FCC Faces Scrutiny, Doubt at Midyear State Regulator Meeting
PORTLAND, Ore. -- Multiple challenges emerged for the FCC at a midyear NARUC meeting. Some regulators and officials questioned USF methodology, called for Federal State Joint Board on USF referral of FCC decisions and questioned the broader direction the commission has moved on telecom in recent years. The strains have manifested in broader misgivings that some panelists discussed about the November USF/intercarrier compensation order (http://xrl.us/bnhyb7) as well as a more focused critique and controversy surrounding a quantile regression analysis for the fund.
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QRA is a statistical method by which the FCC identifies “appropriate costs in ‘ensuring’ that companies do not receive more support than necessary for prudent capital and operating costs,” a draft NARUC resolution Monday said. It describes how the Wireline Bureau began a specific model in April, and began implementing it July 1. “Its application may be arbitrary and capricious,” the draft resolution said. Indiana Commissioner Larry Landis sponsored the resolution and presented a pared-down version Monday to the telecom committee, noting input from “stakeholders, rural companies, from USTelecom, and other conversations we've had with various parties."
The FCC defended its QRA formula. The formulate “takes into account pluses and minuses” and makes “adjustments up and down” due to many independent variables “to take account for what drives cost in different areas” as the commission attempts “to glide into this” new formula, bureau Deputy Chief Carol Mattey said Sunday. “It truly is going after the outliers.” The FCC has “no interest in changing the variables” unless companies were truly united in opposition to a specific one, she said. These QRA benchmarks won’t affect more than 500 companies, and will affect about 120 to 130, she said. The FCC wants to “reconcile any boundary conflicts” and emphasizes “everything is on track” overall, Mattey said.
Opposition has risen from those who fear the resolution would create problems and crucially, delay the implementation of the FCC order. “There are still concerns that we have about the resolution, and it’s driven by the criticalness right now about the timing, the implementation of the reform order,” USTelecom Vice President Robert Mayer told the telecom committee when the resolution was presented Monday. He suggested there'd be delay due to the proposed resolution’s recommendation that the FCC “refer the consideration of whether to adopt any additional ICC and USF reforms to the USF Joint Board” other than what’s already pending. “There’s a good body of opinion that says [such referral] is not necessary,” Mayer said Monday about differing legal opinions.
Mayer described fears that the resolution would delay the FCC in what he called already “a very significant challenge” in meeting its Jan. 1 deadline of beginning Phase 2 of the Connect America Fund, a time frame outlined in its November order. USTelecom is still concerned about the predictability of QRA but is “confident” the issues will be resolved, he said. “There is a lot of risk with respect to delay.” Landis disagreed. The idea that Joint Board referral would create such problematic delays was “grounded more in rhetoric than reality,” he said. His resolution failed to reach a consensus and was voted out of subcommittee 9-3. Dissenting NARUC staff also worried then about “slowing the process.” California Public Utilities Commission member Catherine Sandoval met with NARUC subcommittee staff Sunday to speak in support of the resolution and the importance in “making sure the FCC gets the methodological tool right,” she said.
Others worried about the FCC’s broader direction, they said throughout the first four days in Portland. “The FCC doesn’t have the ability to discern the truth,” given how many entities can employ their own lobbyists and “spinners,” said consulting economist Joseph Gillan at a Saturday panel. That commission does an admirable job in a “broken” federal political process, he said. “The transformation order is simply bad policy” and “devastating to small rural carriers,” said Home Telephone Co. Vice President Keith Oliver. The FCC “did not have the proper long-term vision” and is “putting a Band-Aid on the old voice network,” he added.
"We have very great concerns and I'd go as far as to call it bad policy,” lawyer Brooks Harlow said. The “top-down” commission has adopted the views of larger carriers and marginalized smaller ones, said Core Communications General Counsel Chris Van de Verg, who worried auctions could engender legal challenges for covering broadband as well as voice. At a panel on the Sept. 27 Mobility Auction, Mattey joked at the “consensus” of opposition the FCC. Many panelists had differing recommendations, and the FCC’s job is to balance these competing interests, she said.
Panelists acknowledged the extent to which the telecom world has changed in the last couple of years. The FCC doesn’t “get credit enough for what they've been able to accomplish in the past two to three years,” Mayer said Monday afternoon.