Access-Charge Battles in States Expected to Intensify

Sprint recently filed for reconsideration by the Iowa Utilities Board of its ruling. Sprint cited the FCC’s rulemaking on USF and intercarrier compensation. It asked the board to stay the repayment obligations until the board makes a decision on Sprint’s request for reconsideration. The board denied the motion to stay Sprint’s payment obligation. The reconsideration request is pending. In Virginia, CenturyLink filed a lawsuit alleging that in June 2009 Sprint began disputing the access charges for VoIP traffic and arguing that interconnection agreements signed in 2004 and 2005 didn’t authorize the charges that it had been paying. Sprint is disappointed in both decisions and it’s reviewing its options in Iowa and Virginia, a spokesman said. It’s important to note what the FCC said regarding VoIP traffic in its rulemaking notice that it had, in the commission’s words, “never addressed whether interconnected VoIP is subject to intercarrier compensation rules and, if so, the applicable rate for such traffic,” he said.

"We agree with Sprint that the Iowa Utility Board should stay its decision applying access charges to VoIP until the FCC completes consideration of the same issue in the Intercarrier Compensation NPRM,” said Glenn Richards, head of the VON Coalition. He expects other providers to follow suit and challenge access charge ruling at states citing the FCC’s NPRM. National Broadband Plan architect Blair Levin told us he “understands” Sprint’s position, but “my response to those folks is that we need to focus on what are the problems that warrant government action, rather than starting by saying how do we ensure the continuation of existing roles.” State governments “have a very significant role in addressing a number of gaps identified in the broadband plan,” Levin said, but not by adding regulation. “We looked at many problems in the broadband ecosystem in the United States, but I can’t think of one where it appeared that the right answer required more state regulation,” he said. There will always be a state role, said John Burke, a member of Vermont’s Public Service Board.

The applicability of access charges to VoIP calls hasn’t been considered in Indiana, said Commissioner Larry Landis of the state’s Utility Regulatory Commission. Before the FCC’s USF rulemaking notice and the National Broadband Plan were released, state efforts had “widespread success,” a fact that the FCC has paid scant attention to, he said. States continue to encourage buildout and to redefine business models to extend into areas previously considered “uneconomic,” Landis said. This is a significant distinction that the FCC doesn’t seem to have considered fully, he said -- “whether an area is unserved may be quite different from whether it is uneconomic to do so.” Some business decisions have been based on providers’ internal priorities rather than on whether it’s economical to build out unserved areas, Landis said. Whatever steps might be taken by the FCC, including “repurposing” of USF high-cost funds to broadband capital spending, must be grounded firmly in the Telecom Act’s universal-service principles, he said. The need for ongoing network support for otherwise uneconomic high-cost areas would limit the FCC’s ability to “repurpose” those funds, until Congress changes the law, Landis said. Burke and Landis are on the USF Federal-State Joint Board.

"We will increasingly see states attempt to assert authority over intrastate VoIP calls,” especially for the purpose of settling access charge disputes within their jurisdictions, to assess payments for state USF funds, and to require interconnected VoIP providers to meet public safety and reliability standards, said Public Knowledge Legal Director Harold Feld. Companies that depend on access charges are calling state commissions and legislators, and “the situation is only going to get worse from a state perspective as wireless providers switch to VoIP over LTE,” he said. States are expected to get much more aggressive in handling interconnected VoIP, Feld said.

Some industry officials and telecom academics have said they see the role of states diminishing as the FCC starts to direct subsidy of broadband (CD Feb 1 p1). FCC spokesman Rob Kenny said states have to be involved in USF and intercarrier compensation overhauls. “USF and ICC are both hybrid federal-state systems, and successful reform and modernization of the program will require the best ideas and close federal-state cooperation to see this through,” he said.

Consumer advocates are supporting a more rational and uniform system of intercarrier compensation, so that all pay their fair shares to use networks, said Wayne Jortner, senior counsel with Maine’s Public Advocate Office. But consumer advocates don’t generally support broad pre-emption of state authority and “we certainly do not agree that pre-emption can occur even before the FCC acts on these issues,” he said. An unresolved FCC proceeding can’t be a basis for changing the law, Jortner said. The result of the FCC proceeding can’t be predicted, he said. State preemption has been speculated about, but there’s no evidence that the FCC will do that, Jortner said.