WASHINGTON-Wireless carriers looking for relief from high interconnection costs may have to wait a bit longer before the proxy pricing suggested by the Federal Communications Commission in its recently voted interconnection order becomes a reality.
GTE Corp. and the Southern New England Telephone Co. filed a motion Aug. 28 at the commission to stay implementation of the order pending judicial review. In addition, both companies will be filing a petition for review with the U.S. Court of Appeals as soon as the order is published in the Federal Register. If the commission declines the request, both companies will file with the court for a stay within 10 days. The National Association of Regulatory Utilities Commissioners and BellSouth Corp. also plan to file an appeal at the court of the FCC’s jurisdictional analysis.
According to the joint GTE/SNET motion, the pricing suggested by the FCC “would force incumbent local exchange carriers to offer competitors interconnection, unbundled access and resold services below cost,” and that such pricing “will stifle the negotiation process Congress built into the [Telecommunications Act of 1996] before it even gets started.” A stay at this time “would cause no harm” because such negotiations could continue without new FCC rules.
Speaking for the Cellular Telecommunications Industry Association, Tim Ayers said, “We’re going to fight it. The FCC acted appropriately, and it carried out the intention of Congress. We will support the order in our filings.”
Going even further was Mark Golden of the Personal Communications Industry Association. “It can come as no surprise that somebody decided to challenge the interconnection order. I suspect there will be a long list of people with different sets of specific items they want to challenge and complain about,” he said. “We’re obviously disappointed that it is happening because it creates a certain degree of uncertainty, confusion and problems. Absent getting a judge to issue an absolute stay of the effective date of the order, which I think is highly unlikely, you may be able to force some reconsideration, and that will take some time as well.”
Golden continued, “Absent that highly unlikely outcome, the PCS providers we represent will be entitled to reciprocal compensation at the maximum level set by the FCC order, which is highly attractive and fully justified as well. We’ll have to work through the various judicial processes but while that’s happening, the industry will be on its way, and that’s the important thing for us to keep in mind.”
William Barr, GTE’s senior vice president and general counsel, said during a briefing that the FCC had overstepped its boundaries when it included proxy pricing in the order. “This is a state issue,” Barr said. “The order overrides the marketplace and the states’ role.” And even if the FCC did have such authority, Barr said the pricing does not compensate local exchange carriers for the real costs of providing service on their networks.
“The prices require us to sell under cost, and that is unconstitutional,” Barr said. “We say that it is below cost because FCC figures weren’t based on costs of the [embedded] infrastructure but on future carriage costs. The prices are improper because they are presumptive and are grossly below actual costs. They are so far out of line that we don’t know how they got their numbers.” The order’s pricing standards do not address the recovery of LEC joint and common costs, Barr said.
“Requiring local companies to subsidize resellers-some of whom will be among the nation’s largest companies-would not create true competition, would not encourage investment in facilities or innovation and would not create any new jobs,” Barr said. “Where is the incentive to invest in new innovative services or facilities if companies making the investment are forced to turn around and sell at prices below cost?”
Barr also charged the commission with failing to take into account prior state-adopted resale discounts. He said California signed off on GTE’s and PacTel’s discounts-7 percent for residential service and 12 percent for business service-and that the FCC wants to “dictate” another 5 percent.
He added that it was “interesting” that the two other industries recently deregulated-gas and electricity-were entitled by their regulatory body, the Federal Energy Regulatory Commission, to be compensated for their actual costs.
Mickey Sims, general manager and chief executive officer of Poka Lambro PCS Inc., a C-block personal communications services winner, said all this action comes as no surprise to him. Sims serves on the U.S. Telephone Association’s small business committee, and he participated in a conference call Aug. 27 regarding this issue. He joked that the best thing for any wireless carrier to do was “quit the business and become a lawyer.”
