Rural Carriers Seek Undoing of VoIP ICC Reductions
Denying a petition to roll back a reduction in the intercarrier compensation rate on some VoIP calls that took effect this summer would cost rural carriers millions of dollars that could be used instead to deploy broadband, ITTA and NTCA officials told us Tuesday.
Sign up for a free preview to unlock the rest of this article
Timely, relevant coverage of court proceedings and agency rulings involving tariffs, classification, valuation, origin and antidumping and countervailing duties. Each day, Trade Law Daily subscribers receive a daily headline email, in-depth PDF edition and access to all relevant documents via our trade law source document library and website.
The groups are waiting for the FCC to put out for comment an emergency petition they filed, that has pit the carriers against VoIP providers like Level 3 and Verizon in the latest round of an ongoing dispute over reductions contained in the 2011 USF/ICC transition order (CD Feb 14/12 p13). Reductions in the connection fees for VoIP calls that are terminated by rural LECs took effect July 1. At stake in the debate, the associations said, could be more than $18.5 million annually, much of it affecting Frontier Communications and Windstream Communications. The FCC did not immediately comment Tuesday.
The order had envisioned Connect America Fund reforms to be in place by now to provide funding for smaller carriers that would have helped offset the loss in revenue, the groups argued. Since that hasn’t happened, the reduction should be suspended, said Micah Caldwell, ITTA vice president-regulatory affairs. Allowing the reductions to continue would cost carriers millions that could be used for broadband deployment, said NTCA Senior Vice President-Policy Michael Romano. The money would instead go to other areas of the industry, with no assurance that it will be used for deployment, or be passed on to customers, Romano said. The reduction will also cause conflicts over what calls originate as VoIP and are subject to the reduced interconnection rates, he said.
VoIP providers like Verizon said in filings opposing the petition last month that there was no direct link between reducing the rates and creating CAF funding for the carriers. There’s “no rational basis” to link the two, said Level 3 (http://bit.ly/1qxeUdS), a wholesale VoIP provider. The industry has been planning for the rate reductions, Level 3 said. Rolling back the reduction would “harm consumers by impeding the migration to all IP networks,” by preserving “incentives to retain legacy voice technologies and associated high ICC rates and implicit subsidies instead of investing in IP-based broadband networks,” said Verizon (http://bit.ly/1uh5QeW). A Verizon spokesman declined comment Tuesday; Level 3 wasn’t immediately available.
Joining NTCA and ITTA in the petition (http://bit.ly/1mvpDo8) were the Eastern Rural Telecom Association, Frontier Communications, NECA and Windstream. The impact of the reductions, the groups said in the petition, would be $14.5 million annually for Frontier and Windstream alone. Windstream on Tuesday would not detail the impact the reductions would have on the company, beyond pointing to its filing. The FCC is moving “forward in a way that is inconsistent” with the USF/ICC’s goals of “providing measured transitions, establishing explicit support mechanisms to replace lost implicit support, and eliminating arbitrage opportunities,” Malena Barzilai, Windstream’s senior government affairs counsel, said in a statement to us. Frontier was not immediately available.
Both in the transformation order and 2012 order on reconsideration, in response to petitions filed by rural associations Frontier and Windstream, the commission aimed to “strike a careful balance between its desire to transition ICC to bill-and-keep and the disruption that such action could create,” the groups said in the emergency petition in July.
Reform was never supposed to be a “promise" of complete compensation for lost revenue, the groups said in the Aug. 14 reply (http://bit.ly/1CnjqCe). They said the commission was mindful in the 2011 order that funding that could be used for deployment through interconnection charges and CAF were “intertwined” and “inseparably linked.” The commission in its reconsideration could not have anticipated that CAF, Phase II, which it had thought would be in place in early 2013, “would still not be in place” in 2014, the groups argued.
Level 3 and Verizon argued that the commission strove to find a balance between making the changes without creating a “flash cut” for the carriers by delaying the reductions from kicking in. CAF Phase II is supposed to promote broadband development in underserved areas, Level 3 said, not to be “a mechanism to replace intercarrier compensation revenue.” (kmurakami@warren-news.com)