Missoula Plan Gains Support from Midsized Companies

Embarq Senior Vp David Zesiger said talks with Missoula backers brought shifts in the plan’s regulatory treatment of large rural ILECs, many owned by midsized companies. The plan had proposed regulating these ILECs like Bells, which seemed inappropriate, since they're far more rural than Bell companies, he said. Embarq grew from the spinoff of Sprint’s wireline operations. Windstream comprises spun-off Alltel wireline companies. They are among about a dozen midsized telecom companies.

USTelecom threw its support to the plan, though not all of its members support it. For example, Verizon hasn’t signed on. USTelecom said the plan meets FCC goals for intercarrier compensation reform -- minimizing regulatory arbitrage, integrating universal service reform into the overall plan, relying “in the first instance on competition and commercial agreements where possible to determine market outcomes” and giving carriers “a more consistent and predictable opportunity to be compensated for use of their networks.” The association didn’t take a position on the plan’s regulatory “tracks,” saying some members have concerns about the classification system. Three “tracks,” each with their own regulatory requirements, would apply to each of a carrier’s study areas. “A number of USTelecom members have expressed concern about the classification of some or all of their study areas into a particular ’track’ in the plan, which would affect the length of the transition as well as rate levels for their particular companies,” the filing said: “A number of other member companies have stated that they believe the track definitions in the plan are fair and appropriate.”

At the same time, more than 2 dozen groups declared in a news release they oppose the Missoula Plan because it’s “not the appropriate vehicle for reforming the intercarrier compensation system.” They include wireless carriers, CLECs, cable companies, the National Assn. of State Utility Consumer Advocates, CompTel, CTIA and NCTA. “The Missoula Plan is bad for consumers, for competition, and for the market,” the group said. Among its concerns: (1) The plan’s rural transport rules “would require interconnecting carriers to pay to deliver traffic both to and from rural incumbent [LEC] network ‘edges,’ typically incumbent LEC end offices, leading to more inefficiency, impeding facilities-based competition and harming consumers.” (2) “Preferential intercarrier rates and rate distinctions… will distort the competitive market to the detriment of consumers.” (3) The plan would require “at least $2.25 billion in new universal service funding -- apparently available exclusively to incumbent LECs.”

“If the Commission adopts the flawed Missoula Plan, the costs of entry will increase and consumers will benefit less than they should from the development of facilities-based competition,” NCTA warned. “The Missoula Plan does not meet any of the key goals the Commission identified in connection with intercarrier compensation reform,” the cable association said. “Virtually every component of the plan -- the definitions, the transit provisions, the interconnection rules, the universal service provisions -- is designed to favor incumbents over competitors.” NCTA said the FCC ought to “set aside” the Missoula Plan and “focus on the core interconnection and transit issues that continue to pose a barrier to competition.” It said the Commission should concentrate on: (1) “An obligation that ILECs continue to provide transit service at cost-based rates.” (2) Setting “traffic thresholds to encourage direct connections among non-ILECs where efficient.” (3) Combating phantom traffic through carrier identification requirements.

Fla. Attorney Gen. Charlie Crist (R) urged the FCC to reject the plan because it would boost consumer costs “while providing a windfall for a select group of phone companies.” In a letter to FCC Chmn. Martin, Crist said the plan would raise residential phone charges “forcing consumers to absorb the costs that telephone carriers pay other carriers.”

“The FCC should adopt the Missoula Plan” because it “effectively and comprehensively reforms the existing intercarrier compensation rules by providing carriers with a more rational and stable means of recovering network costs,” said OPASTCO. The plan has provisions “that recognize the unique needs and circumstances” of rural rate-of-return (RoR) carriers, OPASTCO said. To make sure the plan is “beneficial to the customers of rural RoR ILECs, it is essential that the FCC adopt all of these provisions without modification,” the association said.

The National Telecom Co-op Assn. said Missoula is “a remarkable proposal.” The plan “proposes specific default rules that address the most egregious problems in the current rules while avoiding the dangers presented by a radical departure from the current access charge and reciprocal compensation concepts which could create instability and uncertainty.”