Handling of NARUC Government-Subsidized Network Competition Resolution Seen as Unusual

What some described as extensive lobbying of public utility commissioners who are NARUC members and vote on resolutions also raised concerns. While lobbying before the meeting is acceptable, supporters of the resolution said they were thrown off by how much “hysteria” was generated by the language. Since the resolution was tabled in the subcommittee, it will likely be revisited in February in Washington when NARUC next meets, some said.

While valid concerns were raised by industry about the proposed resolution, Nebraska Public Service Commissioner Crystal Rhoades, co-sponsor of the resolution, said she still believes there needs to be a conversation about it. The relatively new commissioner (see 1411040055) originally partnered with Nebraska Public Service Commissioner Tim Schram, but he dropped off sponsoring the resolution once industry officials spoke with him about their concerns, an industry official said. Schram was not immediately available for comment. Rhoades said she respects her fellow NARUC members’ reasons for not wanting to move the resolution, but there are still parts of the resolution that are sound policy. “There are parts of it that are still very strong and important and I also think that there's an opportunity for adjustments,” she said. “My colleagues were lobbied pretty hard on the issue and I think they wanted an opportunity to have more discussion about it before moving the resolution forward. That's reasonable, right? What I would have liked to have an opportunity to do, though, is to begin that discussion.”

Rhoades said during the committee meeting that she didn't know there would be so much "hysteria" about the resolution. Industry officials said they were surprised to hear Rhoades characterize the response to the proposed resolution as "hysteria." Instead, industry was just responding to something that would change the rules of the game.

The minute the resolution was introduced to the subcommittee -- before there could be any discussion -- there was a motion to table it, which National Regulatory Research Institute Principal Researcher Sherry Lichtenberg said was something she had never seen. Lichtenberg said that at the meeting in February, there most likely will be a panel on how networks that are funded largely with taxpayer dollars are going to be operated to increase competition in the high-cost areas. Even with that discussion, it doesn't necessarily mean the resolution will come back, she said. "Once the service is built, then should we continue to make it a monopoly area or should we find some way to open it up?" Lichtenberg asked. "This may be a longer-term question than an immediate question. It's sort of a 'If you build it, will they come? If they want to come, how do you help them get there?'"

Industry opposition to aspects of a resolution isn't unusual, NARUC General Counsel Brad Ramsay said. An approved NARUC resolution serves as a notice that allows Ramsay to act on a particular item, which is why industry representatives get involved with the process, he said. "If a commissioner champions an issue, like Commissioner Rhoades, it can change the debate."

An industry official was thrown off by the lack of action during the Telecom Committee meeting. Instead of moving the resolution for a vote -- either to be tabled, adopted or rejected -- Rhoades and a few other commissioners spoke about the resolution and that was the end of the discussion, the industry official said. Ramsay said Rhoades is allowed to explain her reasoning for why she wasn't going to move the resolution for a vote at the meeting and then allow things to proceed as usual. Usually, under parliamentary procedure, the commissioners would first make a motion to consider the resolution and then get a second before opening it up to the floor for discussion, he said. The resolution process used to not include as much of an opportunity for industry comment, so when NARUC began posting the final proposals online about two weeks before each meeting more than eight years ago, Ramsay said it allowed for lobbying outside of the actual meetings.

There is also debate about whether Rhoades was contacted ahead of time about industry objections. During the NARUC meeting, Rhoades asked that in the future she be contacted directly with problems so she can address them. She said in an interview Friday that she had one conversation with a CenturyLink official who never came back to her with specifics. An industry official said he was told Rhoades was contacted with concerns about the resolution but never contacted her himself.

A CenturyLink spokeswoman called the proposed resolution a "short-sighted attempt that put competition before broadband availability in markets that can barely support one provider, much less two.” An AT&T spokesman agreed, saying the resolution posed a “significant conflict” with the national policy goal of getting broadband to all Americans. All telcos that accepted FCC Connect America Fund Phase II money analyzed the financial risks before making a decision, the spokesman said. If the FCC were to undertake the changes NARUC’s proposed resolution recommended, the companies would need to be given a chance to reassess whether they would participate in the program, he said. “At the worst, carriers could have pulled out … at the very least [there would have been] additional delay in driving broadband into rural, high cost areas that today are unserved,” he said. “At the very worst, [it would] decimat[e] the CAF II program if carriers determined they could/would not participate.”