Industry, States Reject ‘Piecemeal’ AT&T Plan for Intercarrier Compensation

The FCC should reject the AT&T and Embarq petitions, “which focus on a particular type of traffic for only one carrier,” Verizon said. “The Commission should be wary of any proposal -- whether carrier-specific or not -- that would increase rates for one service to compensate for claimed deficiencies in rates for a different service.” Instead, the commission should be concentrating on completing a full overhaul this year, it said. Cable and wireless agreed. The FCC should “concentrate its efforts on fashioning a durable regime to govern the exchange of all traffic,” rejecting proposals “that offer only piece- meal solutions,” Comcast said. Granting the AT&T petition “would end up undermining FCC efforts to adopt” long-term reform, the Rural Cellular Association said.

The AT&T petition “is not an answer,” said the New York Public Service Commission. “It will only make matters worse and will fail to resolve underlying issues.”

Some said the FCC should take interim steps, but only as a fallback if there’s no comprehensive revamp. If interim proposals are adopted for AT&T, the FCC shouldn’t impose them on other companies, “but rather allow others to volunteer to implement these solutions,” USTelecom said. Any “reform efforts must provide carriers serving high cost rural areas an opportunity to recover revenues lost due to rate reductions,” said the Independent Telephone & Telecommunications Alliance.

The VON Coalition, representing the VoIP industry, didn’t file comments but probably will file reply comments, said Jim Kohlenberger, the group’s executive director. “This is indeed an enormously important issue for VoIP users and providers,” and it’s “precisely” why VON signed on to a broader industry letter (CD Aug 8 p5) urging a complete overhaul, he said. AT&T’s proposal is another “problematic piecemeal” approach “that could slow the rollout of… innovative new ways to communicate.”

Little Love for AT&T Plan

AT&T is seeking interim declaratory rulings and limited waivers. Most of its proposals relate to the FCC’s handling of Internet-based traffic. AT&T wants the FCC to declare, on an “interim” basis, that carriers may collect access charges from telecom companies serving VoIP providers, as long as the calls appear to be ‘interexchange,'” and “the charges are not higher than the terminating carrier’s tariffed interstate switched access rates.” AT&T wants the FCC to expand the scope of a 2004 Vonage order by declaring that it preempts states when regulating AT&T U-verse VoIP and other fixed-location VoIP services. And AT&T wants a waiver of FCC rules to allow it to increase subscriber line charges and originating access charges, enabling it to voluntarily reduce intrastate access rates to interstate levels.

Rural carriers agreed that access charges should apply to Internet-based traffic. Rural local carriers “are experiencing many of the same problems AT&T describes in attempting to collect tariffed access charges from [VoIP] providers and associated interconnecting carriers,” said the National Exchange Carrier Association, the Organization for the Promotion and Advancement of Small Telecommunications Companies and the Western Telecommunications Alliance in joint comments. The Rural Independent Competitive Alliance agreed, but it condemned AT&T’s request to cap VoIP traffic compensation at interstate levels. “Such a declaration would force LECs with higher intrastate than interstate access rates to reduce all of their terminating rates.” CenturyTel also disputed the proposed cap, saying the limit would produce “unreasonably low compensation for rural carriers… and effectively [negate] the switched access regime.”

The FCC shouldn’t apply access charges to IP traffic, even on an interim basis, Sprint Nextel said. That would be “contrary to existing law and to the public interest,” it said. On the contrary, the commission should clarify that access charges don’t apply to IP traffic, Sprint said. AT&T’s proposal “would discriminate against IP traffic by making IP providers pay AT&T” for terminating and originating access traffic, said ISP Core Communications. It would be “arbitrary and capricious” for the FCC to grant the petition because the agency has repeatedly found that “there is no cost basis for setting disparate intercarrier compensation rates for otherwise indistinguishable switching functionality,” Core said.

The FCC shouldn’t decide on VoIP access charges in the context of AT&T’s request, CompTel said. The commission already has “at least” two pending proceedings on whether access charges should apply to VoIP traffic, the competitive carrier association said. The FCC should decide the issue there, as “extensive records have been developed.” Cox Communications agreed, saying the FCC should decide in the context of an Embarq forbearance petition on the subject.

The FCC should make clear its exclusive jurisdiction over IP-enabled services, NCTA said, agreeing with that aspect of AT&T’s plan. The action would make all Internet traffic interstate and no longer subject to state regulation. “Some state commissions… are seeking to impose unnecessary and burdensome entry requirements on facilities-based VoIP providers,” the cable association said.

The FCC shouldn’t declare interstate all fixed Internet traffic, CenturyTel said. Doing that “could well motivate network users to suddenly declare all traffic ‘IP-based’ and not subject to intrastate access rates,” the rural local carrier said. “State commissions and carriers would find themselves in the unwelcome position of having to sort out a litany of disputes that would preoccupy the industry for years to come.” The proposal might only work if the FCC offset lost intrastate access revenue with money from the Universal Service Fund or elsewhere, it said.

Sprint supported AT&T’s proposal to reduce intrastate access rates to interstate levels. But the FCC shouldn’t allow AT&T to increase originating interstate switched access rates or to assess “access charges of any sort” to Internet-enabled traffic, it said. An access replacement mechanism must be in place if intrastate access rates are reduced, said NECA, OPASTCO and WTA. “A mechanism for replacing forgone intrastate access revenues is vital for assuring the continued provision of advanced services in rural areas,” they said. The FCC should allow AT&T and other price cap carriers to recover intrastate access revenue shortfalls by increasing subscriber line charges and originating access charges, they said. But that recovery mechanism won’t work for rate-of-return carriers, they said. “To assure the benefits of AT&T’s proposal apply nationwide, the Commission should permit ROR carriers” to recover shortfalls “via targeted increases in interstate access support mechanisms” such as Interstate Common Line Support or Local Switching Support funding, they said. The groups suggested a new, interim LSS component, LSS2, made specifically for that purpose.

AT&T’s plan to “voluntarily” reduce intrastate rates means its customers would be required to pay more “involuntarily,” said the National Association of State Utility Consumer Advocates. The RCA agreed, saying the plan amounts to “smoke and mirrors.” AT&T failed to show “good cause” for a waiver, said CompTel. It said AT&T doesn’t need a waiver to reduce rates, but the Bell’s “main priority” is keeping current revenue levels. “There are many interesting and relevant truths that AT&T chooses to leave out of its Petition -- in particular, the fact that AT&T has sufficient headroom in its earnings to fully implement any intrastate access charge reductions it chooses without the Commission waiving its rules to allow a corresponding increase in interstate rates,” CompTel said.