Japanese-owned SoftBank should not be permitted to buy Sprint due to national security concerns, said former Director of National Intelligence Mike McConnell during the first of two House cybersecurity hearings Tuesday. SoftBank’s $20.1 billion bid to buy 70 percent of Sprint Nextel has recently been criticized because of allegations that SoftBank uses equipment from Chinese telecom manufacturers Huawei and ZTE (CD May 21 p12). “If you are in the intelligence business ... the one thing you would love to do is run the telecommunications infrastructure in another country ... so having a foreign country own and control a communications company inside the United States ... I would not be in favor of,” said McConnell, who was in George W. Bush’s administration and is now the vice chairman at Booz Allen Hamilton.

The FCC killed more than 120 regulatory requirements on telcos, it said Friday (http://fcc.us/13Bv8YF). The order grants forbearance for 126 of about 141 rules and requirements that USTelecom sought in its petition. Companies will no longer have to retain certain records made redundant by digital databases, property record filings and calling cards record reporting, the FCC said. “In so doing, we further our commitment to eliminate burdens on industry and promote innovation while ensuring our statutory objectives are met,” the order said. “We grant forbearance to the full extent supported by the record. Where we cannot forbear from a requirement completely, we in several instances reduce burdens by granting partial or conditional forbearance.” The ruling is not intended to preempt any state rules, it added. The FCC also issued a further NPRM in which “we examine whether to retain, modify, or eliminate the comparably efficient interconnection (CEI) and open network architecture (ONA) requirements as well as the ‘All Carrier Rule,'” according to the order. It’s also adopting a second further NPRM on “whether we should modify or eliminate the separate affiliate requirement for independent incumbent LECs that are subject to rate-of-return regulation,” it said. “With 126 regulations removed, we're talking about millions of dollars in savings, which will ultimately result in a more dynamic, competitive market and lower prices for consumers,” outgoing Chairman Julius Genachowski said in a statement. The order also preserves “consumers’ right to notice when services are being eliminated, a vital protection as we move forward on trials of wireline to wireless, TDM to IP, and copper to fiber technology transitions,” Genachowski added. Commissioner Ajit Pai called the order “bipartisan compromise, an important first step,” but wished the FCC had “gone further, faster” with eliminating legacy obligations. USTelecom expressed some pleasure with the order, but the FCC “missed the opportunity for the thorough spring cleaning that has long been needed,” USTelecom President Walter McCormick said in a statement. “Given the fact that we have already gone through 15 months of study, we would expect that this further review could be completed by the end of the year.” In a Friday blog post (http://bit.ly/10KunZ7), McCormick slammed the FCC for leaving in place “Part 32 accounting rules, CEI/ONA rules and streamlining Section 214 notification requirements” and called the step “timid.” The order was adopted May 10.

There’s a “tension” between language in the USF/intercarrier compensation order and the FCC’s Part 69 rules, representatives from several ILECs told Wireline Bureau officials Monday, an ex parte filing said (http://bit.ly/10v15AK). The rules “on one hand, appear to direct companies to allocate certain legacy high-cost support (IAS, ICLS and LSS) to the calculation of interstate access charges but, on the other hand, also appear to direct companies to spend increasingly larger amounts of this same legacy high-cost support on building and operating broadband networks in certain areas,” said the USTelecom filing. That tension could have “potential fiscal effects” on support, access and subscriber charges, said the association and members AT&T, CenturyLink, Verizon and Windstream.

Commenters on the FCC’s proposed call completion data collection (CD Feb 8 p8) agreed that call completion to rural areas is crucial, but differed on where the obligations of monitoring and reporting most properly fall. Several groups suggested that the originating long distance provider is the best positioned to capture meaningful data. Commenters also differed on the details of which data should be collected.

"In 2013, we see a new set of priorities,” said National Regulatory Research Institute Principal Sherry Lichtenberg of recent IP-focused deregulatory state legislation. NRRI is an affiliate of NARUC, and Lichtenberg released a new review of state deregulation laws Wednesday (http://bit.ly/YFJuHQ). These “different” 2013 laws have a clear and focused message, she said: “Thou shalt not touch VoIP or IP-enabled services -- even if we haven’t defined them.”

State telecom deregulation will continue and may not harm consumers, argued National Regulatory Research Institute Principal Sherry Lichtenberg in a paper to be released Wednesday. NRRI is an affiliate of NARUC. “It is clear from the number of bills passed since Indiana’s 2006 deregulation bill, as well as the bills pending in 2013, that deregulation will continue, either individually, state by state, or via FCC forbearance,” the 72-page paper said. It’s an update to a survey of legislation she released last summer. Lichtenberg described the legislative survey results and conclusions of this research to us earlier this spring, saying she worries less about deregulation these days (CD March 29 p13). Such deregulation bills have passed or are pending in 70 percent of states, the paper said. The research examines the wave of recent laws and pending bills, such as those limiting state regulation of Internet Protocol-enabled services (CD April 1 p7). It analyzes which telcos are dominant in areas where regulation is being or has been reduced. “Legislation passed or pending in the 22 states where AT&T is the primary ILEC could almost totally eliminate state utility commission oversight of retail telecommunications across the AT&T region,” Lichtenberg’s paper argued. “As the largest carrier in these regions, AT&T has moved aggressively to encourage state legislatures to deregulate both traditional wireline and emerging VoIP and IP-enabled services throughout the territory. AT&T’s key legislative goals appear to be protecting VoIP and ‘emerging IP-enabled services’ from regulation and eliminating the [carrier of last resort] COLR and/or basic service obligations not shared by its more lightly regulated competitors.” Verizon is “least active” in sponsoring these deregulation efforts in its 13-state ILEC area, Lichtenberg said: “Rather than push for deregulation, Verizon appears to have focused its efforts on increasing the penetration of FiOS where it is already available, addressing the damage caused by Hurricane Sandy, resolving quality-of-service issues raised by the failure of the 911 system during the 2012 Derecho, and responding to questions about service quality raised in New York and California.” The paper confirms what Lichtenberg told us about the effects of state deregulation: “The early results seem, if not positive, then at least ‘palatable.’ Carriers have not withdrawn service from their traditional markets, including their rural markets. ILECs have not raised prices significantly or eliminated traditional TDM wireline service offerings.” And PUCs and consumers are adjusting, she said. She proposed strategies for these stakeholders, suggesting state regulators work with other agencies to fill in gaps in oversight where regulatory power has been removed or reduced. Lichtenberg is scheduled to present her research Wednesday morning at a USTelecom event on state telecom policy.

USTelecom proposed two additional safeguards that “could be conditions for obtaining Part 32 forbearance,” in a letter to the FCC sent Friday (http://bit.ly/ZLMlgY). On pole attachment agreements under Section 224 of the Communications Act, “any company wishing to avail itself of Part 32 forbearance would commit not to increase overall cost inputs to the FCC pole attachment rate formulae by more than the rate of inflation” for the following three years, the association said. Companies would further “retain the ability to provide financial data depicting existing Part 32 account structures by mapping or deriving such account structures from their GAAP (or successor) financial records,” for the next five years, USTelecom said. More than a year ago, it asked for forbearance from several legacy rules (CD Feb 17/11 p14). Some of the “recent attention” in the proceeding has focused on Part 32, USTelecom said. That’s the commission’s “arcane uniform system of accounting that still applies to price cap carriers even though none remain subject to cost-based regulation,” it said. USTelecom members have committed to file the “same pole attachment cost report” that they do now, and “continue to record or track transactions” in a “reasonable, auditable way,” it said. USTelecom “strongly” disagrees that additional protections are necessary to “ensure a smooth transition” if forbearance relief were granted, it said. USTelecom’s petition gives the FCC an “opportunity to respond to President [Barack] Obama’s directive to eliminate regulations that are ‘outmoded’ and ‘excessively burdensome,'” the association said.

The Montana Telecommunications Association (MTA) concurs with USTelecom that the FCC should “reconsider permitting and encouraging the speculative installation of excess capacity” with regard to the Rural Health Care Program, it told Wireline Bureau officials April 22 and 23, said an ex parte filing posted Tuesday (http://bit.ly/ZUnVBq). MTA also expressed its concern that posting requests for proposals on the Universal Service Administrative Co. website “may be too passive” a move. “Stakeholders should not be expected simply to divine when or where a Healthcare Connect project is planned that may affect them either positively or negatively,” it said.

Part 32 cost data do not serve any regulatory purpose under price cap regulation, USTelecom told FCC Commissioner Mignon Clyburn Tuesday, an ex parte filing said (http://bit.ly/Y2yHVI). USTelecom has requested forbearance from several legacy regulations. Part 32 accounting rules were put in place for ratemaking purposes under cost-based regulation and don’t serve any regulatory purpose now, the association of ILECs said. Clyburn asked USTelecom to address concerns raised in an ex parte letter from state members of the Federal-State Joint Board on Universal Service, USTelecom reported. In response, USTelecom emphasized that if granted, the relief it seeks “would not undermine the jurisdictional separations process,” it said. Nor would the relief preempt state public service commission authority to obtain accounting information “necessary to carrying out state functions,” it said.

Any auction conducted in Phase II of the Connect America Fund program should attempt to maximize the number of locations to which broadband could be provided and maintained, USTelecom and member ILECs told FCC officials Wednesday, an ex parte filing said (http://bit.ly/ZiSYav). The groups were meeting to discuss “the broad contours of an auction mechanism” that would take place “where a qualifying carrier elects not to exercise a right of first” acceptance of CAF money, the filing said. In order to maximize the flow of Phase II money, bidders should be allowed to aggregate geographic areas to ensure scale for “efficient network construction and operation,” the ILECs said. They also discussed the potential benefits of a multi-round auction and package bidding. Any auction procedures should be “fully described well before any company must make an election to accept state-wide obligations and support” under Phase II, the filing said.