Martin, Rest of FCC At Loggerheads on USF, Intercarrier Comp Revisions
Four members of the FCC pledged to work together on broad intercarrier compensation and Universal Service Fund reform, for a vote at the Dec. 18 FCC meeting. The four cited growing consensus on several issues teed up for decision, in a statement they all signed. But FCC Chairman Kevin Martin questioned whether his colleagues will really be ready to reach a decision in December. The letter was released just before midnight Wednesday, as the FCC responded to a writ of mandamus by the U.S. Court of Appeals for the D.C. Circuit addressing the so-called ISP remand (CD Nov 6 p1).
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Commissioners Michael Copps, Jonathan Adelstein, Robert McDowell and Deborah Tate said in their statement accompanying the order and rulemaking proposal “we do believe that there is a tentative but growing measure of consensus on a number of issues.” The FCC had been slated to vote on reform measures at the Nov. 4 meeting, but ran out of time, agency officials said.
The four said agreement appears close on moving intrastate access rates to interstate access levels “over a reasonable period of time,” addressing phantom traffic and traffic pumping, the need for an alternative cost recovery mechanism in some cases, basing USF support on a company’s costs, and making broadband part of USF. They also said they agree in general that the FCC should exempt Alaska Native regions and tribal lands from the cap the FCC imposed on competitive eligible telecommunications carriers last May.
Martin said in a statement he’s “skeptical” of the commitment: “I question whether my colleagues will be any more willing to adopt comprehensive reform in December… I believe when December comes, the other Commissioners will simply pursue another Further Notice and another round of comment on the most difficult issues.” Martin said if the appeals court wants a more satisfactory response on the ISP remand and “is willing to give the Commission the benefit of the doubt rather than vacate our rules immediately” it should “enforce our promise of reform on pain of automatic vacatur on December 19.”
Along with the ISP remand order, the FCC is seeking comment of three different versions of USF/intercarrier compensation reform, running to hundreds of pages. Martin had the staff working long hours over the weekend, generating even more text, which ultimately was not included in the release.
The FCC did circulate a “cleaned up” version of the original revamp plan Martin first floated Oct. 14. While many details had leaked, this was the first time it’s being widely circulated. The FCC also asked for comment on an alternate proposal limited to universal service fund reform, which the chairman first circulated last Friday. The third proposal incorporates changes sought by OPASTCO and other groups, agreed to by Martin, which other commissioners first saw themselves after 5 p.m. Wednesday. The three proposals total more than 350 pages. Comments will be due 14 days after the item is published in the Federal Register.
The ISP remand part of the order states that though ISP- bound traffic fell within the scope of Sec. 251(b)(5) of the Communications Act, “this interstate, interexchange traffic is to be afforded different treatment from other section 251(b)(5) traffic pursuant to our authority under section 201 and 251(i) of the Act.” Martin said in a statement he doubts the order would withstand legal scrutiny. “I doubt that an Order that retains artificial and unsupported distinctions between types of IP traffic and maintains an interim rate without establishing an end game will be seen any more favorably by the Court than the Commission’s two previous attempts,” he said.
Stifel Nicolaus said in a research note the court probably will reject the FCC’s latest rationale. “However, given court procedures, we believe the FCC has probably bought itself a little more time to initiate comprehensive reform steps that begin to harmonize at least some intercarrier rates and might have a better chance of surviving judicial scrutiny,” the firm said.
Industry officials said they were still reading the document but saw no major surprises. “We're pleased that it’s out there and we have the opportunity to now finally see what is in the order, digest it and comment on it, and that we will have a more open process going forward,” said Curt Stamp, president of the Independent Telephone & Telecommunications Alliance. “We are hopeful that we can get something done in terms of meaningful intercarrier comp reform.”
NARUC Telecommunications Committee Chairman Ray Baum, an Oregon regulator, said the FCC was right to seek comment. “These programs are critical and complex and must be publicly vetted to ensure that reform efforts are successful,” he said. “The FCC is to be commended for taking this step and we look forward to working with our federal colleagues, lawmakers, and consumer and industry groups as this process continues.”
“There are no real surprises about the content of the proposals,” said a wireless industry attorney. “But what is so striking is how little legal support there is for the steps that the Commission wants to take. They have completely failed to tie the so-called reform measures to the Telecom Act.”