WASHINGTON-In a surprise move that gives new FCC Chairman Kevin Martin more time to reveal his regulatory philosophy, Level 3 Communications Inc. withdrew a forbearance petition regarding how much Voice over Internet Protocol carriers must pay to have their calls connected to the public-switched telephone network.
“Level 3 has withdrawn the petition in deference to the Federal Communications Commission. Given the appointment of new leadership only three business days before the statutory deadline for ruling on the petition, we determined it was inappropriate to ask the agency to resolve this important issue in the timeframe required by law. However, there remains a pressing need in the industry for clarity in this area, and Level 3 may elect to refile the petition or take other appropriate regulatory actions in the future,” said James Crowe, Level 3 chief executive officer. “The FCC’s record is one of strong support for VoIP, and we’re confident it will resolve these important issues in an appropriate and timely manner. There are a number of other avenues by which the commission can address the issue of VoIP and intercarrier compensation, and our hope is that it does so quickly in order to provide the industry with clear ground rules.”
In December 2003, Level 3 asked the FCC to rule that VoIP carriers were required to pay only reciprocal compensation to carriers for connecting their calls rather than the access charges the carriers said they are due. Due to the forbearance law, the FCC had a year to rule on the petition with an extension of up to 90 days. The 90-day extension period runs out today.
Telecommunications insiders had been watching to see how Martin would rule on the Level 3 petition as a clue as to how he might come down on the thorny issues of how carriers-most especially rural wireline carriers-are compensated. The FCC recently asked the industry to comment on a series of questions and options for reforming intercarrier compensation, and there is also a strong likelihood of reforming universal service.
Intercarrier compensation comes in two forms: access charges for long-distance calls and reciprocal compensation for local calls. Rural LECs rely heavily on access charges as a major revenue source. The other major source of revenue for RLECs is universal-service funding. The FCC is also considering changes to the universal-service system. It is unclear whether intercarrier compensation can be changed without changes to universal service and vice versa. Universal-service subsidies and access charges are under increasing pressure as telecom evolves from a circuit-switched wired world to one where calls are connected without wires and without switches, and the distinction between local and long-distance is shrinking.
State regulators have also indicated that changes to both the intercarrier-compensation regime and universal service are necessary. The National Association of Regulatory Utility Commissioners recently voted to tell the FCC that states should be allowed to “opt into” any new system.
