INDUSTRY LOOKS TO RECIPROCAL COMPENSATION AS BELLWETHER
Several panelists at Credit Suisse First Boston (CSFB) conference Wed. in N.Y. said upcoming FCC order on reciprocal compensation payments would provide early sign of agency’s commitment to rely on market forces under Chmn. Powell. Verizon Senior Vp-Public Policy Thomas Tauke said work on reciprocal compensation order was likely to wrap up in next 30 days. “We are going to have a transition away from it, which will save us substantial amounts of money this year and next year,” he said. Tauke and others said they expected Commission to look at broader issue of intercarrier compensation shortly. He said there was “80% chance” that FCC would undertake some streamlining of Sec. 271 long distance application process, with 50-50 chance that changes would be “significant.”
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“You will see a very balanced approach to what has been a complex issue,” said former FCC Chief of Staff Kathryn Brown of upcoming order. Decision will be “hooked to an understanding that all conversations across the network ought to be looked at,” meaning that push to look at intercarrier compensation also will be addressed, she said. In general, decision is expected to cover move toward flat-pricing across board, with understanding that “some fairness issues will need to be addressed” in interim, Brown said. Of order, she said of CLECs and RBOCs: “Both sides are going to declare victory.” Brown said she expected Powell FCC to attempt what other commissions also have tried -- to get states to think more closely about “vexing issue” of retail rates when it comes to pricing. “I suspect that the market may actually help here,” Brown said in panel discussion streamed over Internet. “Once players get into the market with new kinds of packages, we may see these rates adjust themselves to the point where politicians can stop worrying so much about a rate increase.”
Asked by CSFB Managing Dir. Daniel Reingold whether RBOC-IXC merger would pass regulatory muster under Bush Administration, several panelists said there was at least possibility such deal could be cleared. (Wall St. Journal reported Wed. that WorldCom was interested in selling itself, with BellSouth, Qwest, SBC and Verizon seen as possible buyers.) Whether RBOC-long distance carrier union would fly in Washington “depends on who you are talking about, what their market share is” CompTel Pres. Russell Frisby said. “It could go through easily or it could be problematic.” Merger of 2 RBOCs would be “very difficult politically and it’s a challenge legally,” Tauke said, but such union still might be possible. Merger of ILEC and long distance carrier would be “easier politically,” with timing hinging in part on how long it took Bell companies to make it through Sec. 271 process, he said.
Panelists also offered views on how U.S. Supreme Court would come down on appeal of decision by 8th U.S. Appeals Court, St. Louis, that vacated FCC’s Total Element Long-Run Incremental Cost (TELRIC) pricing standard for competitive interconnection. Earlier this year, court also agreed to review lower court ruling that FCC lacked jurisdiction to regulate pole attachment fees paid by cable operators when providing Internet access. “Common thread” running through both cases is confiscation argument being made by telecom companies, Brown said. “Not for the life of me… do I see a confiscation argument. There are other arguments, but I have a very hard time seeing that a confiscation argument will win at the Supreme Court.”
Frisby said focus of President Bush on utilities was likely to be more on electricity side rather than on telecom. “He hasn’t filled the position of the head of NTIA yet, which is a very important position,” he said. He also reiterated calls by CLECs for strong enforcement of Telecom Act requirements, including bringing in state attorneys gen. and Dept. of Justice as necessary “because they are much better at enforcement than FCC is in these types of situations.”
AT&T Vp Govt. Affairs John Langhauser called for “renewed commitment to open local markets,” including adjusting ILEC prices for unbundled network elements that he charged were “way too high.” In 2 upcoming decisions, FCC will have opportunity to compel “economically viable discounts.” One is ruling due next month on Verizon’s Sec. 271 application in N.Y., Langhauser said. Second is FCC Common Carrier Bureau’s arbitration of disputed interconnection agreement between Verizon and AT&T after Va. State Corp. Commission declined to do so because of legal questions. Arbitration in Va. case is “super forum” for FCC to set “model for the future” in cost cases in other states.
On wireless spectrum policy, Tauke projected there was “80% chance” that Administration would work to free spectrum currently held by Defense Dept. and public safety users for wireless carriers “sometime over the next 2 years.” He saw similar probability that 45 MHz spectrum cap would be lifted in next 2 years to help pave way for advanced wireless services. Brown said: “The spectrum issue is the hardest, biggest nut to crack and probably the most important.” While spectrum cap issue has received considerable attention, she said that relatively speaking it was easily solved compared with questions on “where will new spectrum come from.”