Adoption of ABC Plan Means Litigation, States Tell FCC; Wisconsin Backs Limited Preemption

"Whatever the FCC does will wind up in court,” NARUC said. Adoption of key components of the state plan would restrict the issues available for appeal (CD Aug 24, p2), it said, but adoption of ABC Plan presents “a target-rich environment of appealable issues.” The states, including state commissions and consumer advocates, would have no other options but to appeal the FCC’s adoption of the ABC Plan, in order to preserve state jurisdiction over areas like carrier of last resort obligations, intrastate rate authority, consumer protection, and broadband deployment, said Pennsylvania regulators. The plan violates the Telecom Act of 1996 and would be subject to legal challenges, said the National Association of State Utility Consumer Advocates.

Any revamp would be better achieved through a coordinated federal/state framework, said the Nebraska Public Service Commission. The ABC Plan attempts to limit the states’ authority to designate carriers as eligible to receive USF support and to distribute USF support by granting ILECs right of first refusal of USF support, said the Mississippi Public Service Commission. Specifically, carrier of last resort requirements are essential to universal service, said Geoffrey Why, Massachusetts Department of Telecom and Cable commissioner. States should retain ETC designation authority for USF support, should be able to examine broadband deployment investment and new construction charges and should receive USF recipient data, he said. States can be essential partners with the FCC in ensuring accountability of USF support recipients through well define carrier of last resort obligations, said Clyde Holloway, vice chairman of the Louisiana Public Service Commission.

However, some limited preemption of current state authority may be necessary to have a workable, enforceable and long-term revamp of the USF and ICC systems, said the Wisconsin Public Service Commission. It may be necessary to eliminate distortions in the market caused by varying rates for different types of traffic, it said. The Wisconsin commission calls the ABC proposal “a rare moment of major consensus among significant parts of the telecommunications industry.” While support isn’t universal, the commission is encouraged by the broad industry support for the ABC Plan, it said. But the commission emphasized “many decisions are best made by state regulators and officials” because they are closer to the people and entities impacted by those decisions.

The New York State Public Service Commission, while concerned about the FCC extending federal jurisdiction to intrastate access charges, recognizes that “the FCC is uniquely positioned to balance competing policy trade offs and effectively implement ICC reform.” New York regulators claimed if ICC revamp is done in a manner that doesn’t penalize New York’s interests, it would need to “weigh its jurisdictional concerns relating to the establishment by the FCC of ICC reform against New York’s strong state interest in achieving badly needed reforms.”

Many state commissions oppose any recommendation in the ABC plan that would prevent VoIP traffic from being classified as telecom service. State commissions are best suited to adjudicate the fact questions associated with determining the jurisdictional nature of such traffic, the Iowa Utilities Board said. However, the New York State Public Service Commission supports VoIP recommendations in the ABC Plan that would eliminate controversy and disputes over application of ICC rules to VoIP and may provide additional revenue for local exchange carriers to offset decreases in ICC revenue. They would also eliminate existing arbitrage opportunities, including phantom traffic and traffic pumping, New York regulators said.

Nebraska regulators noted the FCC’s ruling on the Nebraska/Kansas Petition (CD Nov 10 p7). That order requires nomadic VoIP providers to pay into state and federal USF. If the FCC does decide to implement the ABC proposal for VoIP traffic, it should clarify that the Nebraska/Kansas decision relative to state universal service contribution requirements on nomadic VoIP isn’t affected, Nebraska regulators said. Subjecting VoIP traffic to a differential rate structure would incentivize carriers to “mislabel, reroute, or create avoidance schemes for any payment of switched intrastate access calls,” the Nebraska commission said. Meanwhile, states should be given a set period of time to develop an intrastate revamp plan and should be allowed to create a transition to a cost-based system consistent with federal goals, it said, asking the FCC to match state funds with federal USF as an incentive to the states to revamp intrastate charges.

The Maine Public Utilities Commission, Vermont Public Service Board and Vermont Department of Public Service agree with ABC Plan proponents that compensation amounts must be the same for an individual carrier regardless of the nature of the traffic, and that intercarrier compensation for VoIP traffic can’t be set at a different level than that charged for other traffic. But they don’t agree with the premise that the cost for a rural carrier is $0.0007 or that an amount anywhere close to that is justified for intercarrier compensation. The adoption of the $0.0007 rate would “appear to be so far from any cost-justified amount that it would be an abuse of discretion to use that amount for intercarrier compensation purposes,” they said.