS market is 
not an example of Bertrand competition since “cable faces real capacity constraints.”  Motion for Stay at 25 n.79.  
That assertion, however, is not reconcilable with cable’s steady, double-digit BDS revenue increases in recent years 
that are well documented in the BDS Order.  See, e.g., BDS Order, 32 FCC Rcd at 3488, para. 62.  
60
Qwest Phoenix Order, 25 FCC Rcd at 8661, para. 73. 
61
Id. at 8662, para. 74.
62
Id. at 8668, para. 87.  
Federal Communications Commission DA 17-663
10
market with extensive and growing competition from various competitive providers and cable companies 
and based its CMT on the actual, not predicted, presence of competitors nearby.
63
  
22. Petitioners contend that even in industries with high sunk costs, duopolies do not lead to 
competitive prices.
64
  The Commission, however, found in the BDS Order “that the high sunk cost nature 
of the BDS market gives providers the incentive to extend their network facilities to new locations with 
demand even when those locations contribute revenue only marginally above the incremental cost of the 
network extension.”
65
  It further stated, “consistent with other industries with large sunk costs, the impact 
of a second provider is likely to be particularly profound in the case of wireline network providers.”
66
  To 
the extent Petitioners argue that the business data services market is not a high sunk cost industry but is 
rather characterized by high marginal costs, their argument is flawed.
67
  While incremental costs to serve 
an additional location may not be negligible, they are low relative to the considerably higher sunk costs of 
deploying communications networks generally. Petitioners in fact underscore this point by citing several 
sources that support the relatively low nature of incremental build out costs.
68
  
23. Additionally, in the BDS Order the Commission found that the disproportionate impact 
of a single competitor was another reason for basing the CMT, which determines when the Commission 
should exit ex ante price regulation, on a single competitor standard.  The Commission explained that “the 
largest benefits from competition come from the presence of a second provider, with added benefits of 
additional providers falling thereafter.”
69
  Petitioners incorrectly claim that the Commission did not “rely 
on any empirical data in support of its conclusion that a single BDS competitor has a substantial 
competitive effect on prices.”
70
  Data in the record quantify the disproportionate impact of a single 
competitor—data supplied by a leading competitive LEC.
71
  These data further show the relatively minor 
impact that second, third, and additional competitors have on pricing.
72
  Petitioners fail to acknowledge 
this finding or respond to the data that support it.
73
  Ultimately, we find that Petitioners fail to rebut the 
Commission’s finding that the high sunk cost nature of BDS networks provides strong incentive for 
competitive deployment, even when a single competitor is present.  
                                                     
63
See BDS Order, 32 FCC Rcd at 3485-89, 3506, 3507 paras. 55-65, 103, 106.  See also Sean Buckley, Comcast, 
Charter Lead Cables Challenges to Telcos in the Business Services Sector, FierceTelecom (Dec. 15, 2016), 
http://www.fiercetelecom.com/telecom/comcast-charter-lead-cable-s-challenge-to-telcos-business-services-sector
(“‘Customers are getting more capacity, prices are coming down even though it’s just us as the new competitor and 
the incumbent,’ [SVP of Mediacom Business, Dan] Templin said.”).  
64
Motion for Stay at 23.  
65
BDS Order, 32 FCC Rcd at 3515, para. 121.
66
Id. at 3514, para. 120.
67
Motion for Stay at 25, n. 80.  In support of this argument Petitioners cite declarations of economists who filed on 
behalf of various competitive LECs.  None of the cited economists, however, compared the magnitude of marginal 
costs of extending a lateral to the overall sunk network costs. 
68
Id. at 28 n.89.  
69
BDS Order, 32 FCC Rcd at 3514-15, para. 120.  
70
Motion for Stay at 29.  
71
BDS Order, 32 FCC Rcd at 3514-15, para. 120 & n.369 (providing information demonstrating that in one of 
Sprint’s request for bids, the first additional bidder produced a much greater reduction in prices than subsequent 
bidders); Sprint June 28, 2016 Comments, Exh. B, Decl. of Chris Frentrup at paras. 4, 10.  
72
BDS Order, 32 FCC Rcd at 3514, para. 120 n.369.  
73
Motion for Stay at 29 (“Nor does the Commission rely on any empirical data in support of its conclusion that a 
single BDS competitor has a substantial competitive effect on prices.”).
Federal Communications Commission DA 17-663
11
24. Moreover, as the Commission emphasized in the BDS Order, even in areas subject to the 
36 month detariffing transition, BDS rates remain subject to sections 201, 202, and 208 of the 
Communications Act.
74
  As a result, in the event that competition fails to discipline rates, customers have 
the protections of sections 201 and 202 prohibitions against unjust, unreasonable, and unreasonably 
discriminatory rates.  
2. Treatment of Transport, Packet-Based and Grandfathered Services
25. The Transport Market Was Appropriately Deregulated.  The Commission’s finding that 
the transport market is sufficiently competitive was based on record evidence of substantial competition 
and conditions that support the deployment of competitive facilities.
75
  Specific evidence supported the 
Commission’s conclusion that there are structural reasons that make both entry into the transport market 
attractive and burdensome regulation unnecessary.
76
  The Commission also observed that the costs of 
overregulation were too high to justify a less administratively feasible approach.
77
  To the extent the 
Commission noted the proximity of competitors’ facilities to a customer’s location in the channel 
termination context, it did so as a way to confirm its conclusion that this portion of the market has been 
and will continue to be competitive.
78
  Contrary to Petitioner’s argument, the Commission did not rely on 
this finding to reach its conclusion regarding the underlying competitiveness of the transport market.
79
  
26. Petitioners argue that the Commission’s approach to the transport market was flawed 
because it considered the distance between a customer’s location and the competitive transport facility 
when evaluating competition.
80
  Petitioners contend that because transport services carry traffic to and 
from an end office, the Commission should have but failed to consider this distance.
81
  However, the 
                                                     
74
BDS Order, 32 FCC Rcd at 3500, para. 89.
75
Id. at 3496-98, paras. 79-82.
76
See e.g., Access Charge Reform, CC Docket No. 96-262; Price Cap Performance for Local Exchange Carriers, 
CC Docket No. 94-1; Interexchange Carrier Purchases of Switched Access Services Offered by Competitive Local 
Exchange Carriers, CCB/CPD File No. 98-63; Petition of U.S. West Communications, Inc. for Forbearance from 
Regulation as a Dominant Carrier in the Phoenix, Arizona MSA, CC Docket No. 98-157, Fifth Report and Order 
and Further Notice of Proposed Rulemaking, 14 FCC Rcd 14221, 14289, para. 102 (1999) (Pricing Flexibility 
Order), aff’d, WorldCom v. FCC, 238 F.3d 449 (D.C. Cir. 2001) (“[C]ompetitors are likely to enter the market for 
entrance facilities, direct-trunked transport, channel mileage, and the flat-rated portion of tandem-switched transport 
before they enter the market for channel terminations between a LEC end office and a customer premises.”); Letter 
from James P. Young, Counsel to AT&T Inc., to Marlene H. Dortch, Secretary FCC, WC Docket Nos. 05-25 et al., 
at 5 (filed on Oct. 25, 2016) (listing urban areas with numerous competitive transport providers); Letter from Russell 
P. Hanser & Brian W. Murray, Counsel to CenturyLink, Inc., to Marlene H. Dortch, Secretary, FCC, WC Docket 
Nos. 05-25 et al., at 2 (filed on Nov. 4, 2016) (noting that it uses incumbent LEC transport facilities for a minority of 
the end user channel terminations it purchases as a competitive provider outside of its incumbent footprint).
77
BDS Order, 32 FCC Rcd at 3501, paras. 92-93.  In any event, much of the transport market has enjoyed pricing 
flexibility for years.  Id. at 3469-97, para. 79 (“Indeed competition for such services has been robust since a large 
proportion of TDM transport services were deregulated.  As Frontier explains, a substantial majority of transport 
revenue has been covered by Phase II pricing flexibility since the early 2000s.” (internal quotation marks omitted)).
To the extent that any party believes that the Commission’s finding regarding the competitiveness of the transport 
market results in unjust and unreasonable rates, it continues to have recourse to the Commission’s section 208 
complaint process.  
78
BDS Order, 32 FCC Rcd at 3501, para. 91 (noting that “92.1 percent of buildings served were within a half mile 
of competitive fiber transport facilities”).
79
Cf. id. at 3495-98, paras. 77-82 (finding widespread competition in the market without reference to the percentage 
of customers served being within a half mile of competitive fiber transport facilities).
80
Motion for Stay at 29-30.
81
Id. at 29-30.
Federal Communications Commission DA 17-663
12
Commission rejected this narrow definition of the transport market in the BDS Order, finding that the 
relevant transport market is not exclusively relegated to the carriage of traffic between end offices.  The 
Commission explained that competitive transport providers now commonly take the opportunity to 
bypass incumbent LEC facilities for network interconnection.
82
  
27. Petitioners also argue that in the BDS Order the Commission conflated the relevant 
distance metrics used when analyzing competition in the channel termination and transport markets and 
neglected the differing functions of these services.
83
  But the Commission did not conflate the two in 
order to reach its conclusion.  The Commission recognized that channel termination and transport are 
different, acknowledged that it has traditionally treated channel termination and other special access 
services differently,
84
and affirmatively chose to continue to distinguish the two.
85
  It simply 
acknowledged that competitors often provide transport without incurring the additional cost of connecting 
with an incumbent LEC end office.  
28. Application of the Competitive Market Test Only to TDM Services Was Appropriate.  
Petitioners argue that the Commission’s decision to not apply its competitive market test to packet-based 
services of the same or higher bandwidths in the same relevant product market is flawed.
86
  But the 
Commission explained that, on balance, competitive forces in the market for packet-based services 
counseled against regulation, even when application of the test would indicate a lack of competition.
87
  
Moreover, because most incumbent LECs had already received forbearance relief from ex ante pricing 
regulation for packet-based services, this decision merely preserved the status quo and confirmed 
previous findings that, injecting heightened regulation into the developing packet-based market, even in 
areas currently deemed non-competitive, would impose an unnecessarily burdensome regulatory
framework in this rapidly evolving market, and could have negative consequences such as chilling 
investment, inhibiting innovation, and distorting competition.
88
  The Commission reasonably chose not to 
employ prescriptive measures because it found that imposing regulations would be likely to impose long 
term costs.
89
  Finally, for those markets in which Petitioners believe the Commission’s decision not to 
apply the CMT to higher bandwidth services produces unjust and unreasonable rates, we note the 
availability of relief through section 208.
90
29. The Commission Appropriately Allowed Grandfathering for Some Services.  Petitioners 
argue that the Commission’s decision not to reintroduce price cap regulation in non-competitive counties 
previously granted Phase II pricing flexibility is irrational.
91
  We disagree.  The Commission’s choice to 
maintain the status quo, minimize regulatory disruption, and exempt those few counties that do not meet 
                                                     
82
See BDS Order, 32 FCC Rcd at 3497, para. 81 n.273.
83
Motion for Stay at 30.
84
BDS Order, 32 FCC Rcd at 3495, para. 77.
85
Id. at 3496-97, para. 78.  Moreover, the Commission’s rules treat them separately.  Compare 47 CFR § 69.709, 
with 47 CFR § 69.711.
86
Motion for Stay at 31.
87
BDS Order, 32 FCC Rcd at 3499-3500, paras. 87-88.
88
BDS Order, 32 FCC Rcd at 3519, para. 129; see also Petition of AT&T Inc. for Forbearance Under 47 U.S.C. § 
160(c) from Title II and Computer Inquiry Rules with Respect to Its Broadband Services; Petition of BellSouth Corp. 
for Forbearance Under Section 47 U.S.C. § 160(c) from Title II and Computer Inquiry Rules with Respect to Its 
Broadband Services, WC Docket No. 06-215, Memorandum Opinion and Order, 22 FCC Rcd 18705, 18725-26, 
paras. 33-35 (2007).
89
BDS Order, 32 FCC Rcd at 3500, para. 88.
90
See 47 U.S.C. § 208; BDS Order, 32 FCC Rcd at 3503, para. 96.
91
Motion for Stay at 31.
Federal Communications Commission DA 17-663
13
the competitive market test, but had been granted regulatory relief many years earlier, is consistent with 
the Commission’s policy goals, properly weighs the relevant costs and benefits, and constitutes reasoned 
decision-making.
92
  We again note that section 208 provides for a remedy in those grandfathered markets 
where unjust and unreasonable rates may develop.
93
   
3. The BDS Order Satisfies APA Notice and Comment Rulemaking 
Requirements  
30. Petitioners incorrectly allege that the Commission provided insufficient notice for the 
competitive market test adopted in the BDS Order and for the rules regarding transport thereby affecting 
Petitioners’ ability to effectively comment.
94
  
a. Adequate Notice was Provided for the Adoption of the Competitive 
Market Test  
31. Contrary to Petitioners’ assertions, the Further Notice provided abundant notice that the 
Commission was considering adopting a market test that focused on BDS where competition is lacking, 
namely for TDM DS1 and DS3 services, which operate at or below 50 Mbps.
95
  As the Commission made 
clear in the BDS Order, the competitive market test utilizes “core attributes of a test on which there was 
consensus in the record.”
96
  That consensus was the result of both pointed and broad questions in the 
Further Notice seeking comment on “different tiers of products . . . based on differences in speed,”
97
and 
“whether the type of competitor in the market makes a difference” or whether to “weight competition 
from a cable company differently than a non-cable competitive LEC or vice versa,”
98
among other 
things.
99
  Petitioners’ assertion that the Commission’s final choice of a geographic market for the CMT 
violates the APA is also not true.
100
  Consistent with the Further Notice
101
and the record compiled in this 
proceeding, the Commission adopted the county as the geographic unit for the CMT which takes
individual buildings and census blocks into account—enabling an administratively feasible test that, in 
                                                     
92
See BDS Order, 32 FCC Rcd at 3538-39, para. 181.
93
See 47 U.S.C. § 208.
94
See Motion for Stay at 32-40. 
95
Id. at 34; Further Notice, 31 FCC Rcd at 4840, para. 271 (“As described above, the data and our analysis suggests 
that competition is lacking in BDS at or below 50 Mbps in many circumstances, and that competition is present in 
BDS above 50 Mbps in many circumstances.  Such evidence will guide how the Commission uses product market 
characteristics in applying the Competitive Market Test to a relevant market.”) (internal citations omitted); BDS 
Order, 32 FCC Rcd at 3503, para. 97.
96
BDS Order, 32 FCC Rcd at 3504-05, para. 99.  
97
Further Notice, 31 FCC Rcd at 4844, para. 285.
98
Id., 31 FCC Rcd at 4846, para. 294.
99
Id., 31 FCC Rcd at 4840-49, paras. 270-311 (Sec. V.D. Competitive Market Test). 
100
See Motion for Stay at 34; see Further Notice, 31 FCC Rcd at 4814, para. 209 (The Further Notice “suggest[ed] a 
geographic market definition for lower bandwidth BDS lies somewhere above the average area of the Census Block 
with BDS demand and below the MSA” and sought comment “for the purpose of developing an administratively 
feasible test.”).  
101
Further Notice, 31 FCC Rcd at 4845, para. 289 (“Given our analysis, we seek comment on using census blocks 
as the geographic area for applying the Competitive Market Test.  We also ask whether using a more granular area, 
e.g., the building or cell site location as the relevant geographic market, or whether a larger geographic area is 
appropriate”).  In the BDS Order the Commission explained its reason for using counties as the appropriate 
geographic measure for the Competitive Market Test.  BDS Order, 32 FCC Rcd at 3508-12, paras. 108-16.
Federal Communications Commission DA 17-663
14
fact, implements the very kind of more-localized competitive analysis that the Commission proposed, and 
that Petitioners incorrectly assert is lacking.
102
  
32. In addition, Petitioners mistakenly claim the Further Notice failed to provide sufficient 
notice of the competitive analysis undertaken in the BDS Order because the second prong of the adopted 
competitive market test takes into account competitive pressures posed by cable providers.
103
  The 
Further Notice contained a substantial discussion of cable entry in the BDS marketplace.
104
  Moreover, it 
specifically sought comment on the idea that the Commission should be looking at cable operators’ whole 
HFC network footprint, stating:  “Looking forward, it may already be or soon will be the case that cable 
companies are able to supply BDS everywhere they have deployed DOCSIS 3.0.  We seek comment on 
this.  Counting cable supply as being capable of reaching every unique location with BDS demand in 
every Census block that cable reports as being able to serve greatly increases the extent of competition at 
the level of unique location.”
105
  Additionally, as the Further Notice sought comment on competitive 
market test criteria, it specifically sought comment on whether the Commission should “weight 
competition from a cable company differently than a non-cable competitive LEC” and on whether it was 
“enough for a cable company to just have DOCSIS 3.0 coverage over their HFC network in the area or 
should we weight an HFC network differently based on the presence of Metro-E capable nodes in the 
area?”
106
  Finally, Petitioners’ hypothetical claims that the Further Notice “might have developed” some 
sort of economic “model” for the competitive test that was adopted so parties could offer a detailed 
rebuttal is simply a smokescreen to obscure the fact that the Commission’s competitive market test was 
developed based on reasoned decision-making from comments in the record in response to the Further 
Notice.
107
     
33. Petitioners’ arguments, rather than stating an actual problem with the Further Notice, 
simply reflect their underlying disagreement with the substance of the Commission’s decision.  Despite 
Petitioners’ claims that the Further Notice did not enable them to “challenge” the methodology employed 
in the final rule, an agency is not restricted to adopting the position it proposed when seeking comment.
108
                                                     
102
Motion for Stay at 33; BDS Order, 32 FCC Rcd at 3508, para. 109 (“As suggested by various commenters in the 
record, we agree that the geographic area we use for the competitive market test should be larger than census blocks 
or census tracks, but smaller than MSAs.  We find that counties are granular enough to capture reasonably similar 
competitive conditions yet large enough to be administratively feasible and are supported in the record.”) (internal 
citations omitted); id. at 3509, para. 110 (“The Commission’s 2015 Collection shows an average of 376 buildings 
with last-mile access demand in a county, whereas the average number of buildings with last-mile access demand in 
an MSA is 2,713.  This statistic shows that counties are much more granular geographic units for administering the 
competitive market test.”).
103
See Motion for Stay at 36.  Moreover, Petitioners’ claim ignores the broad-ranging questions the Commission 
sought comment on in the Further Notice in order to determine the appropriate criteria for the test and the resulting 
wide body of economic evidence and literature in the record on this issue, including competition by cable providers 
and other competitive providers’ build or buy decisions. Further Notice, 31 FCC Rcd at 4842, para. 278.
104
See Further Notice, 31 FCC Rcd at 4749-53, 4821, 4827, paras. 59-66, 221, 231.
105
Id. at 4821, para. 221.  The Census block-level reporting of DOCSIS 3.0-enabled broadband service by cable 
operators that the Further Notice references is done through the Commission’s Form 477, which data the BDS Order
used as the basis for the second prong of the competitive market test.  
106
Id. at 4846, para. 294.  
107
See Motion for Stay at 35.  Likewise, Petitioners ignore that the test adopted by the Commission is, in fact, based 
on the Further Notice’s proposal to “use publicly available information, the 2015 [Data] Collection, and other 
information in the record to apply the test.”  See Further Notice, 31 FCC Rcd at 4840, para. 272. Petitioners
incorrectly allege that, even though Form 477 data used in the test are publicly available, the Commission was 
obligated to more specifically state that Form 477 data could be used.  See Motion for Stay at 37.
108
See Motion for Stay at 35; see, e.g., Agape Church, Inc. v. FCC, 738 F.3d 397, 423 (D.C. Cir. 2013) (even 
though the “final action taken by the FCC was not something that the agency had expressly proposed in its NPRM” 
(continued….)
Federal Communications Commission DA 17-663
15
Under the “logical outgrowth” standard, a notice of proposed rulemaking does not violate notice 
requirements under the Administrative Procedures Act if it “provide[s] the public with adequate notice of 
the proposed rule followed by an opportunity to comment on the rule’s proposed content.”
109
  As noted 
above, that is precisely the case here.  
34. The Further Notice comprehensively framed the subjects for discussion as evidenced by 
the comprehensive comments in the record.
110
  The Commission initially proposed various criteria for a 
competitive market test, but also retained an open mind by seeking broad comment on possible criteria 
and relevant issues -- including what “appropriate factors” and “appropriate weight” to apply in such a 
test.
111
  Throughout the Further Notice the Commission encouraged commenters to suggest other 
alternatives for consideration and “comment on how any approach would further our goals of promoting 
competition and investment” and the “administrative feasibility of any particular approach.”
112
  Given the 
comprehensive record in this proceeding, with opposing views on the current and predicted state of 
competition in the marketplace, and what a competitive test should entail, Petitioners’ advocacy for 
issuing yet another Notice is not only legally unwarranted, but from a practical standpoint, it is 
unreasonable to believe that any additional analysis offered by any party would have resulted in a 
different outcome, and it would only serve to further delay the conclusion of a proceeding which was 
initiated in 2005.      
35. In addition, Petitioners’ arguments that parties had no meaningful opportunity to 
comment on the competitive market test adopted by the Commission are further discredited by the 
additional opportunity to comment provided to parties when the Chairman released a public version of the 
proposed final BDS Order for public review weeks prior to its adoption.
113
  Therefore, it is not appropriate 
to overturn the Commission’s decisions adopted in the BDS Order under concern that notice was 
insufficient.
114
  Indeed, several parties submitted ex parte filings that addressed the competitive market 
test—which the Commission considered and responded to in the record—before adopting the final rule.
115
  
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it was a logical outgrowth of requests for comment that “alert[ed]” the public that the relevant rule “might be in 
jeopardy”); City of Portland v. EPA, 507 F.3d 706, 715 (D.C. Cir. 2007) (finding a logical outgrowth even though 
final rule deviated from proposal developed through negotiated rulemaking). Such a restriction would undermine 
the “purpose of notice-and-comment—to allow an agency to reconsider and sometimes change, its proposal based 
on the comments of affected persons.” Ass’n of Battery Recyclers v. EPA, 208 F.3d 1047, 1058 (D.C. Cir. 2000); see
also Ne. Md. Waste Disposal Auth. v. EPA, 358 F.3d 936, 951 (D.C. Cir. 2004) (If the EPA were precluded from 
changing its position, it “could learn from the comments on its proposals only at the peril of subjecting itself to 
rulemaking without end.” (internal quotation marks omitted)).
109
Agape Church, 738 F.3d at 422; see generally Covad Commc’ns Co. v. FCC, 450 F.3d 528, 548-49 (D.C. Cir. 
2006).
110
See Connecticut Light & Power Co. v. NRC, 673 F.2d 525, 533 (D.C. Cir. 1982) (“An agency adopting final rules 
that differ from its proposed rules is required to renotice when the changes are so major that the original notice did 
not adequately frame the subjects for discussion.”).
111
Further Notice, 31 FCC Rcd at 4840, para. 271.
112
Id. at 4840, 4844-45, paras. 271, 286.
113
See Wireline Competition Bureau Announces Process to Access Unredacted Version of Proposed Business Data 
Services Report and Order, WC Docket Nos. 16-143 et al., Public Notice, 32 FCC Rcd 2116 (WCB Mar. 30, 2017).  
This additional opportunity for comment was instituted by the current chairman and is a departure from prior 
Commission practice.  
114
If notice was insufficient, which we do not find in this case, it would be no more than harmless error since the 
Chairman released the document weeks prior to its adoption allowing for additional, pointed comments on the entire 
framework, including the CMT.
Federal Communications Commission DA 17-663
16
For the reasons discussed above, we do not find that the Petitioners’ arguments provide cause to grant the 
requested stay.
b. Adequate Notice was Provided for Adopting Rules Governing BDS 
Transport Services  
36. Petitioners’ assertions that the Commission provided insufficient notice and opportunity 
to comment on the rules the Commission adopted for BDS transport services are also baseless.  
Moreover, the Commission squarely addressed this very question in the BDS Order.
116
  The Commission 
consistently included transport services within the ambit of its analysis in this proceeding because 
transport services are an integral part of the business data services market.  For example, in the Further 
Notice the Commission proposed to define business data service as a service that “transports data between 
two or more designated points,”
117
which naturally includes the transport component of a BDS circuit.  In 
the Further Notice the Commission also proposed to “abandon the colocation-based competition 
showings for channel terminations and other dedicated transport services for determining regulatory 
relief,” and asked for comment to create a new regulatory framework.
118
  Indeed, in an ex parte filing, 
Sprint expressly opposed any attempt to exclude transport services from the Commission’s reform of 
business data services regulation.
119
  All of this discussion invited comment on the appropriate regulatory 
treatment of TDM transport services.  
37. Petitioners further claim that “nationwide deregulation” of transport is not a “logical 
outgrowth of the [Further Notice].”
120
  Yet in the Further Notice the Commission announced at the outset 
that it was “proposing to end the traditional use of tariffs for BDS services” and called for “large scale de-
regulation.”
121
  At a minimum, the revised treatment of transport services is a logical outgrowth of the 
Commission’s proposal to “abandon collocation-based competition showings” for dedicated transport 
services.
122
  Furthermore, Petitioners’ assertion that the BDS Order treats the “entire country” as the 
relevant market glosses over and mischaracterizes the more granular analysis the Commission used to 
decide how to reform regulation of TDM transport services.
123
  The Commission’s conclusion to adopt 
nationwide deregulation of TDM transport services was a logical outgrowth of its analysis of granular 
census block data which showed that in 2013 there was at least one competitive fiber provider in “more 
than 95 percent of census blocks with BDS demand in MSAs, and . . . those census blocks cover about 97 
(Continued from previous page)                                                            
115
See, e.g., Letter from John T. Nakahata, Counsel for Windstream, and Christopher J. Wright, Counsel for Sprint, 
to Marlene H. Dortch, Secretary, FCC, WC Docket Nos. 16-143 et al. (filed Apr. 13, 2017) (objecting and 
recommending changes to the Competitive Market Test framework and asserting the draft order does not comply 
with notice requirements and provides insufficient time to engage their experts to evaluate the framework); BDS 
Order, 32 FCC Rcd at 3485, para. 56 (responding to the framework challenge).
116
See BDS Order, 32, FCC Rcd at 3501, para. 90 n.289.  
117
Further Notice, 31 FCC Rcd at 4842, para. 279.
118
Id. at 4842, para. 278 (emphasis added).
119
See Letter from Paul Margie, Counsel to Sprint Corp., to Marlene H. Dortch, Secretary, FCC, WC Docket Nos. 
16-143 et al., at 1-3 (filed Nov. 9, 2016) (citing a “misleading, eleventh-hour demand to carve-out transport circuit 
elements from the reform framework”).
120
Motion for Stay at 38. 
121
Further Notice, 31 FCC Rcd at 4725, para. 4.
122
Id. at 4842, para. 278; Ne. Md. Waste v. EPA, 358 F.3d at 952 (“A rule is deemed a logical outgrowth if 
interested parties ‘should have anticipated’ that the change was possible, and thus reasonably should have filed their
comments on the subject during the notice-and-comment period.”).
123
Motion for Stay at 39.
Federal Communications Commission DA 17-663
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percent of the BDS connections and 99 percent of business establishments.”
124
  The Commission’s 
conclusion that these more-granular data warranted a finding of broader deregulation is not unusual.  The 
Commission has always aggregated relevant markets facing the same competitive circumstances.
38. Petitioners’ claim that parties did not “have an opportunity to comment on the 
competitive analysis and rationale supporting the Commission’s” deregulation of transport services is also 
inaccurate.
125
  In the Further Notice the Commission specifically sought comment on its proposed 
competitive analysis and each of the Petitioners commented on the proposal.
126
  The Petitioners next claim 
that the Commission did not propose to analyze transport competition “based primarily on the number of 
buildings located within a half mile of competitive fiber transport facilities.”
127
  We know of no 
requirement for the Commission to identify and seek comment on every possible metric that the 
Commission might use to analyze data in a Further Notice of Proposed Rulemaking and therefore reject 
this argument.
B. Petitioners Fail to Demonstrate that they will Suffer Irreparable Injury Absent a 
Stay 
39. In attempting to establish irreparable injury, Petitioners paint a misleading picture of the 
Commission’s BDS Order.  This is so in at least two critical respects.
40. First, Petitioners mischaracterize the regulatory action taken by the Commission.  In their 
stay request, Petitioners argue that the Commission has imposed “extensive deregulation” that will 
“replace discontinued BDS with higher-cost alternatives.”
128
  These are not apt descriptions of the 
Commission’s action, which eliminated “the extra layer dominant-carrier pricing regulation” provided by 
tariffing and the Commission’s ex ante pricing rules, “while leaving in place basic Title II common-
carrier regulation” under sections 201, 202, and 208 of the Act.
129
  
41. This change in regulatory approach is a far cry from the “seismic change[]” the 
Petitioners attempt to depict.
130
  As Petitioner BT Americas is well aware, price cap regulation “merely 
reflects the Commission’s ‘tentative opinion’ about the dividing line between reasonable and 
unreasonable rates for the limited purpose of exercising [its] suspension power” under section 204 of the 
Act.
131
  Petitioners are concerned that, absent a stay, incumbent LECs will increase their business data 
services rates substantially.
132
  But they were free to do that prior to the BDS Order, regardless of whether 
the underlying services were the subject of forbearance relief, Pricing Flexibility II grants, or regulated 
                                                     
124
AT&T Aug. 9, 2016 Reply at 2.
125
Motion for Stay at 39.
126
See Further Notice, 31 FCC Rcd at 4840-49, paras. 270-311; see also INCOMPAS June 28, 2016 Comments at 
5-9; Sprint June 28, 2016 Comments at 5-12; Windstream Aug. 9, 2016 Reply at 15 (criticizing AT&T’s assertion 
that the existence of one competitor within a half-mile of a customer “means that the marketplace for business data 
services is ‘robustly competitive at all levels.’”).
127
Motion for Stay at 39.
128
Id. at 3.
129
Ad Hoc v. FCC, 572 F.3d 903, 908 (D.C. Cir. 2009).
130
Motion for Stay at 3.
131
  Letter from Thomas Jones, Counsel to Birch Communications, Inc., BT Americas Inc., and Level 3 
Communications, LLC, WC Docket No. 05-25, at 5 (filed Aug. 28, 2015) (quoting Policy and Rules Concerning 
Rates for Dominant Carriers, CC Docket No. 87-313, Report and Order and Second Further Notice of Proposed 
Rulemaking, 4 FCC Rcd 2873, 3306, para. 895 (1989) (internal quotation marks and citation omitted)); see BDS 
Order, 32 FCC Rcd at 3550-51, para. 216.
132
Motion for Stay at 40. 
Federal Communications Commission DA 17-663
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under price caps. First, a substantial percentage of the locations at issue were relieved of price cap 
regulations pursuant to either grants of Phase II pricing flexibility or forbearance relief well before the 
action taken in the BDS Order,
133
making the changes effected by the BDS Order and the potential for 
those changes to disrupt the market less sweeping and more incremental in nature. Moreover, even in 
instances in which the location is being relieved of price cap regulation, customers remain fully protected 
against unjust, unreasonable, or discriminatory rates, terms, and conditions by the clear terms of sections 
201 and 201 of the Communications Act.  Ultimately, under either type of regulation, customers are 
protected against rates that are just and reasonable.  
42. Second, Petitioners overstate how the August 1, 2017, effective date of reforms adopted 
in the BDS Order will affect the industry.  In the BDS Order, the Commission acted to implement a 
reasonable shift from the tariffing regime to broader Title II protections in a manner that is fair to those 
seeking a quicker transition from federal tariffing obligations, and to those opposing a transition from 
tariffs.
134
  Focusing on middle ground, the Commission implemented a 36 month transition period;
135
took 
interim measures to address issues raised in the record to ensure an evenhanded implementation of its new 
rules;
136
and emphasized the requirement of  just and reasonable rates after the transition period.
137
  In 
counties that were deemed competitive, and relieved of price cap regulation, tariffs may still be used for 
three years.
138
  Any tariff filing made during that permissive period will be subject to challenge, as they 
are presently, and for a period of six months after the effective date of the BDS Order, the Commission 
required “price cap incumbent LECs to freeze the tariffed rates for end-user channel terminations in 
newly deregulated counties, as long as those services remain tariffed.”
139
  The Commission also 
grandfathered existing BDS “contract tariffs, term and volume discount plans, and individual circuit 
plans,” minimizing disruption during the transition, with a focus on and ensuring that both parties to such 
agreements realize the benefit of the bargain they struck.
140
  In fact, the Commission specifically made 
clear that it does not intend for its actions in the BDS Order “to disturb existing contractual or other long-
term arrangements—a contract tariff remains a contract even if it is no longer tariffed [and that] contract 
tariffs, term and volume discount plans, and individual circuit plans do not become void upon 
detariffing.”
141
  Emphasizing its continuing jurisdiction, during and after the transition period, the 
Commission stated that it “expect[s] all carriers to act in good faith to develop solutions to ensure rates 
are just and reasonable.”
142
43. As a practical matter, implementing and coordinating changes across multiple tariffs by 
multiple incumbent LEC operating companies would be administratively burdensome and challenging to 
accomplish during the pendency of this appeal.
143
  Removing only the BDS portions of these tariffs (the 
                                                     
133
BDS Order, 32 FCC Rcd at 3463-64, para. 7 (describing previous grants of pricing flexibility and forbearance 
from tariffing, price cap, and other dominant carrier regulation for BDS).
134
BDS Order, 32 FCC Rcd at 3533-34, paras. 166-70.  
135
Id. at 3533, paras. 167.
136
Id. at 3533-34, paras. 168-70.  
137
Id. at 3533-34, para. 170.  
138
See id. at 3517, para. 127 n.389 (finding “[i]t is rare for end-user contracts to be much longer than three years . . . 
.” (citing XO Jan. 27, 2016 Comments, Decl. of James A. Anderson at para. 37)).
139
Id. at 3533, para. 167.
140
Id. at 3533-34, para. 170.  
141
Id. 
142
Id. 
143
We note that AT&T for example, provides these services through five separate tariffs for its five operating 
entities:  Ameritech, Southwestern Bell, BellSouth, Nevada Bell, and Pacific Bell.
Federal Communications Commission DA 17-663
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switched access services will remain tariffed) will involve changing hundreds of tariff pages and will 
have to be done in a deliberate manner to ensure the correct services have been removed.  Moreover, once 
the various services are detariffed, the carriers will lose the deemed lawful protections of section 
204(a)(3), providing additional incentives for carriers to ensure they have the proper agreements in place 
prior to detariffing.
144
44. Finally, Petitioners do not acknowledge the continuing availability of the section 208 
complaint process to protect competitive LECs from unreasonably high business data services rates.  The 
Commission found that “customers are protected in the near term from harm that would result from any 
rates, terms, or conditions that are unjust and unreasonable or unjust and unreasonably discriminatory 
because the Commission’s section 208 complaint process continues to be available for common carriage 
services.”
145
  As the D.C. Circuit has recognized, that process provides “a formal fast-track . . . for 
business end users and competitive broadband providers to challenge the rates charged by ILECs” and 
have their challenge investigated and resolved within five months.
146
C. The Balance of the Equities Does Not Favor a Stay
45. Petitioners argue that the balance of the equities favors maintaining the status quo.  First, 
Petitioners contend third parties will not be harmed if the Commission grants their stay motion.
147
  
Petitioners, however, fail to recognize and address the negative impact delaying the effectiveness of the 
BDS Order would have on the market generally.
148
  In the BDS Order, the Commission concluded that 
“there is a significant likelihood [that maintaining] ex ante pricing regulation will inhibit growth and 
investment in many cases.  In such circumstances, we should not continue unnecessary regulations.”
149
  
The Commission also found that “there are substantial costs of regulating the supply of BDS.”
150
  
46. Petitioners have also failed to demonstrate that the public interest supports grant of their 
stay request.  As detailed above, Petitioners’ claims regarding imminent incumbent LEC BDS price 
increases and the consequences of decreased competition are wrong.  In the BDS Order, the Commission 
adopted a measured change in regulatory approach, subject to a generous transition period, to unleash 
innovation and increased buildout while maintaining ample regulatory protections for all stakeholders in 
the BDS marketplace.
151
  Unconstrained by ex ante pricing regulation, ILEC BDS providers, like their 
competitors, can now evaluate how best to operate their businesses while the Commission relies on 
sections 201, 202, and 208 to ensure that rates for such services remain just and reasonable.  
                                                     
144
See 47 U.S.C. § 204(a)(3) (new or revised charges, regulations, or classifications that a local exchange carrier 
files on a streamlined basis, are deemed lawful unless the Commission takes action before those charges, regulations 
or classifications become effective). 
145
BDS Order, 32 FCC Rcd at 3505-06, para. 102.
146
Ad Hoc v. FCC, 572 F.3d at 909.
147
Motion for Stay at 50.
148
NATOA v. FCC, No. 15-1295 (D.C. Cir. July 7, 2017), slip op. 10 (“Rate regulation of a firm in a competitive 
market harms consumers: Prices set below the competitive level result in diminished quality, while prices set above 
the competitive level drive some consumers to a less preferred alternative.”) (citing Alfred E. Kahn, The Economics 
of Regulation: Principles and Institutions, vol. 1, 21, 66-67 (1970)).  
149
BDS Order, 32 FCC Rcd at 3462, para. 4.  See also id. at 3517-19, paras. 125-29.  
150
Id. at 3517, paras. 125-26.  
151
Also, a stay would produce no change for areas that currently are not subject to ex ante regulation, the 
“grandfathered” regions, as there is no change in these areas triggering an imminent or irreversible harm.  See BDS 
Order, 32 FCC Rcd at 3538-39, para. 181; id. at 3461, para. 2 (finding the “record indicates the market for business 
data services is dynamic with a large number of firms building fiber and competing for this business”).
Federal Communications Commission DA 17-663
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47. Therefore, we reject Petitioners’ claims and find that granting a stay of the BDS Order 
would harm third parties and the public interest by delaying the promised benefits of the BDS Order
including stimulating critical investment in and deployment of facilities and accelerating the deployment 
of next generation packet-based services relied upon by businesses and other institutions of all sizes.  As 
the Commission explained, it adopted a regulatory framework “that promotes long-term innovation and 
investment by incumbent and competitive providers alike which well-serves business data services 
customers.”
152
  We find Petitioners’ arguments do not support further delaying this outcome.
III. CONCLUSION
48. Petitioners bear the burden of showing they meet each of the elements required of a stay 
request.  We find Petitioners have failed to meet that burden.  Therefore, for the reasons detailed above, 
we deny Petitioners’ motion for stay.   
IV. ORDERING CLAUSES
49. Accordingly, IT IS ORDERED, pursuant to the authority contained in sections 1, 2, 4(i), 
4(j), 10, 201(b), 202(a), 214, 303(r), and 403 of the Communications Act of 1934, as amended, 47 U.S.C. 
§§ 151, 152, 154(i)-(j), 160, 201(b), 202(a), 214, 303(r), 403, and the authority delegated pursuant to 
section 0.91 and 0.291 of the Commission’s rules, 47 CFR §§ 0.91 and 0.291, this Order Denying Stay 
Motion in WC Docket No. 16-143 et al. IS ADOPTED and SHALL BE EFFECTIVE IMMEDIATELY.  
50. IT IS FURTHER ORDERED, that the Motion for Stay Pending Judicial Review of Ad 
Hoc Telecom Users Committee, BT Americas, Inc., INCOMPAS, and Windstream Services, LLC IS 
DENIED.  
FEDERAL COMMUNICATIONS COMMISSION
Kris Anne Monteith
Chief
Wireline Competition Bureau
                                                     
152
Id.