Rural BDS Plan's AT&T-RLEC Divide Clear on 'All-or-Nothing' Rule, Market Test, 9.75% RoR
AT&T voiced continued qualms about how rate-of-return telcos could opt into incentive-based business data service price-cap regulation. But incumbent and rural telco groups cited no opposition to a core FCC proposal for the option, seeking to reject AT&T and Sprint proposals. Replies posted Monday and Tuesday in docket 17-144 crystallized battle lines over an "all-or-nothing" rule, a competitive market test, and a targeted rate of return under price caps.
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RLEC initial comments "do little to ameliorate the concerns in AT&T's comments" (see 1806190029), the company replied: "Some of the commenters’ exuberant push for the Commission to grant them even more regulatory freedom than was encompassed by the original petition that formed the basis of the NPRM illustrates why the Commission should proceed with caution." It said the FCC "should reaffirm that, pursuant to its long-standing price cap rules" -- it cited the all-or-nothing rule -- an Alternative Connect America Cost Model (A-CAM) carrier’s choice to move from rate-of-return (RoR) to price-cap regulation "must apply to all of its interstate services."
If the FCC "grants A-CAM carriers the option to be price-cap carriers when providing BDS and remain rate-of-return when providing switched access services the Commission must ensure that the carriers’ initial price cap rates are set fairly and reflect all ongoing switched access and rate-of-return pricing reforms," targeting a 9.75 percent RoR, AT&T said: Any market test used "to determine whether a county should be deemed 'competitive' or 'non-competitive' under the contours of the Commission’s BDS Order must be A-CAM carrier specific and centered upon the competitive landscape for BDS in the A-CAM carriers’ study areas."
Petitioners ITTA and USTelecom said initial comments "unanimously support the Commission's proposal" and "confirm that the costs of legacy regulations of model-based carrier BDS now far outweigh the benefits." Certain AT&T and Sprint recommendations should be rejected "because the BDS marketplace has changed" and they would "undermine the consumer, competitive and investment benefits of the NPRM's proposals," replied ITTA/USTelecom. They said an existing price-cap carrier competitive market test is equally appropriate for model-based RoR carrier lower bandwidth BDS; and urged all-or-nothing rule modifications to allow the RLECs to move only their BDS to incentive regulation, and rejection of an initial 9.75 percent RoR target.
"There appears to be no opposition" to allowing A-CAM or Alaska Plan carriers to opt into incentive BDS regulation, replied NTCA. It said disagreements are about "a few discrete, but important details of such a transition," citing approvingly previous ITTA/USTelecom arguments. NTCA said creating a new competitive market test for RoR telcos "would be unnecessarily burdensome for all," and relaxing the all-or-nothing rule aimed at "internet cost shifting" poses "no material risk of 'gaming' because costs that a carrier might think of reallocating (even if possible) to switched access from BDS" are subject to other restrictions.