Lobbying Intense as Vote on Intercarrier Compensation Nears

FCC sources said it was too early to say, in particular, whether the Commission will be able to reach an agreement in the coming days on items that address wireless issues intended to accompany the rulemaking (CD Jan 4 p1). The rulemaking otherwise may get a vote as a stand-alone item. Officials with rural groups have been at the FCC in force to raise major red flags about the wireless items.

The main vehicle for the rulemaking will be the plan filed by the Intercarrier Compensation Forum, as well as proposals by NARUC, CTIA and rural carriers. Industry groups have been furiously lobbying the FCC, with the issue expected to go on the Sunshine agenda Feb. 3. NARUC held its 5th forum on ICC last week in Washington.

An ILEC source and expert on both the USF and ICC predicted Congress ultimately will have to become involved and that at the most the FCC will on its own be able to devise a plan that will alleviate some of the stresses on the system. “There’s going to have to be a bifurcation of the system,” the ILEC source said: “One of the reasons why folks are not going getting to consensus as quickly as they might otherwise has to do with the fact that all of these plans are one-size-fits-all approaches. What works for the small companies will not work for the large and vice versa. If it has to be one size fits all there won’t be consensus.”

Ultimately, a deal will have to be cut that preserves the ICC system while taking pressure off the system, officials said. “The degree makes a difference,” the source said. “If you're collecting $2 billion a year that’s one thing. If you're collecting $3 billion that’s something else. How you're collecting and from whom makes a difference.” The source added that some ICC support obligations could be moved to the USF: “But there are limits on how much you can stick into universal service. People are uncomfortable if the fund increases from the $6 billion of today to $10 billion. That creates problems.”

“The bottom line is it’s still a big jumble,” said an analyst who has followed the issue closely. “This gets down into the nitty-gritty details they tried for a year to work out… Could they in time work something out? I suppose so, but I expect this to be a very protracted, contentious proceeding.” He predicted that reaching a resolution could take into 2006: “There’s no flash cut. This will take time.”

A 3rd source said he expects the 3 Bells that dropped out of the ICF talks (only SBC stayed), the wireless carriers no longer participating, and others to rethink their decision, especially as the FCC looks closely at the ICF proposal as a starting point. “Given the willingness of the FCC to move forward with a proceeding, this does create pressure to question the wisdom of swimming on your own,” the regulatory attorney said: “The [3 Bells that left] figured they might be in a bargaining position but the FCC has made it clear they're going to go forward anyway.”

Along with the rulemaking, the FCC is expected to take on 2 wireless issues. The first is a Sprint filing on who should pay the transport costs on the link between the wireless carrier and the rural LEC. Sprint sought clarification that wireless carriers can designate separate “rating and routing points” for the exchange of local traffic under existing numbering and interconnection rules.

The 2nd related issue is whether ILECs can block wireless carriers from making use of blocks of numbers on the grounds that it constitutes the use of “virtual NXX codes.” NTCA is advising the Commission to hold off any resolution of these wireless issues independent of the larger ICC rulemaking.

All but the last mile of a wireless call are reliant on wireline infrastructure, noted Scott Reiter, senior telecom specialist at NTCA, “If they get this wrong there won’t be any infrastructure,” he said: “The bottom line is the FCC shouldn’t take a piecemeal approach to intercarrier compensation. Short term solutions may cause more problems than they solve.”

Ken Pfister, a rural ILEC official and leader of the Alliance for Rationale Intercarrier Compensation (ARIC), told us his group mas major concerns about both wireless proposals. “We've been in there meeting with the FCC this week,” Pfister said Fri. “We've recommended that it’s illegal for them to move forward on any change in rating and routing… They have not even opened a rulemaking on the issue raised by Sprint 2 years ago. Any changes will have huge implications if they're done in advance of the rulemaking.”

Supporters of the NXX order said Fri. they believe they have 2 votes in favor and are focusing on trying to line up a 3rd vote.

The ICF has been holding weekly calls, mostly to plot strategy, as the Feb. 10 meeting approaches, and to decide how to address queries from FCC staff drawing up the rulemaking. Those meetings are closed to those who dropped out.

Gary Epstein, moderator of the ICF and former chief of the FCC Common Carrier Bureau, told us that while only 2 rural groups joined the ICF since last summer when a number of major players defected SBC, AT&T, Sprint and its other members would welcome additions. “We welcome anybody back at anytime,” Epstein said: “The broader the group we have the happier we'd be.” Epstein observed that the big players who dropped out were at the table for 80% of the time it took ICF to put together its proposal: “Their input remains in what we put out.”