AT&T, USTelecom Trying to Revive Talks for Industry-Wide Proposal on ICC, USF
AT&T and USTelecom are trying to revive dormant efforts to create an industry-wide proposal on Universal Service Fund and intercarrier compensation regime reforms ahead of the FCC’s rigid schedule, multiple industry officials told us. Similar efforts have foundered in the past -- including a concerted attempt in 2006-07 -- but this time, “I think there is a possibility for a very broad industry coalition on this,” said USTelecom Vice President Jon Banks. “The FCC knows we're trying to do this,” he added. “Everybody -- ILECs, CLECs, cable wireless, rurals -- is trying to put together a path for the FCC to follow.”
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The first calls have gone to the Independent Telephone and Telecommunications Alliance. USTelecom and AT&T have focused on CenturyLink and Windstream, mid-size LECs that were key players in the last serious negotiations in 2006-07, Banks said. New ITTA President Genevieve Morelli said in an email that the group “is participating very actively in the debate on these critically important issues to its members and will do its part to help ensure that the Chairman’s goal of bringing broadband to all Americans is achieved.” USTelecom and AT&T are pitching telcos on lowering intercarrier compensation rates through regulation but allowing carriers to recoup any losses through an access recovery fund, Banks said. The fund would be supported by money saved by the impending Universal Service Fund Overhaul and additional rates from consumers, Banks said.
Separately, USTelecom and AT&T have re-floated the idea of creating consumer rate benchmarks, Banks confirmed. Companies that could prove they can’t reasonably meet the rate benchmarks would qualify for universal service cash to supplement to the benchmark, Banks said. Modernizing the “subsidy programs for the broadband era will take commitment, hard work and focus from everyone,” AT&T spokesman Michael Balmoris said in an email. “We and many others are working to make sure this important FCC priority is accomplished this year.”
Conversations have waxed and waned among telcos for the better part of a decade. But on March 15, FCC Chairman Julius Genachowski and the four commissioners promised to move to orders on universal service and intercarrier comp reform by summer’s end. The FCC’s pledge was a new spur for industry, Banks said. An FCC spokesman declined comment.
Late last year, XO Communications offered its own proposal for reform, in which the FCC would require that within five years all intercarrier traffic be exchanged in Internet protocol format. AT&T contacted XO last fall and “showed interest” in the proposal, an industry official said. XO Vice President Lisa Youngers said any intercarrier comp reform “must be forward-looking and include policies that focus on IP networks rather than circuit-switched (TDM) networks. … IP networks provide more efficient and lower cost transport and exchange of traffic; therefore, IP interconnection should be encouraged, regardless of the technology used to serve particular end users. … The option of strong IP interconnection policies within the intercarrier compensation regime will create proper incentives to spur additional broadband deployment."
National Telecommunications Cooperative Association spokesman Caitlin Colligan acknowledged that agents from her group have been “actively meeting” with bigger telcos to try to work out a deal. “NTCA always welcomes the opportunity to engage other parties in identifying solutions that work for providers serving rural America and ultimately benefit all consumers,” she said in an email.
Despite the warm language, it may be difficult to put together an industry-wide proposal for reform. NTCA and other rural associations, for instance, have already joined forces to try and fight a rear-guard action against the FCC reforms. Last week, 39 House members, most of them from rural districts, wrote to FCC Chairman Juliud Genachowski to press him about reforms. “In particular, could you describe how the FCC will specifically account for the impact any changes to USF and ICC may have on service providers who are also [Rural Utilities Service] borrowers?” they asked. “Will the FCC conduct a thorough analysis of USF and ICC changes and the potential impact of those changes on RUS borrowers’ ability to repay loans? And, will you conduct such an analysis before making any changes to USF and ICC rules?” Among those signing the March 31 letter were House Agriculture Committee Chairman Frank Lucas, R-Okla., and ranking member Collin Peterson, D-Minn., as well as House Telecom Subcommittee member Lee Terry, R-Neb.
Verizon, meanwhile, has made clear that it won’t pay more than $0.0007 per minute to connect VoIP calls. This has led it into conflict with at least four CLECs, including Cbeyond, which filed a federal lawsuit against Verizon last month (CD March 10 p11). A Verizon spokesman didn’t respond to requests for comment.
Around 2004, a consortium of about 20 telcos hired Latham & Watkins' telco lawyer Gary Epstein to lead discussions for a new intercarrier comp and USF regime. Now retired, Epstein said his efforts ultimately “cratered” but the work product from the 14 months of negotiations has shaped FCC discussion of USF and intercarrier comp reforms. In his case, industry couldn’t come up with a compromise package in part because he was only “a facilitator” and not a binding arbiter. This time, industry might have more success because the FCC has shown it’s serious about moving ahead with reform, he said: “I think it makes a big difference. If the commission continues to show a lot of fortitude, it'll push industry players into action.”