Competitors Support FCC Process Revamp

It’s remarkable “how little work the FCC does in establishing facts,” said Texas attorney Bill Magness. The commission often relies on evidence that others haven’t been given enough chance to challenge, he said. And the commission doesn’t reach out enough to local regulators, especially in dealing with individual markets, he said.

The FCC’s ex parte process is “misused and abused,” Morelli said. The comment and reply comment rounds are “almost becoming irrelevant,” as lawyers spend more of their time on ex partes, she said. That’s a problem because, unlike with comments and replies, ex parte filers aren’t required to notify other parties when they've made a submission, she said. The problem is exacerbated when parties file critical new data or details of important negotiations at the “eleventh hour,” she said. Even if other parties discover late filings, they sometimes don’t have a chance to respond, other panelists said. The FCC should disclose when it plans to rely on such information and provide time for other parties to review it, said Magness.

The regulator seems to have abandoned the reconsideration process, panelists said. The FCC used to embrace reconsideration petitions as a way to clean up rules that created unforseen problems, said consultant Joseph Gillan. But lately the FCC has seemed to regard acting on reconsideration as “admitting [it’s] wrong,” he said. Many in the industry “don’t even bother” filing for reconsideration, Morelli said, “because you know it’s not going to be acted on.”

Rulemaking notices should include proposed rules, panelists said. Last year, the commission almost did a comprehensive intercarrier compensation and Universal Service Fund revamp without releasing details of then-Chairman Kevin Martin’s plan, said Bill Hunt, a Level 3 vice president. That “would have been a disaster,” he said.

It’s tough to predict how the FCC will respond to two Verizon forbearance petitions seeking relief from unbundling and other requirements in Rhode Island and Virginia Beach, Morelli said. The FCC is under statutory deadlines to review Rhode Island by May 15 and Virginia Beach by June 29. “Whatever happens on May 15 is going to happen on June 29,” Morelli said. But a case in the U.S. Circuit Court of Appeals for the District of Columbia complicates matters, she said. The court must decide whether the FCC was right to deny roughly the same forbearance relief to Verizon in six markets, including Providence and Virginia Beach. Whatever the court decides will affect the standard that the FCC uses to decide Verizon’s pending forbearance petitions, she said.

Broadband stimulus efforts may spur revamps for universal service and intercarrier compensation, but it likely won’t be the comprehensive overhaul that some are looking for, panelists said. The $7.2 billion included for broadband in the American Recovery Act is the “initial down payment,” but eventually regulators will need to address USF and intercarrier comp, Hunt said. Compensation reform probably won’t happen for another two years, because the lineup of commissioners is in flux, and 2010 is an election year, he said. “Industry fatigue” on the issue, created by multiple FCC requests for plans and comments, could also keep compensation reform a low priority, he said. A total overhaul may be unlikely soon, Morelli agreed, but more limited revamps are possible, because the three commissioners seemed to find areas of agreement last year.