FCC Eases Rules for AT&T, CenturyLink in $45 Billion Data Market

(Bloomberg) -- The U.S. Federal Communications Commission voted to give companies such as AT&T Inc. and CenturyLink Inc. more freedom over rates in the $45 billion market for fast data lines needed by banks, universities, hospitals and other businesses.

The action, on a 2-1 Republican-led vote, could lead to higher fees for service buyers including Sprint Corp. and Windstream Holdings Inc.

The market for business broadband has evolved as cable companies provide new competition, the FCC said in materials distributed before the vote. Rate-setting will end in areas with sufficient competition, the agency said.

The vote represents a favorable reversal of fortunes for AT&T and CenturyLink. Democrats last year moved toward imposing rate cuts, but didn’t bring their proposal to a vote before the election that gave Republicans the majority at the agency.

CenturyLink and Frontier Communications Corp. in a filing cited “stultifying” rate rules. The companies said they face competition from smaller providers in 95 percent of localities where they offer business data service. AT&T made a similar argument, saying in a blog post that “there are competitive facilities blanketing the country, fighting for business customers nearly everywhere.”

Incompas, a trade group with members including Sprint, said the FCC’s action is likely to result in a price hike of at least 25 percent for small business, schools, libraries and consumers buying broadband.

To contact the reporter on this story: Todd Shields in Washington at tshields3@bloomberg.net.

To contact the editors responsible for this story: Jon Morgan at jmorgan97@bloomberg.net, Elizabeth Wasserman