WASHINGTON-TheUnited States Telephone Association last week attacked the Federal Communications Commission’s interim wireless-wireline interconnection proposal, calling the plan misguided and the cellular industry’s campaign for such reform misleading.
“The process seems to be a little screwy,” said Roy Neel, president of USTA and a former aide to Vice President Al Gore. Neel questioned the wisdom of setting a temporary policy for interconnection between local exchange carriers and commercial mobile radio service providers after the FCC issues a broad interconnection ruling several months from now as mandated by the new telecommunications law.
“To our knowledge, not a single complaint has been filed at the FCC-ever-by a [wireless] carrier,” said Neel, “so somebody is trying to fix a problem that doesn’t exist.”
That may have been true for the first 12 years of the cellular industry, but new personal communications services systems are expected to compete against local landline telephone companies over time as well as against cellular operators more immediately.
“The FCC needs to fix interconnection [policy] to enable wireless carriers to compete in the local loop,” said Michael Altschul, vice president of regulatory affairs for the Cellular Telecommunications Industry Association. Altschul said it is crucial that wireless-wireline interconnection rules be revised as soon as possible to give bidders for PCS licenses clarity on the policy.
USTA disagrees, describing as “completely false” the cellular industry’s claim that reciprocal termination will foster competition and that it costs LECs next to nothing to terminate calls to wireless subscribers but that they nonetheless charge wireless carriers an average of three cents per minute. Those costs, according to USTA, are more than $500 million a year.
CTIA, noting that nearly $1 billion a year is paid by wireless carriers to LECs for terminating calls, said the current interconnection regime is “the most formidable barrier to the deployment of new wireless networks.”
Neel’s remarks to reporters last Wednesday were the powerful telephone industry lobby’s first public pronouncement on the LEC-CMRS interconnection issue since the proposal was issued in early January and represent the start of a series of battles between wireless and wireline industries with the dawning of a new competitive era in the telecommunications industry.
More reaction on the LEC-CMRS interconnection proposal is expected in comments due today at the FCC.
The FCC is pushing a reciprocal termination approach whereby wireless and wireline carriers recover the costs of generating calls on their respective networks and terminate each other’s traffic at no charge.
USTA said the scheme is flawed because most wireless calls are terminated by landline telephone companies, an imbalance the association said would preclude LECs from recovering their costs and be contrary to FCC mutual compensation rules.
Moreover, USTA said negotiated compensation arrangements between LEC and CMRS providers are the primary jurisdiction of the states, not the FCC.
Bell Atlantic Corp. and Pacific Telesis Group, in a joint pleading, made the same point with the FCC. That only two of the seven Bells chimed in on the issue has led the wireless industry to suggest the Bells may not be united in their position. USTA denied any defections among Bells.
Still, the interconnection issue puts the LECS in a precarious position. The seven regional Bell telephone companies that dominate the $100 billion local exchange market are parents to many of the top wireless telephone firms in the country. Yet Bell cellular subsidiaries voted unanimously to support the interim reciprocal termination policy proposed by the FCC, according to CTIA.
