National, Rural Carriers Clash Over FCC’s IRFA

The Commission released an IRFA after the U.S. Appeals Court, D.C., ruled in March (CD March 14 p3) that the agency failed to follow the Regulatory Flexibility Act (RFA) by not doing a regulatory flexibility analysis as part of the Intermodal LNP Order. The RFA requires federal agencies to prepare an initial and final regulatory flexibility analysis when they develop new regulations to explore alternatives, to minimize the economic impact of their rules on small organizations -- and if such alternatives are rejected, to explain why. The court in March stayed enforcement of the Intermodal LNP Order against small entities until the FCC completes a final regulatory flexibility analysis.

Calling the RFA “inadequate,” USTelecom said “the Commission will have to go further in its Final Regulatory Flexibility Analysis to avoid once again failing to comply with the RFA.” In particular, the group said, the FCC “must explain the extent to which the decisions in the Intermodal Portability Order will burden small entities, and what alternatives it considered to accomplish its objectives while minimizing the economic impact on small entities, and the reasons the Commission rejected those alternatives.” The FCC should lift the intermodal LNP requirement on “small entities that are not otherwise required to implement number portability,” USTelecom said.

The FCC should extend the stay of the Intermodal LNP Order for all carriers with less than 2% of the subscriber lines nationwide until the issues related to the rating and routing of calls to ported numbers and 2% carriers’ transport responsibilities are resolved, OPASTCO and NTCA said in joint comments. Otherwise, they said, the FCC should require wireless carriers to either establish a point of interconnection (POI) within the service areas of 2% carriers or require them to pay the transport and termination costs for traffic outside those service areas.

It’s “technically infeasible” for 2% carriers to comply with the rating and routing requirements of the order in the absence of established POI with wireless carriers, OPASTCO and NTCA said. “Two percent carriers are limited to transporting traffic within their exchange boundaries and to POI at their boundaries,” the groups said. Calls made by 2% carriers’ customers to POIs beyond the originating carrier’s network are rated and routed by the customer’s toll or long distance provider, not the originating ILEC, they said. “In the absence of a technically factual and legally sound resolution to these specific network issues, there is no basis for requiring the routing and billing of calls ported outside of 2% carriers’ local exchange in the same fashion as they were prior to the port,” the groups said: “Any attempt to complete a Regulatory Flexibility Analysis… must fully account for this fundamental issue.”

The FCC failed to recognize that high per-subscriber costs of deploying intermodal LNP by small carriers -- coupled with low demand for wireline-to-wireless porting in the areas they serve -- impose significant economic burdens on small companies, rural interests claimed. According to a membership survey conducted by NTCA and OPASTCO, total intermodal LNP implementation costs range from $16,000 to more than $209,000, with most companies reporting costs of $80,000-$140,000. The study also found that the cost per line of implementing intermodal LNP is higher for smaller carriers serving fewer access lines, because the total cost of becoming intermodal LNP capable doesn’t vary significantly by the size of the carrier. Another NTCA study found that 3 of 4 of the reporting rural ILECs -- which spent about $100,000 to become LNP capable -- had, at most, a single customer interested in using the service.

The FCC shouldn’t continue to rely on states to address the burdens placed on small carriers through the suspension and modification provision of the Telecom Act, rural interests said. The FCC had said that under Sec. 251 of the Act, 2% carriers may petition a state commission to suspend and modify the LNP requirements. The agency asked for comment on the effectiveness of such mechanism for addressing any potential burdens on small carriers. But OPASTCO and NTCA said the suspension and modification provision of Sec. 251 of the Act is intended to address extraordinary situations where a requirement would adversely impact a particular carrier -- not virtually all 2% carriers.

In other comments by small carriers: (1) John Staurulakis Inc. urged the FCC to declare that “wireless carriers are operationally and financially responsible for the transport and termination of traffic in situations where the wireless carriers do not have POIs within the rural LEC’s service area.” (2) NTC Communications asked the agency to “make it clear that non-common carrier STS [shared tenant service] providers are not subject to the number portability obligations.” (3) A group of 6 rural carriers said “until the FCC actually considers the impact of its LNP rules on rural interconnection issues, its regulatory analysis is incomplete.” (4) The Rural Iowa Independent Telephone Assn. urged the FCC to exempt small rural carriers from complying with intermodal LNP rules, or otherwise modify the IRFA.

National carriers argued the Intermodal LNP Order doesn’t impose a significant economic burden on small entities. Because rural carriers already bear the financial burden of LNP, “the incremental costs associated with intermodal porting are minimal if any,” Sprint Nextel said. The carrier said the FCC’s final analysis should “recognize that the reason that the FCC had to adopt its Intermodal Porting Order is because rural LECs refused to comply with rules that the FCC adopted years ago.” Verizon Wireless urged the FCC to issue the final regulatory flexibility analysis “promptly,” requiring all carriers to provide LNP on request: “Any costs and burdens associated with offering LNP to requesting customers are reasonable and are far outweighed by the benefits that flow from competition and consumer choice.”

“Almost 2 years of experience makes clear that intermodal porting is feasible, that it can be done in an efficient and uncomplicated fashion if carriers are committed to the process,” CTIA said. It said the RFA process doesn’t require or even permit the FCC to exempt small carriers from the intermodal LNP requirement. Small entities’ complaints about the burdens of porting are “merely a contrivance to try to make this market-opening requirement seem more difficult than it actually is or need be,” CTIA said.