CLECs Push for 5 Years for Government Clients in Voice Forbearance Rules

The FCC is expected to vote by Friday to meet internal scheduling guidelines. If left unaddressed, the petition would be deemed granted the following Friday. In avoided-cost resale, CLECs don't provide the copper loops that deliver voice service to customers. Here, regulations offer protections to these companies other phone service aggregators don't get.

Sana Sheikh, Granite Telecommunications senior corporate counsel, told us if the FCC votes for forbearance, she's optimistic it will use a longer period for government than for corporate CLEC clients. Doing so "is in the best interest of the government and taxpayers," she said.

The FCC proposal says business customers would get three years to transition to new services and six months to order new services from CLECs that fall under the existing avoided-cost resale regulations. Granite proposes giving business customers 18 months to order new services so companies wouldn't be under pressure to undergo lengthy negotiations with individual ILECs. Many corporate and government customers continue to value TDM service for the power and redundancy, Sheikh said.

USTelecom backs the FCC proposal to grant forbearance on avoided-cost resale for voice services but supports reducing the business transition window to 18 months from three years, said Patrick Halley, senior vice president-policy and advocacy. "The commission has already decided the voice market has been a highly competitive market for many years."

CLECs' main concern here involves the voice resale market, said Incompas CEO Chip Pickering. "It's primarily used to connect multiple sites," such as post offices, satellite campuses within a state university, or hospitals and clinics across a regional healthcare system. CLECs aggregate TDM telecom capabilities from individual ILECs and offer them to large organizations that would otherwise need to negotiate with tens or sometimes hundreds of phone companies within a state or around the country. CLECs also target retailers with multiple locations, Pickering said. A CLEC might provide credit card swipe services to national drug store chains that fill prescriptions or use faxes to accept prescription orders. "You can imagine if the nationwide service was cut off what a headache that would be," Pickering said.

The Commerce Department raised concerns about how quickly the federal government would be able to transition to new contracts for telecom technologies that support public safety and other vital services, said Pickering. Resale agreements between ILECs and CLECs allow companies to provide a national voice resell service that's "one call to connect all," he said. "It's a useful service that's difficult to replicate."

USTelecom's Halley said there's no evidence anyone will be harmed. The only thing that would change, he said, is CLECs selling to government or to others would have to renegotiate their costs with the ILECs subject to market-based rates. "We do this all the time," he said. "The vast majority of resale arrangements we have today is not based on avoided costs; it's commercially negotiated." He said it remains in the business interest of USTelecom members to maintain their wholesale arrangements with rivals.

Copper gives clients telecom redundancy during natural disasters when the ability to maintain service is critical, Pickering said. He said the five years are "very critical for not displacing useful services."

Granite, along with other Incompas members, met with FCC officials to ask them to "deny forbearance for avoided-cost resale of TDM-based telephone services provided via copper loops (traditional TDM service) and voice-grade copper loop unbundled network elements (VGCL UNEs)," it said, posted Tuesday in docket 18-141. If there is forbearance, Granite and the other CLECs want a minimum five years for federal government customers "with an overlapping four-year period during which new services can be ordered subject to the wholesale regulations at issue." The CLECs said the General Services Administration postponed a mandatory transition date until May 2023 for federal telecom services awarded by enterprise contracts.

CenturyLink backed the forbearance and rejects "specious claims" by CLECs that it would disrupt their business plans for providing traditional phone services to business and government customers and eliminate a regulatory backstop to protect against "purported ILEC market power." The telco said end-users routinely buy TDM voice services through indirect sales channels such as system aggregators and IT consultants that don't have the avoided-cost discounts that CLECs have.

WorldNet Telecommunications met with FCC officials this month to oppose the USTelecom request for forbearance on loops in Puerto Rico. Puerto Rico Telephone Co. asked the FCC to grant USTelecom's petition for forbearance "on the same terms that it is granted in the rest of the United States." That came in a phone call with Wireline Bureau staff, per a filing posted Friday.

The agency must answer the petition for forbearance by Aug. 2 or it's deemed granted (see 1902140064). Commissioners considered other parts of the USTelecom forbearance petition, ordering at their July meeting a three-year transition for CLECs selling UNE broadband transport, with an exception in Puerto Rico. It got five years (see 1907100058).

The draft on avoided-cost voice resale "would end two narrow regulatory obligations imposed on phone companies that no longer stand the test of time," an FCC spokesperson emailed now, repeating earlier comments.