Carrier Groups: FCC Shouldn't Delete Separations Rules but Make Freeze Permanent
Carrier groups urged the FCC to move cautiously as it updates its Part 36 separations rules, which haven’t seen a major overhaul for more than 35 years. The rules remain important for many small providers, they noted in comments due Wednesday in docket 80-286. The FCC also has the ongoing “Delete, Delete, Delete” proceeding, which is examining eliminating rules of all kinds (see 2504140046 and 2504140063).
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In November, the FCC extended for up to six years its freeze on federal-state jurisdictional separations of telecom costs and revenue for rate-of-return incumbent local exchange carriers (see 2411130043). The agency also asked the Federal-State Joint Board on Jurisdictional Separations to provide further guidance, including whether the freeze should be made permanent, whether the rules are necessary in light of changes in the communications marketplace, and whether providers should have a one-time opportunity to “unfreeze” their category relationships.
NTCA said it would be “premature [to] declare the Part 36 separations rules ‘unnecessary’ in their entirety.” Customers are moving to broadband-only loops, and rural carriers “are increasingly moving to IP-based voice solutions,” it said. “Yet, for now, the separations regime remains essential in setting certain regulated rates and in other means of recovering regulated costs at the federal and state level alike.”
In fact, NTCA urged, the FCC should make the freeze permanent. “The Commission has solicited comment on separations freezes numerous times, and nothing found in the resulting record supports ‘unfreezing’ the rules,” the group said: “Should the Commission do so, on its own motion or acting upon a Joint Board recommendation, small rural providers and federal and state regulators alike would be forced to renavigate and potentially recreate a regulatory framework that has offered relative predictability and stability for more than two decades.” NTCA also supported “a narrow and targeted” temporary lifting of the freeze, so carriers can make adjustments.
The National Exchange Carrier Association (NECA) also supported a permanent freeze but opposed sweeping reforms. “Separations remain[s] an important step in the process used for allocation of costs between the federal and state jurisdictions,” the group said. “This is particularly critical for [rural local exchange carriers] in NECA’s interstate pools and tariffs, as well as for identifying costs used in the interstate ratemaking process, and should be retained.” NECA noted that the FCC first froze separations in 2001 and has issued repeated extensions.
Reform would be difficult and not in the public interest, NECA said. After nearly 25 years of not performing separations studies, “It is highly questionable whether personnel with the expertise needed to perform the studies even exist," it said. “Removal of the current freeze would necessitate reassignment of personnel to these tasks and provide them with specialized training, resources that would be better utilized to deploy advanced networks and provide service to consumers.”
WTA also opposed deleting the separations rules, noting that its typical member serves fewer than 5,000 customers per service area and has fewer than 50 employees. “As a general matter, … the separations process should be simplified and streamlined using company-specific information,” the group said. “Although the separations process continues to grow less relevant for many -- but not all -- service providers … the separations process remains critical for many smaller companies.”