WASHINGTON-The Federal Communications Commission will begin examining the relationship between wireline and wireless carriers and which regulators-federal or state-have jurisdiction over interconnection.
It is a “question of our jurisdictional basis for addressing the intercarrier compensation rules that we should use for wireless interconnection,” said Jane Jackson, chief of the competitive pricing division of the FCC’s Common Carrier Bureau. “Using Section 332 of the Communications Act, that authority rests with the FCC alone. With Sections 251 and 252, there is a different mix of reciprocal compensation authority, where the federal government sets pricing guidelines but states actually are the ones that arbitrate the agreements. We ask whether we should be doing this under 332 or 251 or all of those together and how does it work? … We don’t want to leave any stones ignored. … We wanted to make sure that people remembered it is not just 251, it is also 332,” Jackson said. State regulatory agencies have called for more say in interconnection matters, even joining in litigation that went to the Supreme Court. The wireless industry has remained adamant that its pricing regimes are under the sole purview of the FCC.
The most recent debate over reciprocal compensation-when carriers pay each other to carry traffic-began when incumbent local exchange carriers alleged that some competitive LECs were serving only Internet service providers, which meant that there would be no traffic, and hence no compensation, going in the direction of the ILECs.
The debate on reciprocal compensation will not likely be over any time soon. Dorothy Atwood, chief of the FCC’s Common Carrier Bureau, has refused to estimate when all of the varying issues dealing with intercarrier compensation will be resolved.
While the Cellular Telecommunications & Internet Association has had issues with reciprocal compensation rules, the trade group and its members initially were largely absent from the current debate. CTIA got involved late last year when it appeared the FCC was leaning toward giving the states more control over wireless/wireline interconnection.
CTIA was not immediately available for comment.
The Personal Communications Industry Association, which has engaged in this battle on the side of the CLECs, said it was pleased the FCC was taking a unified approach to intercarrier compensation.
“332 has been treated as our Holy Grail. Any changes to its implementation have to be examined very carefully. … It is not inappropriate to take a look at 332 hoping that ultimately the result will be a reaffirmation of 332,” said Rob Hoggarth, PCIA senior vice president of government relations.
While the FCC adopted the reciprocal compensation rules by a unanimous vote, FCC Commissioner Harold Furchtgott-Roth said that white papers released late last year by FCC economists were more reflective of a socialist instead of a free-market economy.
“Deregulation is not about government studying prices. It is not about government studying mechanisms or specific kinds of intercarrier compensation arrangements. It is not about mandating bill-and-keep. It is not about mandating any kind of price. It is about getting the government out of the way in transactions between private parties. … The system we have, let’s face it, is broke. … It must be one that is not directed from Washington. It must be one that is based on contracts. [Socialist countries] use economists to set prices for compensation between private parties. It is the worst use of intellectual talent conceivable to man. … Get the government out of the business of setting prices,” said Furchtgott-Roth.
In addition to starting this large proceeding, the FCC reiterated its previous ruling that ISP-bound traffic is interstate in nature and therefore not subject to reciprocal compensation, but instead of eliminating the current contracts in place, the FCC created a two-year transition mechanism. Furchtgott-Roth dissented, saying the decision is apt to be challenged again in appeals court.
The ILEC industry not only lobbied the FCC, but last year mounted a serious lobbying effort on Capitol Hill.
The House telecom subcommittee passed a bill late last year to phase-in a bill-and-keep mechanism but the bill died before being considered by the House Commerce Committee because then-chairman former Rep. Thomas Bliley (R-Va.) was against changing the regime.
The new House Commerce Committee chairman, Rep. Billy Tauzin (R-La.), is more sympathetic to the Baby Bells.
The day before the FCC’s action, Tauzin sent letters to various CLECs requesting additional information specifically related to their costs and revenues associated with servicing ISPs, specifically he requested copies of service agreements, a breakdown of costs or estimates of costs and the method for that estimation.
“When confronted with the possibility that reciprocal-compensation payments may be further reduced or even eliminated, some CLECs have stated that they will be forced to either leave the business or recover these `costs’ by significantly raising the fees they charge their own customers-principally [ISPs], which allegedly would pass those increased fees onto their Internet access customers. But this argument assumes several facts to be true that appear, at this point, to be at best unclear-namely, that there are significant costs incurred in terminating a competitor’s call, that reciprocal compensation rates reflect those actual costs (and no more), and that the current fees collected from ISP customers do not already, or cannot reasonably, cover such costs. It also assumes a lack of competition in what appears to be a very competitive ISP business,” said Tauzin.
Also at last week’s meeting, the FCC was given an update of the agency’s efforts to spur the television industry’s transition to digital TV. While the FCC said it is doing everything in its power to encourage the transition, it would not speculate whether 85 percent of the homes in America will be capable to receiving digital signals by Dec. 31, 2006. When the later of those two thresholds is met, other spectrum users-including advanced wireless and public safety-will gain access to spectrum that TV broadcasters use for channels 52-69. The FCC expects to begin auctioning some of this spectrum in September.
