NARUC, NASUCA Bracing for Longer Separations Freeze
Comprehensive FCC action by July on jurisdictional separations may be a long shot, given a short time frame and ongoing work on the National Broadband Plan, said officials for state commissions and state consumer advocates. The FCC may again extend the nearly nine-year-old freeze on separations, which expires June 30, they said. “Another freeze is certainly a possibility,” said Commissioner John Burke of the Vermont Public Service Board. If the FCC chooses to go in that direction, state regulators believe “interim changes to key factors are an absolute pre-requisite to extending final comprehensive review beyond June of this year,” he said.
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Separations, governed by the FCC’s Part 36 rules, is the process that incumbent local carriers use to allocate interstate and intrastate regulated costs. The commission first froze its separations processes in 2001, after concluding that networks had changed vastly since the rules were written. The freeze was supposed to last five years, or until the FCC adopted a full-on separations overhaul. But commission inaction made a three-year extension in 2006 necessary. In May this year, the FCC extended the freeze by another 12 months, and directed the Federal-State Joint Board on Jurisdictional Separations to issue a recommendation on how to proceed with comprehensive reform (CD May 18 p6).
The Joint Board plans to convene by telephone in early January, but time is short for action, said Brad Ramsay, general counsel for the National Association of Regulatory Utility Commissioners. The Joint Board must still issue a recommended decision, and it’s not unusual for the body to seek comment before finalizing it, he said. After that, the FCC will need to seek comment on the recommendation, he said. To make the June 30 freeze expiration, the FCC probably has to adopt an order by the end of March, he said.
Ramsay is “optimistic” the FCC will at least take interim action on separations by July, he said. For example, it could temporarily adjust some factors used in the separations process, he said. That may require another extension of the freeze, but would at least be a “step forward,” he said. Comprehensive reform is “less likely” but “not impossible” since the Joint Board and FCC have been working on the issue for many years, he said.
At least one FCC commissioner has heard “absolutely nothing” on any recent progress at the commission on separations reform, said an eighth-floor agency official. An extension of the freeze is possible because the FCC now intends to revamp USF and intercarrier compensation, a major effort that could push separations to the back burner, the official said. An FCC spokesman declined to comment because the matter is before the joint board.
The Joint Board could not have issued a recommended order until recently, because the FCC only assigned federal members to the body on Dec. 17. State members met between May and December to discuss separations reform, but it’s “difficult to move forward without a full board,” said Ramsay. It’s hard to imagine the Joint Board made much progress on separations without federal members, said David Bergmann, telecom committee chairman of the National Association of State Utility Consumer Advocates. He said he would “not be surprised” if the FCC extends the freeze again. The Joint Board could issue a recommended decision before the freeze expires, but the FCC might not have enough time to respond, he said.
State members of the Joint Board “have not been idle,” said Burke. “Earlier this year we provided some ideas on possible next steps. The FCC had a full complement of Commissioners by mid-2009 and we have been concerned about the closing window for State action.” Commissioner Mignon Clyburn contacted each of the state members shortly before the FCC announced her appointment as the new federal chair, Burke said. The board will soon hold a “a preliminary conference call to discuss next steps and the state members’ proposals,” and hopes “to meet face-to-face in a closed session for some staff and commissioners no later than February,” he said.
The FCC’s National Broadband Plan due Feb. 17 may further diminish the chances for near-term reform, sources said. Many telecom issues have taken a “back seat” to the plan, “and justifiably so,” said Ramsay. Another issue with a near-term deadline is the FCC’s response to a court remand on the Universal Service Fund high-cost support mechanism for non-rural carriers, Bergmann said. The FCC doesn’t appear to be considering separations reform as it crafts recommendations for the plan, he said. With so much on the FCC’s plate, quick action on separations seems less likely, Bergmann said.
“Congress imposed a very challenging task on the FCC with an incredibly tight deadline,” said Burke. The broadband plan “is necessarily engaging key FCC advisory staff in all parts of the agency, as well as the commissioners themselves,” he said. State members of the board believe the broadband plan “should take some aspects of separations into account,” he added.
Revamps for USF and intercarrier compensation, expected to be teed up as part of the broadband plan, could further delay separations reform. In its May separations order, the FCC asked the Joint Board to examine whether separations reform should be deferred pending the other two reforms. The FCC could do the three overhauls in any order, said Bergmann. Separations is a “multibillion dollar issue” for consumers that like USF and compensation was designed to spur plain old telephone service, not broadband, he said.