NCTA Proposes Conditions to Telco Transition Plan for Pole Rates in FCC Shift to GAAP
NCTA urged conditioning a telco proposal for a transition in pole-attachment rates under a potential FCC shift in price-cap carrier accounting from Part 32 rules to generally accepted accounting principles (GAAP). "While the transition period should be helpful in avoiding rate shock due to changes made during the initial accounting transition, it will not do anything to protect against subsequent accounting changes," said an NCTA filing posted Friday in docket 14-130 on a meeting with Wireline Bureau staffers. It noted its advocacy of a "temporary freeze" in telco pole rates, but said: "[A]s a safeguard the Commission should consider applying the 12-year transition to any rate increases attributable to accounting changes during the first three years a carrier is using GAAP, not just the initial transition."
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“This proceeding has been around forever," said Lynn Follansbee, USTelecom vice president-law and policy. "This is about moving from Part 32 rules to GAAP rules. It’s not about pole-attachment rates ... but pole-attachments rates have always been the hang-up. I think the ILECs put forth a good-faith transition proposal that’s very generous. So let’s just do it. We’re basically keeping two sets of accounting books and that's a regulatory burden. The sense I get is the FCC understands that." Thursday's commissioner meeting includes a draft item to simplify telco accounting. The FCC didn't comment Friday.
NCTA also voiced concern about the transparency of pole-attachment rate calculations, and asked the FCC to require price-cap carriers to make underlying accounting data and cost allocations available upon request of attaching parties, "and not in secret submissions that require parties to file complaints to resolve every pole dispute with every price cap carrier in every state." The group proposed specific language for conditions and also urged the FCC to closely monitor ILEC pole and conduit attachment rates in the first years of GAAP accounting.
A pole-attachment rate freeze would prevent "millions of dollars in potential rate increases simply because the telephone company is changing accounting practices," NCTA said in a statement responding to our query on whether the group was still calling for a rate freeze. "The telcos have proposed that such increases would be permissible, but that rate increases due to the initial accounting change would be spread over 12 years. NCTA’s letter suggested that if a freeze is not adopted, the 12 year transition should apply to any accounting-related increases that occur within the first three years, not just the initial increase. We also raised significant concerns about the relative lack of transparency under the new regime proposed by the telcos, which could lead to a substantial increase in the number of complaints filed with the FCC if it is not addressed.”
USTelecom continued to push for moving from Part 32 rules to GAAP-based rules, with one filing responding to American Cable Association arguments (see 1702160023). "What ACA has proposed does not raise anything beyond that which was already proposed by NCTA ... in their ex parte letter filed last week," USTelecom said. "Part 32 accounting is a relic of rate-of-return regulation, and continuing these costly accounting requirements makes no sense for America’s price cap carriers. Any sort of requirement that Part 32 books be maintained only for pole attachments defeats the value the relief sought.”
The telco association summarized a meeting of ILEC officials with an aide to Chairman Ajit Pai, which included discussion of the telco transition proposal. "Unlike a rate freeze, this proposal allows companies to incorporate relevant expenses and costs on an annual basis into their calculation, more consistent with the Act, rather than relying on outdated information at the same time as it neutralizes the impact of the transition from Part 32 to GAAP based inputs," said the filing.