WASHINGTON-A lengthy notice of proposed rulemaking adopted July 25 by the Federal Communications Commission but not released until Aug. 13, “initiates a comprehensive review of our existing regulatory framework of structural and nonstructural safeguards for local exchange carrier provision of commercial mobile radio services.”
Taking another step toward full competition in the local marketplace, the NPRM outlined numerous proposals aimed at changing the FCC’s current rules that govern how LECs structure their wireline and wireless businesses while protecting other paging, cellular, specialized mobile radio and personal communications services providers. Because the notice has not been printed in the Federal Register, no comment dates have been set.
“The commission’s goal in releasing the notice is to enhance competition by eliminating safeguards when they are no longer necessary,” commented Wireless Telecommunications Bureau chief Michele Farquhar. “The notice compliments the pro-competitive regulatory paradigm established by the Telecommunications Act and reflected in other items the commission has recently adopted. The proposals included in the notice are also carefully balanced to facilitate thoughtful consideration of the interests of wireline and wireless providers and customers.”
As Farquhar alluded, perhaps the most important two proposals presented in the document concern the sunsetting of restrictions placed on Bell operating companies and LECs regarding wireless service-provision safeguards. To keep in synch with sunset rules that govern certain other BOC-and LEC-related competitive service offerings, the commission offered two options for comment, both geared toward phasing out regulations covering wireline provision of cellular services.
Option One would sunset the rules once new interconnection and access rules are formulated, and after a wireline carrier has completed a “competitive checklist” that ensures a level playing field.
Option Two would flash-cut to new competitive rules if the FCC’s proposed “uniform set of safeguards” is adopted. “Such an approach would enable the BOCs to realize some degree of efficiencies through integration with landline management and operations, akin to those already available to their largest competitors, AT&T (Corp.) and GTE (Corp.),” the FCC wrote.
The NPRM’s proposed uniform proposals seek industry comments on joint marketing, customer proprietary information and network information disclosure requirements, including:
Price discrimination-The commission is concerned that BOCs and other LECs could favor their own cellular operations over services provided by a traditional CMRS operator if no separate-subsidiary rules were in place. What is the value of separate affiliates as deterrents to discrimination, and should such separations be structural or non-structural?
Cross-subsidization-Some wireless players maintain that BOCs and LECs still can cross-subsidize even under a price-cap scenario. The FCC wants “specific data and argumentation in support of [such] claims, and to address the relative value of structural and non-structural separate affiliate requirements in this regard.”
In addition, the FCC seeks comment on whether it should prohibit volume discounts for cellular service sold by the cellular affiliate to the affiliated LEC for resale; and if rates, terms and conditions for such resale should be put on public notice. Joint billing between regulated and unregulated operations also is up for question.
Leveraging of market power-Since the introduction of the duopoly cellular plan, the commission has determined that customer bases have been split about 50/50 between wireline and wireless carriers. The commission is concerned about potential abuses in providing, installing, and maintaining the network before interconnection and unbundling strictures can be codified. The advent of PCS provision, which the commission said would give LECs and BOC cellular subsidiaries a “double incumbency,” also adds to the potential problem.”
Costs/benefits of integrated vs. structurally separated operations-Most customers would prefer a “one-stop shopping” option when they buy wireless services, the FCC said. LECs and BOCs can market wireless and certain wireline services together at this time, even with structural safeguards in place. “We therefore seek comment on specific public benefits from integrated cellular/landline operations that structural separation precludes.”
Ownership of landline facilities-The FCC proposes that no BOC cellular affiliate can own landline networks that would permit the BOC to offer local service.
Network information disclosure-Because the commission already has concluded that “incumbent LECs should be required to disclose all information relating to network design and technical standards” along with any information impacting interconnection, it believes no specific Part 22 rule is needed.
In its notice, the commission also concluded that BOCs no longer have to structure their out-of-region cellular activities as separate subsidiaries if they are not the incumbent LEC in the area.
The commission also seeks comment on whether LECs that hold 10-megahertz PCS licenses be exempt from any in-region structural safeguards. For LECs holding 30-megahertz PCS licenses, the commission proposes that a non-structural safeguard plan be submitted to the FCC that includes the following: a description of a separate affiliate for providing PCS, a description of compliance with accounting rules, details of planned compliance with new interconnection rules and network disclosure rules, and an outline on how all sensitive customer information will be handled between subsidiaries. Like its proposal to disallow any LEC/cellular joint ownership of wireline facilities, no PCS subsidiary would be able to own any network on which its parent could provide LEC services.
