USF Reconsideration Petitions Come Pouring In

The order, released, Nov. 18, “involved significant tradeoffs for all affected carriers, and reflected a careful, well-reasoned balancing of all interests after extensive deliberation,” but a few changes are needed to close loopholes “which unprincipled arbitragers might seek to exploit,” MetroPCS said. The carrier asked that its petition be given expedited consideration.

MetroPCS asked the FCC to clarify the definition of “access revenue sharing agreement” in the order “to make clear that an arrangement in which a third party receives compensation for activities which result in traffic stimulation is included whether or not the payment is tied directly to the amount of billings or collections of access charges.” Otherwise, the carrier said, “traffic stimulators may try to evade the rule by adopting fixed fee arrangements.” MetroPCS also asked the FCC to make clear that the access stimulation definition “extends to third party arrangements not only with the terminating LEC, but also with any affiliate of the terminating LEC.” The filing said this is already “implied by the current definition, which extends to direct and indirect arrangements,” but should be made more “express."

MetroPCS also asked the FCC to clarify how the 3:1 traffic imbalance ratio definition in the order will be used to determine whether a carrier is engaged in “access stimulation” or so-called traffic pumping. MetroPCS said concerns remain that parts of the order are “ambiguous in some respects and may lead to unnecessary confusion as to what qualifies as traffic stimulation, as well as potential mischief from traffic stimulators who are attempting to evade the Commission’s new regulations.” MetroPCS also asked the FCC to address a “gap” in the order by applying the traffic stimulation provisions to intrastate traffic. “The Commission’s Order neglects to address traffic stimulation in the intrastate access context which is a matter of concern because MetroPCS has already started to see access stimulation in this segment of the market,” the filing said.

The USF Order raised several questions about the validity of Vermont’s existing intrastate rate design that includes Local Measured Service (LMS) and what constitutes the local rate for purposes of the order, the petition said. ILECs in the state have in place the LMS rate including a fixed charge for dial tone service and variable charges that apply for each minute of local calling, it said. The system, which was adopted in the 1980’s, remains in effect. John Burke, a member of the Vermont Public Service Board, pointed to paragraph 78 of the order. The provision seeks to specify that “the functionalities of eligible voice telephony services include voice grade access to the public switched network or its functional equivalent; minutes of use for local service provided at no additional charge to end users and toll limitation to qualifying low-income consumers."

The USF Order appears to prohibit LMS rate designs, which have as an inherent component charges for each minute of use for local services, the Vermont petition said. The state asks the FCC to make clear that the order wouldn’t prohibit intrastate rate structures that include charges for local minutes of use.

Vermont’s other concern is what is considered the local rate for purposes of the order. The order says the FCC is adopting a local rate system that applies to both rate-of-return carriers and price cap companies. Paragraph 238 of the order then limits high-cost support where local end-user rates plus state regulated fees don’t meet an urban rate level. In Vermont and other locations with LMS rate structures, due to the LMS rate design, the dial-tone rate for Vermont carriers can’t be reasonably compared directly to those in states without LMS which includes local usage, the Vermont filing said. An alternative would be to use an average usage component based upon all local minutes of use for the local carrier, Vermont said. Vermont seeks to make sure there’s solid, reasonable comparability between dial-tone rates that include local calling minutes and those that don’t, Burke said.

The Public Service Commission of the District of Columbia asked the FCC to reconsider the determination to permit price cap local exchange carriers to determine the allocation of eligible recovery for intercarrier compensation reform at the holding company level, it said in a filing. Alternatively, the D.C. PSC seeks a waiver from the rule so consumers in jurisdictions that have no intrastate access charges aren’t required to pay for intrastate access charges lost by the price cap LEC in other jurisdictions. The FCC cited no legal authority to justify permitting holding companies to reallocate intrastate access revenue from one jurisdiction to other jurisdictions, the D.C. commission said. The order “unfairly” permits holding companies to pass on intrastate access charge recovery to jurisdictions that have no intrastate access, the D.C. PSC said. The commission had said there’s no intrastate access charges to reform in D.C. (CD Dec 13, p11) meaning whatever intrastate access revenue is “recovered” from D.C. customers would be intrastate access revenues “lost” in another jurisdiction.

Rural carriers, as expected, also filed petitions to reconsider. In a joint filing, NTCA, OPASTCO, the National Exchange Carriers Association and the Western Telecommunications Alliance urged the FCC to take another look at the public interest obligations imposed by the Universal Service Reforms, as well as the caps imposed by the order and various provisions for waivers of the new rules.

The reforms, approved by the FCC in October (CD Oct 28 p1), impose several obligations on rate-of-return carriers but don’t offer concrete returns, the rural groups said. “The Commission should make sure sufficient and predictable funding is in place before imposing new service mandates,” the rural groups said in a joint statement. “The Commission should also reconsider the sufficiency of its budget for high-cost universal service, and reconsider several aspects of its caps on capital and operating expense."

Turning to the question of caps, the rural groups urged the FCC to “improve its methodology for determining a reasonably comparable rate floor, and reconsider its decision to phase-out safety net additive support,” Thursday’s statement said. “The Associations also show that the Order’s adoption of a per-line cap on high-cost support will harm consumers in high cost areas without providing any public interest benefit."

On the waiver provisions of the reforms, the rural group said: “Changes are needed to the Commission’s method for prescribing a new interstate authorized rate of return, as well as several of the ICC provisions of the Order.”