Embarq Wants Accounting Rules Forbearance for All Price-Cap ILECs

“Verizon, Qwest, and Embarq are all similarly situated to AT&T” because none are subject to rate-of-return regulation for which cost-assignment rules were designed, Embarq said in comments. The FCC currently uses price caps to regulate the carriers, it said. “Any ILEC wholly within the federal price cap regime is similarly situated [to AT&T].” The FCC should extend cost-assignment forbearance to all price-cap-exclusive carriers that agree to comply with conditions set in the AT&T order and provide a compliance plan, Embarq said. “It should be inconceivable that forbearance should be limited just to AT&T, or just to Bell operating companies.”

The case for giving Embarq forbearance is stronger than it was for AT&T, Embarq said. “Embarq is a small fraction of AT&T’s size,” it said. Also, Embarq is “chiefly rural” and has no major facilities-based long distance or wireless affiliates, it said.

The FCC could see Embarq’s comments as the carrier’s formal request to extend forbearance. The FCC sought comments on extending relief to Verizon and Qwest after the carriers asked for it in a May ex parte meeting. That surprised the AT&T order’s opponents (CD June 10 p2), who believe the carriers need to file separate, identical forbearance petitions to get me-too relief. The FCC could put the Embarq request up for comment too, a CLEC official said. But, like the other me-too requests, it won’t carry the 12-month statutory deadline associated with forbearance petitions, the official said.

The FCC has ample authority to grant Embarq relief without separately putting the carrier’s request up for comment, said John Benedict, Embarq federal regulatory affairs director, in an interview. The FCC would grant Verizon and Qwest’s request, but say the conditional forbearance also applies to all price-cap regulated ILECs, he said. Granting forbearance to similarly-situated ILECs doesn’t require a petition, he said.

The FCC shouldn’t extend forbearance to other carriers while the D.C. Circuit mulls a NASUCA appeal of the AT&T order, NASUCA said in comments Thursday. NASUCA disputes the FCC’s ruling that there is no “current, federal need” for cost-assignment rules, said David Bergmann, NASUCA chair, in an interview. The accounting data still serves “plenty of state purposes,” he said. The FCC must serve the public interest, and there is public interest in having state needs met, he said. The appeal isn’t the order’s only challenge. In late May, CompTel, Sprint and others filed a reconsideration petition to the FCC (CD June 25 p6).

CLECs, Wireless Fight Bells

The FCC shouldn’t extend forbearance to Qwest and Verizon because they aren’t “similarly situated” to AT&T, said CompTel, Sprint Nextel, T-Mobile, Time Warner Telecom and One Communications in joint comments. Also, the Bells’ ex parte “fails as a petition for forbearance both procedurally and substantively,” they said. Qwest and Verizon disagreed.

Qwest, Verizon, and AT&T are Bells, but “that is where the similarities end,” the competitive and wireless carriers said. “They are each different in terms of the market conditions they face, scope of operations, geographical presence, and historical context.” Unlike AT&T, a pure price-cap regulated carrier, the other Bells are subject to rate-of-return regulation by the states, they said. Also unlike AT&T, Verizon has local exchange carrier affiliates getting Universal Service Fund high-cost support, they said. In the AT&T order, the FCC “relied on its belief that AT&T did not receive high-cost loop support as one ground for its decision to grant forbearance,” they said.

Verizon and Qwest are “similarly situated to AT&T,” and would agree to filing a compliance plan, Verizon and Qwest said in separate filings. That Verizon’s intrastate rates are still subject to rate-of-return regulation in some states makes no difference, it said. The FCC rules found cost- assignment rules didn’t serve “current, federal needs,” Verizon said. State needs shouldn’t come into consideration, it said.

The New York Public Service Commission isn’t opposed to the Verizon request, as long as compliance plans are filed with the PSC, it said in comments. The PSC “should be afforded time to provide comments on the sufficiency of the filing for state regulatory needs.” The data the PSC gets from Verizon has been “extremely important in monitoring and evaluating competition and service quality,” it said.

An ex parte is not a forbearance petition, the CLECs and wireless carriers said. The ex parte refers to the carriers’ forbearance petitions seeking relief from Automated Reporting Management Information System (ARMIS) requirements, but “those petitions have not been incorporated into this docket, and in any event, do not seek the identical relief that AT&T received,” they said. Verizon’s petition didn’t seek relief from cost-assignment rules, while Qwest’s only asked for relief from some, they said. The ex parte was also lacking in verbiage, they said. “[A] few sentences clearly do not constitute a thorough and thoughtful analysis,” they said.

Carriers don’t need to file “me too” petitions to get the same forbearance relief as a similarly situated carrier, Qwest said. In the “Section 272 Sunset Order,” for example, the FCC extended relief from the equal access scripting requirements to Qwest and Verizon, it said. The FCC “found that ‘[its] analysis of the EA Scripting Requirement would not vary for any of the BOCs’ and that the BOCs were ’similarly situated with regard to the factors relevant to forbearance,'” Qwest said.

Thursday’s comments marked T-Mobile’s entrance into the cost-assignment rules fight. T-Mobile hadn’t previously involved itself, but opponents to the AT&T order had “been keeping them in the loop,” a CLEC official said.