CenturyLink, Frontier Shares Jump After FCC Eases on Price Capsby
Regulators now seeking moderate curbs on $45 billion industry
New ceiling phases in 11% price cut instead of 16% previously
Shares of CenturyLink Inc. and Frontier Communications Corp. rose after U.S. regulators proposed weaker-than-expected pricing restrictions on business-data services, a $45 billion market the companies have relied on to fuel profits.
The proposal by the Federal Communications Commission would phase in an 11 percent cut over 10 years by lowering the current cap 3 percent in the first year, 4 percent in the second and 3 percent for the remaining years, according to an FCC fact sheet released Friday. Phone companies had been bracing for the cap to be lowered by as much as 16 percent.
CenturyLink rose 2.9 percent to $27.76 at the close Friday in New York. Frontier increased 6 percent to $4.23.
The rules are aimed at phone companies including AT&T Inc., Verizon Communications Inc. and CenturyLink and Frontier, which sell data connections to cable operators and wireless carriers. With a tight hold on the local networks, some companies were overcharged by $75 billion over the past five years, according to the Consumer Federation of America.
The FCC is moving to limit the caps to old-line or legacy data services that date back to the Bell System’s phone wiring and will not set ceilings on advanced services such as Internet and data delivered through Ethernet, the officials said at a news conference Friday. The FCC could vote later this month on the proposal.