Submarine Cable Operators Back AT&T-Verizon Regulatory Fee Proposal
Private submarine cable operators support a regulatory fee structure proposed by AT&T and Verizon for submarine cable systems, FCC and industry officials told us Wednesday. The two sides are working on language and implementation issues, but are near formal agreement, we're told. The FCC has promised to act by Sept. 29 on the issue (CD Sept 5 p8). Level 3 and the other submarine cable operators, which earlier pitched a collective proposal, now believe the AT&T- Verizon plan, while likely to mean higher fees, is more fair, said an industry official close to the proceeding.
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In a Monday phone conference, AT&T, Verizon and submarine cable operators found consensus, the industry official said. Tuesday, operators met with FCC commissioner offices to report that accord, news commissioner legal aides seemed pleased to hear, the official said. AT&T and Verizon may meet as soon as Friday with Chairman Kevin Martin, perhaps with submarine cable operators joining in, the official said. “We're very encouraged by the response to the AT&T-Verizon plan, but all parties are still working out the details, and no formal agreement has been reached yet,” said an AT&T spokesman. Verizon and Level 3, prominent in pushing the operators’ collective proposal, declined comment.
Earlier this month, the submarine cable operators raised concerns about the AT&T-Verizon plan. Both plans would create a per-system fee specifically for submarine cable systems, but the details vary. Submarine cables now are charged as international bearer circuits, a classification operators say results in inequitable fee assessments. AT&T and Verizon have called their approach more “nondiscriminatory and competitively neutral” than the operators’ plan.
Implementing the AT&T-Verizon proposal would mean submarine cable operators pay more, but many operators probably haven’t been paying the full amount anyway, the industry official said. Operators report their own data, and loopholes in the IBC fee category let them under-report circuits, lowering fees, the official said. Submarine cable operators now see the Verizon-AT&T proposal as superior to their own, because it eliminates opportunities for arbitrage, the official said. The operators’ proposal still allowed under-reporting, relying as it did on circuit counts for one- half of the recovery, the official said.