Industry Doubts Martin Can Keep Six-Month Promise for Intercarrier Compensation Reform
The telecom industry is skeptical about FCC Chairman Kevin Martin’s headline-making pledge to tackle broad intercarrier compensation reform in six months. An FCC lawyer announced the Martin-authorized promise in oral argument May 5 at the Court of Appeals for the District of Columbia Circuit (CD May 6 p1). More likely, industry sources said, the FCC will only act on compensation for ISP- bound traffic, a subset issue that the D.C. Circuit remanded for FCC action back in 2002. But even that’s not certain unless the appeals court grants a Core Communications request for a writ of mandamus forcing the FCC to act, a telecom analyst said.
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Martin’s sudden interest in intercarrier compensation reform caught the industry off guard, several sources told us. It “surprised us, but we applaud it,” said John Rose, president of Organization for the Promotion and Advancement of Small Telecommunications Companies, in an interview.
Commissioners didn’t see it coming, either. At least one commissioner’s office still hasn’t heard about Martin’s plan for broad reform, an FCC source told us. And at least two offices didn’t know about the six-month goal until last week’s oral arguments (CD May 12 p5). Getting commissioners to agree on comprehensive reform in six months is possible, but will take a significant amount of work, two FCC sources told us.
The six-month pledge might have been more about timing than genuine interest in reform, a wireless carrier lawyer said in an interview. It was “clear” Martin only gave the FCC attorney the statement to use as a “shield” against the D.C. Circuit judges, the lawyer said.
Intercarrier compensation is the “health care” of telecom, said David Kaut, a Stifel Nicolaus analyst, in an interview. Broad reform is “complex, contentious” and “politically thorny,” because any order will “create winners and losers,” Kaut said. To get a ruling in six months, there would need to be a court order, marketplace crisis or other emergency driving the FCC to act, he said.
Where there’s a will there’s a way, but it will be a “real challenge” to release an order on broad reform in six months, Rose said. Martin can make progress if he invests enough political capital, but it will be an “uphill” battle until there’s more industry consensus, said an incumbent carrier source. Others seemed less optimistic. “Unlikely,” said a competitive carrier lawyer. “The odds still seem long,” said the wireless carrier lawyer.
The FCC hasn’t even “picked a direction” for broad reform, the wireless lawyer said. Many proposals have been filed since the intercarrier compensation docket opened in 2001, but the FCC still hasn’t agreed on a “basic structure,” the lawyer said. After that, the FCC will still need to figure out political differences likely to arise among the commissioners, the source said: The FCC “can’t just pop out a 20-page order.”
It probably will take a court order to force the FCC to act on even the ISP compensation part, Kaut said. At oral argument, the FCC lawyer told the court Martin would schedule a vote on that issue at the commission’s next regularly scheduled agenda meeting if, after six months, commissioners don’t agree on broad reform. The FCC won’t do “anything” without a court deadline, agreed the CLEC lawyer. Such a deadline is probable because courts tend not to accept representations of counsel, the lawyer said: “There’s nothing to back [them] up.”
But current “political pressure” might be enough, said the wireless lawyer. The issue is now too “high profile” for FCC inaction, the lawyer said: “They're going to have to [act].”