WASHINGTON-Six congressmen instrumental in the crafting and eventual passage of the Telecommunications Act of 1996 have taken to task in writing those who oppose the Federal Communications Commission’s interconnection and local competition order scheduled for oral argument in front of the Eighth Circuit Court of Appeals Jan. 17 in St. Louis.
Sens. Ernest Hollings (D-S.C.), Trent Lott (R-Miss.) and Daniel Inouye (D-Hawaii) along with Reps. Edward Markey (D-Mass.), Thomas Bliley (R-Va.) and Ted Stevens (R-Alaska) filed an amicus curiae brief with the court Dec. 23 in support of the FCC’s role in overseeing mandates of the act. While admitting that such a filing goes against their normal grain, “Several of the briefs filed in this case … purport to characterize the intent of Congress in passing the act in ways that we know to be inaccurate and highly one-sided,” they wrote. “Those filings, and the importance of this particular appeal, prompted us to prepare this brief in order to ensure that the court has a more complete and balanced record as it considers the important issues before it.”
The congressmen pointed out that former Bell companies and their supporters “appear to contend that merely eliminating state laws prohibiting competitive entry would enable such entry to occur. To the contrary, however, the act reflects Congress’ recognition that economic barriers to entry have been at least as powerful in frustrating competition in those markets as legal barriers to entry.” They also contended that any thought that the act only recognizes “facilities-based” carriers as competitors was completely wrong, and that “Congress specifically recognized the importance of resale in enabling carriers to enter the market now and to build facilities over time, as it becomes economical for them to do so.” In addition, they cited resale as one of the ways the long-distance industry had grown and diversified since the breakup of AT&T.
In addressing the most serious charge by states-rights advocates-that the FCC should have no role whatsoever in implementing pricing rules that maintain “just, reasonable and nondiscriminatory” pricing-the congressmen said such a move would be “an extraordinary reversal” of congressional intent, and that it would “directly negate the balanced partnership between the FCC and the states.” In clarification, they said the act was set up specifically with the intention of overlapping certain state and federal functions, including pricing, and that arbitration of those pricing policies would be a states-only realm consistent with current regulation. “The act replaces a patchwork of differing state policies with a single, overriding national policy,” they wrote, and they admitted that both parties involved in the appeals-court hearing (those who back the FCC and those who back the states) both wanted exclusive jurisdiction over the act in the early days of its formation.
Petitioners in favor of vacating the FCC’s interconnection order have intimated that Congress slanted the act, behind closed doors, in favor of the FCC. Harking back to the process of House-Senate negotiations regarding the telecom bill, the congressmen continued, “Indeed, as petitioners and their [friends] concede, both the Senate bill and the House bill … made clear that the FCC would adopt rules relating to all the act’s interconnection requirements, including those related to rates. The Conference Committee, on which we all served, had no reason to reopen the existing House-Senate consensus on that issue or to tilt Congress’ carefully crafted compromise in a single radical direction.” Any attempt by any petitioner to prove otherwise, they wrote, would be “an unfortunate attempt at historical revisionism.”
In conclusion, the six urged the court to reject the appeal based on the balance between state and federal rights built by the Congress into the act.
“Recasting that balance by giving one level of government exclusive authority over any central questions would disregard Congress’ actual intent, render pointless the tortuous legislative process of reaching consensus on such difficult issues and profoundly disserve the public interest by impeding Congress’ plan to move rapidly towards nationwide competition.”
The court on the same day also received a brief from intervenor commercial mobile radio service providers that also weighed in support of the FCC. AirTouch Communications Inc., Comcast Corp., the Cellular Telecommunications Industry Association, Cox Communications Inc., ProNet Inc., Paging Network Inc., the Rural Telecommunications Group, AT&T Corp., Sprint Spectrum L.P., Vanguard Cellular Systems Inc. and Western Wireless Corp. presented their case in favor of certain aspects of the interconnection order, and they pleaded for a 15-minute argument in front of the court Jan. 17.
The group brief focused on six rules contained in the order “crucial to CMRS-local exchange carrier interconnection” that went unchallenged in any brief submitted thus far by those opposing the interconnection order-the major trading area rule, the reciprocity rule, the symmetry rule, the true-up rule, the proportionality rule and the fresh-look rule. “The great risk to CMRS providers in this case is that they will be overlooked,” the group contended.
Pointing out that most CMRS-LEC interconnection provisions were based on “30 years of prior federal regulatory experience,” the group reiterated FCC findings that LECs still are not negotiating in good faith and that discriminatory pricing still is in effect. “Because CMRS providers’ massive investments in building wireless networks are nearly worthless if they are not interconnected with incumbent LEC networks, CMRS providers are in a weak bargaining position vis a vis monopoly LECs,” they wrote. “Having invested millions or billions of dollars, a CMRS provider cannot afford to walk away if an incumbent LEC’s interconnection offer is unfair.”
According to the intervenors, the FCC protected CMRS-LEC interconnection requirements six ways in its August 1996 order:
through the MTA rule that “bars the imposition of long-distance access charges on CMRS calls that both originate and terminate within the CMRS provider’s service area;”
through the reciprocity rule that “requires reciprocal interconnection rates and bars LECs from charging for calls they originate;”
through the proportionality rule that “mandates that the costs of transmission facilities between the interconnected carriers be borne in proportion to the amount of traffic each carrier originates;”
through the symmetry rule that “clarifies that reciprocal rates are symmetrical, in that a LEC must pay others the same price it charges for terminating calls;”
through the true-up rule that “conforms interim compensation to the terms of final agreements approved by state commissions;” and
through the fresh-look rule that “requires the negotiation of non-reciprocal CMRS-LEC agreements established prior to the new rules.”
“These provisions do not mandate particular prices or pricing methodologies,” they explained. “Petitioners’ briefs, with one limited exception, do not discuss any of these provisions … Petitioners’ major arguments [regarding wireline pricing] do not apply to these ground rules.”
The instance in question regarded an assertion by mid-sized LECs that “the FCC’s rules requiring the LECs to compensate paging companies for traffic that originates on the LEC’s network [are] … contrary to the plain language of the act,” and that the nature of one-way paging traffic prevents any “mutual and reciprocal” compensation agreements between such a CMRS carrier and a LEC.
“If this argument prevails,” intervenors wrote, “the LECs will actually charge the paging company for originating calls from the LEC’s own subscribers to paging units, rather than paying the paging company for termination services. This argument makes no sense. The undisputed evidence is that paging companies incur substantial costs for
terminating LEC-originated calls. Payment for call termination therefore involves no `subsidy’ to paging carriers; indeed, the only subsidy occurs when LECs-without any statutory support whatsoever-charge for originating calls, even though origination costs are fully borne by the LEC’s subscribers.”
In arguing that nothing in the Telecommunications Act of 1996 reduced the commission’s CMRS-LEC regulatory authority, the intervenors pointed out that the act still upholds reciprocity, symmetry and proportionality, even absent a FCC order, and that such rules have been in place since at least 1987.
The intervenors pointed out that LEC petitioners and friends want to vacate the entire interconnection order, even though there are many parts-including those protecting CMRS providers-that remain unchallenged.
“This `guilt by association’ strategy cannot succeed absent an argument that the challenged and unchallenged provisions are so inextricably related that one cannot stand without the other,” they wrote.
In addition, the six built-in rules that protect CMRS providers “obviate the need to set particular prices” and “make sense even if the FCC’s pricing rules are invalidated” as a result of a final court decision.
Urging the appeals court to at least affirm the six rules, intervenors concluded, “Indeed, as this court noted in its stay order, the invalidation of the FCC’s proxy prices will only enhance the critical role of private negotiations; hence, there is every reason to conclude that the FCC would want its basic `ground rules’ for CMRS-LEC negotiations to remain in place” even if the case is remanded to the FCC, as has been suggested by regional holding companies Nynex Corp. and Ameritech Corp.
