Panelists Voice Concerns on USF Predictability, Regulation of IP Services
Panelists at a Practising Law Institute wireline panel cited continued difficulties with application of the FCC’s Universal Service Fund revamp in rural areas. An FCC official said the agency is willing to make changes where it can. Telco officials said the intercarrier compensation (ICC) revamp has been working more smoothly. Panelists debated the necessity of FCC regulation of IP services as carriers and customers switch from legacy technologies to packet-based technologies.
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FCC Chairman Tom Wheeler will have to deal with the “train wreck” that was left after the USF/ICC order, and its quantile regression analysis has been “actually making matters worse” in rural America, rather than fixing it, said Home Telecom Senior Vice President Keith Oliver. The existing system was broken and needed to be fixed, but the new system has created even more uncertainty, he said. His company can’t figure out what kind of funding will be available in the future. “We've just got to get rid of this quantile regression” formula, he said. “Business needs simplicity. It needs some degree of certainty.” Rural companies also need some assurance that the money they have already spent on “legitimate investments” can be recovered, Oliver said. If his company can’t depend on recovery, he can’t invest as much, Oliver said.
"People who have concerns about it, I think it’s important to remember that it was a 750-page very complicated order that affected the entire industry,” said Rebekah Goodheart, wireline aide to FCC Commissioner Mignon Clyburn. “It’s important to keep sight of the fact of how massive this undertaking was,” she said, adding the FCC continues to work with rural carriers to “make changes where appropriate.”
On the ICC side, “we haven’t heard as many concerns about how that’s working,” Goodheart said. “We provided some stability for carriers that didn’t know where their revenues were coming from.” It’s also predictable, she said: Carriers know where their revenue will be coming from in the future, even though they may be going down.
"We're seeing an impact every day” as a result of ICC changes, said Chris Miller, counsel at Verizon. The number of ICC disputes “are reducing on the terminating side,” and the old disputes are “settling out,” he said. Now it’s important to “pivot” to originating access rates in an ICC revamp, as Verizon has been seeing increased arbitrage there, he said.
As the FCC considers the IP transition, it and the states need to retain sufficient authority to make sure the IP transition goes smoothly and problems like rural call completion that come up can be dealt with, said Harold Feld, senior vice president at Public Knowledge. The 1996 Telecommunications Act “did its level best to be technology neutral,” and one of the FCC’s “worst” decisions was to not maintain that technological neutrality when it treated different services differently “in order to encourage new entry,” Feld said. After the transition, the regulatory structure should look different than it did in 1996, but from the consumer’s standpoint, the experience shouldn’t break, he said.
Home Telecom has retired its TDM switch, and has in place one of the first-in-the-nation IP-to-IP interconnection agreements with another provider, Oliver said. That process has been “almost transparent” to residential customers, he said. Oliver cautioned against lifting regulations just because a new technology is being used. “There’s a lot of folks that want to take that as pixie dust and sprinkle it, and anything it touches has now got to be deregulated,” he said. But the IP transport mechanism in the middle is simply the device that the communications are traveling over. Market power can be brought to bear in many segments of telecom, and it’s important the FCC be able to regulate where necessary, he said.
The commission’s look at the special access market has been a “deliberate” process so far, and “it has to be a deliberate process,” said Verizon’s Miller, because of the complexity of the market. The market is competitive and much more robust now than in the past, he said. Cable companies are “winning market share and winning customers.”
"We have not seen that this is a robustly competitive market,” said Charles McKee, Sprint vice president-government affairs. While there are some places where competition can be found, in the vast majority of areas, there’s only one provider through which a person can gain access, he said. Even where cable is deployed, it’s not necessarily an alternative that a competitive carrier can turn to because it doesn’t always provided dedicated service, he said.
Cable has been providing IP voice services to its customers for a decade, said consultant Earl Comstock during an audience Q-and-A. As the FCC tackles the IP transition, Comstock said he wondered whether it’s going to look like more of a wireline issue or a cable issue. Comstock said he was surprised the panel didn’t include a cable representative.
"We did invite cable,” said moderator Kathleen Abernathy, who is executive vice president-regulatory and government affairs at Frontier. “They didn’t want to be on the ‘wireline'” panel, she said, putting air quotes around wireline.