NARUC Wants National Wireless Consumer Standards

The resolution underwent substantial amendment after its introduction Sunday. Originally, it endorsed a joint federal-state task force given six months to write national wireless consumer protection standards. Tuesday the Telecom Committee revised the document, adding a provision specifying that if the FCC didn’t act within four months on joint task force standards, they'd be submitted to Congress. Another change said the task force writing national standards should meet every six months to consider changes. The Telecom Committee deleted language defining national standards as a ceiling, deciding to let the task force resolve that touchy issue.

The telecom panel said the task force should include state attorneys general. The resolution adopted calls for the group to consist of three FCC commissioners, four state commissioners, one wireless industry representative, one representative of the state attorneys general and one consumer advocate. The group would have six months to “engage in a collaborative process to mutually agree upon a set of uniform national wireless consumer standards.”

The resolution reiterates NARUC’s position that states have authority to enforce national wireless consumer standards but departs from past policy by supporting “uniform national standards coupled with a state and federal enforcement partnership model.” The resolution says states retain “co-extensive authority” with the FCC to settle complaints, conduct factual investigations and enforce uniform national standards through appropriate sanctions and penalties.

Several Telecom Committee members questioned whether the resolution cedes to federal jurisdiction authority to set consumer protection standards. California Commissioner Rachelle Chong, a resolution sponsor, said states already are losing that battle and now risk total preemption of their sway over wireless terms and conditions. The resolution is a significant NARUC policy shift, but it recognizes harsh reality, Chong said: “We can have a seat at the table and have meaningful input on national standards, or we can be completely left out of the game.”

Commissioner Phil Jones of Washington said he initially had reservations about the resolution, owing to its departure from NARUC policy. But he said he came to support it because of its core concept of the joint task force resolving wireless consumer protection issues for the federal and state jurisdictions now and in future.

Commissioner Robert Clayton of Missouri opposes the resolution despite the changes, he said: “I can’t support a resolution that could take away our right to exceed national standards.” But Commissioner John Burke of Vermont, earlier a foe, said he supports it because twice-yearly reviews of the wireless standard would let states propose tougher standards as needed. In response to other questions, supporters said the resolution wouldn’t affect states’ ability to enforce state laws applying to all telecom providers, like taxation, interconnection, universal service programs, 911 and public safety.

The resolution passed the Telecom Committee with two dissenting votes. The Consumer Affairs Committee had adopted this resolution Monday, but the telecom panel referred the amended resolution back to Consumer Affairs for concurrence with Tuesday’s changes. Some Consumer Affairs members questioned why the resolution now was silent on whether national standards would be a ceiling or a floor. Chong explained the resolution’s original intent as making them the ceiling, language supporters had to drop, deferring that matter to the task force to get the resolution passed. The Consumer Affairs Committee accepted the Telecom Committee changes and adopted the amended resolution late Tuesday.

The resolution passed the NARUC board without dissent. The board unanimously adopted Telecom Committee resolutions that: (1) Encourage use of broadband technology in federal, state and local efforts on energy and climate. (2) Urge government, business and nonprofit efforts to erase barriers to broadband subscription facing low-income households. (3) Support continued state authority over voice-service interconnection among certificated telecom carriers regardless of what new voice technologies emerge. (4) Authorize a comprehensive NARUC study of state pole attachment regulation, including a list of best practices. The board also adopted Consumer Affairs resolutions urging Congress to help holders of $40 DTV converter box coupons that expired unused before they could buy boxes, and calling on the FCC to expand DTV consumer education programs to highlight how the features built into all coupon-eligible converter boxes can help meet individual user needs.

NARUC Notebook

Speakers at a NARUC panel on intercarrier compensation (ICC) and universal service fund reforms said the time is ripe for reforming both regimes, but differed on how to do so and on whether action is likely this year. Speakers agreed that reform should aim for a system that effectively targets high-cost areas, doesn’t over-subsidize carriers and promotes broadband buildouts to unserved areas. But they couldn’t agree on how. Rich Morris, Sprint/Nextel government affairs vice president, said meaningful, pro-competitive reform would cut funding for competitive carriers. He said even though Sprint gets competitive subsidies, competitive carriers as a whole get too much. Policymakers “are like doctors who have been prescribing their carrier patients opiates for years, hooking them on the USF,” he said. “It’s time to send them to rehab.” He said Sprint’s version of USF reform would stress lower overall USF payments via measures like consolidation of large carriers’ study areas within a state, then consolidation within their holding companies. Robert DeBroux, TDS Telecom public policy director, said rural carriers get 60 percent of their revenue from access charges and universal service subsidies, then put to broadband buildouts. He said ICC and USF reforms pulling revenue from the system will “take away incentives to invest in rural areas.” But Rick Cimerman, NCTA state affairs vice president, said cable companies have spent more than $130 billion on broadband buildouts without a dime in universal service funding. He said one goal of reform is to not over- subsidize incumbent telcos. Wendy Moser, Qwest public policy vice-president, said policymakers must recall that some high- cost areas need subsidies, so the goal should be to target places where it’s needed. She said customers in those areas should bear a fair share of the costs of service through their rates. Joel Lubin, AT&T public policy vice president, said reform needs to be balanced and simple, and provide some equity among the states. He said a step in that direction would be unifying the terminating access rate “so we can transition to a business model that’s not an access charge model.” As to the chances of FCC action on ICC and USF reform this year, panelists split. Kathleen Grillo, Verizon federal affairs vice president, said she’s hopeful because the FCC has committed itself to act by a Nov. 5 deadline set by a federal appeals court. DeBroux of TDS said that FCC Chairman Kevin Martin’s likely lame-duck status poses a perfect opportunity for bold action. “I hope he'll take this opportunity to stand up and quack a lot.” But NCTA’s Cimerman said that while it’s hard to predict election-year outcomes, “I'm not expecting to see a whole lot.”

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Telecom industry analysts told a NARUC audience to expect more consolidation, divestitures, mergers and acquisitions as telecom carriers large and small restructure for strategic advantages, market alignments and cost efficiencies. Michael Balhoff, managing director for Balhoff, Rowe & Williams, said large carriers seek growth, while mid-sized and small carriers seek efficiencies. The result will be more asset divestitures such as Verizon’s selling off its entire northern New England operation to FairPoint, he said. “This marked the first time a Bell company divested entire states,” he said. This type of restructuring can help both telcos and their customers, he said, by leading to lower costs and more capital investment. He said recent history among smaller companies acquiring assets divested by bigger carriers showed buyers averaging 15 percent cost savings managing acquisitions. Carriers can focus on the customers they want to serve, he said. AT&T and Qwest will follow Verizon’s example of divesting marginal assets so they can focus on their core customers, he said. Regulators and carriers share an interest in safeguarding customers and deploying advanced services, he said, advising regulators to clarify their stands and resist the temptation to view transactions as a “cookie jar full of goodies” from which to extract unreasonable concessions. Jessica Zufolo, a Medley Global Advisors analyst, said the landline sector’s continuing decline will drive carriers to diversify through restructuring, mergers and acquisitions. She said despite the economic slowdown, telecom offers attractive investments, citing deployment of third-generation wireless services and devices enabled by spectrum acquired in the recent 700 MHz spectrum. She predicted that federal settlement of universal service and intercarrier compensation issues will lead to a wave of consolidations, mergers and acquisitions, particularly among mid-sized carriers.