There's evidence ILECs exercise market power at data speeds above 45-50 Mbps in business data services, said Jonathan Baker, consultant to Level 3 and Windstream, in a declaration posted Friday in FCC docket 16-143 that was resubmitted with parts made public that previously were redacted as highly confidential. "Prices of high-bandwidth connections are likely substantially in excess of competitive levels. (For example, the presence of four or more in-building and four or more in-block high-bandwidth rivals lowers the prices of high-bandwidth connections by 43% according to one estimate and by 25% according to another.) This evidence does not support the suggestion that all business data services markets at bandwidths above 50 Mbps are competitive," said Baker, who was asked to comment on the BDS study of FCC consultant Marc Rysman. Rysman's data analysis "is broadly consistent with mine," Baker said. Free State Foundation criticized the FCC course and said "it's no wonder the Commission opted to change the terminology" from "special access" to BDS. "This whole decades-long proceeding has been driven in large part by ‘special access.' That is, special access to the Commission's administrative processes by some favored parties engaging in special pleading to obtain special rent-seeking treatment," said FSF President Randolph May and Senior Fellow Seth Cooper in a Friday commentary. "Special rent-seeking privileges are sought primarily by a segment of BDS competitors who serve business enterprises, not everyday residential or retail consumers. New rate controls would give these special interest pleaders price cuts on wholesale access to their competitors' facilities, including advanced IP-based broadband networks. Prompted by the continued special interest pleading, the Commission is proposing rate controls based on problematic analyses that disregard existing competitive forces," they said. "It is true that special interest pleading is nothing new at the Commission, and we freely acknowledge that no company or market segment has a monopoly on it. But the long, tortured history of the ‘special access' proceeding, in the face of ever increasing facilities-based competition in most places, is stupefying. ... Awash in special interest pleading, problematic analyses, and questionable agency processes, the best course would be for the Commission to close the BDS proceeding."
The FCC and stakeholders were saying little as the agency prepared to vote on a tech transition order Thursday. The agenda item is aimed at streamlining industry applications to discontinue legacy telecom services and giving price-cap carriers some additional relief. An FCC official recently told us a draft would take four main actions: (1) remove the "outdated designation" of ILECs as "dominant" in the legacy switched-access marketplace; (2) establish a framework for evaluating a request for discontinuing a legacy voice service as part of the technology transitions; (3) refine the FCC’s discontinuance and notice requirements to make sure the public "is aware of and prepared for" such transitions; and (4) partially grant a petition for reconsideration of an August 2015 order "to make a minor change" in the timing of Communications Act Section 214 discontinuance for competitors affected by a copper retirement (see 1606240069). An NPRM had proposed eight criteria for judging replacement services in discontinuance applications: (1) network capacity and reliability; (2) service quality; (3) interoperability; (4) service for individuals with disabilities; (5) public service answering point and 911 service; (6) cybersecurity; (7) service functionality; and (8) coverage. ILECs criticized the proposals as too burdensome and pushed for more streamlining, while civil rights groups and others sought further consumer protections, including by adding or strengthening consumer notification, education, affordability and broadband access safeguards (see 1607080043). "We have made a strong case that Internet access must be included in the 'adequate replacement' evaluation, and CWA certainly anticipates that the FCC will include this in its updated discontinuance rules," Communications Workers of America Telecom Policy Director Debbie Goldman emailed us Wednesday. A telecom industry official emailed: “The FCC is setting up a process whereby companies can seek permission to retire a service that fewer and fewer Americans are actually using. I doubt that, with all the options consumers have to communicate, the landline phone will ever pull a Pokemon and make a comeback. Nonetheless, we’ll see tomorrow how easy or streamlined or difficult the FCC will make the discontinuance process.” A lawyer involved in the proceeding said there's much opposition to the cybersecurity proposal, which could be watered down. Whatever the FCC adopts, the lawyer predicted the actual process of telcos converting legacy phone networks and services to broadband/IP systems is "going to roll in over an extended period," with carriers focused initially on urban areas. "The expectation that this is going to be a rapid transition is going to prove illusory," the attorney said. Many others didn't comment.
Price-cap telcos said the FCC violated the law by refusing to give them relief from legacy USF voice duties in areas where they don't receive new broadband-oriented Connect America Fund support. AT&T and CenturyLink, joined by intervenor USTelecom, Tuesday filed their opening brief to the U.S. Court of Appeals for the D.C. Circuit, which is reviewing their challenges to 2014 and 2015 FCC orders (AT&T, CenturyLink v. FCC, No. 15-1038 and consolidated cases) (see 1601110036 and 1602050029). "The Communications Act requires the FCC to adhere to a basic principle: a carrier required to provide services in high-cost areas must receive support in the form of sufficient payments from a universal service fund. The FCC orders under review violate this principle," the telco brief said. "By the FCC’s own calculation, Petitioners and other carriers face more than $1 billion in annual unfunded mandates under the FCC’s orders." The telcos said Section 214(e)(1)(A) requires USF eligible telecom carriers (ETCs) to provide services that “are supported” by universal service funding. But the FCC rule "leaves in place statewide price cap carrier ETC designations that require those carriers to provide service in high-cost areas where the required services are not ‘supported’ by high-cost funds," their brief said. "Those obligations violate the straightforward text of § 214(e)(1)(A). Likewise, requiring that service be provided in high-cost areas without supporting it with disbursements from the Fund violates the statutory command in 47 U.S.C.§ 254(b)(5) and (e) that funding be ‘sufficient’ to advance universal service. The Act also requires States to designate ‘service area[s]’ for price cap carrier ETCs that are linked to the FCC’s 'universal service obligations and support mechanisms.' 47 U.S.C. § 214(e)(5) (emphasis added). Legacy statewide service areas violate this requirement because they are a product of the replaced ‘support mechanisms’ and bear no relationship to the targeted funding mechanism that now determines high-cost support." They also said the FCC violated "the principle of competitive neutrality" and the Administrative Procedure Act. The FCC/DOJ brief is due Sept. 2 (see 1606010042).
Fiber cable and contract construction services likely will "become much more expensive or unavailable" as industry deploys new broadband facilities in coming years under various FCC programs, warned WTA, lobbying the agency on the group's petition for reconsideration of a rate-of-return USF overhaul order (see 1605250068). Representatives of the RLEC group also said FCC guidance is needed on how transactions would be handled under a new broadband model and an updated rate-of-return mechanism. "Should actual build-out costs significantly exceed the estimated costs used by the Commission to set its 5-year build-out requirement for the Rate of Return Path and its 10-year build-out requirement for the Model Path, those build-out requirements will become onerous or impossible to achieve with the applicable high-cost support," said a WTA filing posted Tuesday in docket 10-90 summarizing a meeting with Wireline Bureau officials. "WTA has requested a streamlined process for revising build-out requirements for carriers on both Paths if substantial cost increases or other materially changed circumstances render the current build-out requirements unreasonable or impossible." The group said rural telcos increasingly are concerned that "digital subscriber line ('DSL') charges, middle mile costs and customer service expenses" are hindering their ability to certify that they satisfy the FCC's "reasonably comparable rate benchmarks for broadband service." Entities seeking a reduction in an ILEC's Connect America Fund support should be required to offer the same broadband speeds and comply with the same service duties, said WTA. It said members don't expect to receive support where cable companies offer equivalent service but have concerns about "questionable claims" by wireless ISPs.
Alaska Communications Systems said the FCC shouldn't rely on assertions by General Communication Inc. that it and other Alaska Telephone Association members will improve middle-mile connectivity to remote Alaska during implementation of an ATA-proposed "Alaska Plan" for Connect America Fund (CAF) broadband support. ACS urged the FCC to require CAF recipients under the Alaska Plan to commit to meeting FCC minimum broadband standards, to hold the parties to their requirements and to impose reporting duties on the recipients. ACS cited certain GCI statements in a recent letter (see 1607070058) that ATA members may be expected to use some portion of what ACS says is $1.5 billion in proposed CAF support for middle-mile improvements. "GCI does not offer any more specifics than this, as to the precise locations where middle mile will be deployed, how much capacity will be available, or the amount to be invested in middle mile expansion," ACS said in a filing posted Monday in docket 10-90. "ATA members have not yet indicated how the remaining villages (those not among those targeted by the deployment described in GCI’s letter) would be able to receive effective access to broadband at 10 Mbps or better without adequate access to affordable middle mile connectivity." The current plan's likely outcome for many communities will be "substandard broadband or no effective broadband access at all," ACS said. "The Commission should not accept on faith such explanations as to how the ATA members plan to use enhanced high-cost support, and in particular the proposed $1 billion in CETC [competitive eligible telecom carrier] support, under the GCI-ATA plan." GCI didn't comment.
Inmate Calling Solutions opposed Securus' proposed FCC condition on the planned sale of ICSolutions to TKC Holdings, which would require TKC to stop the payment of interstate site commissions to correctional authorities (see 1607050055). "The Commission should dismiss or ignore Securus' Comments because the payment of site commissions to correctional facilities by inmate calling services (‘ICS’) providers is permissible under the Commission's rules," said ICSolutions in reply comments Friday in docket 16-188. "Even if site commissions were not permissible, Securus' requested condition is unrelated to the transaction or to TKC's qualifications to acquire ICSolutions and therefore is outside of the appropriate scope of this proceeding under longstanding Commission precedent." Securus took no position on the merits of the deal. FCC staff removed the TKC-Inmate Calling Solutions license-transfer application from streamlined processing so the transaction could be given further consideration, said a Wireline Bureau public notice listed in Monday's Daily Digest.
CenturyLink said the FCC should limit how it updates its discontinuance process for telecom services in a tech transitions order planned for a vote at Thursday's meeting (see 1606240069). CenturyLink was among the parties that met with commissioner aides and other staffers last week before Sunshine Act lobbying restrictions took effect (see 1607080043). "Additional criteria the FCC is reviewing in the context of discontinuances related to transitions should be limited to the streamlined process for discontinuing voice services. CenturyLink supports having the option of using the existing process in all circumstances," it said in a filing Friday in docket 13-5. "Any showing of alternative services should only cover areas where we have actual customers." The telco also pointed to evidence of more cable competition in the business data services market and to arguments against new BDS regulation. In a filing posted Monday on its meetings with FCC officials, the National Rural Electric Cooperative Association said the agency should focus on maintaining coverage and reliability provided by current voice and data services using TDM technology as telecom carriers shift cooperatives to IP-based services. U.S. TelePacific urged the FCC to harmonize the deadlines for CLEC discontinuance applications under Section 214 of the Communications Act and ILEC copper retirements by adopting its first proposed remedy. "No party opposed the narrowly tailored first proposed remedy that would automatically grant the CLEC’s Section 214 application by the date of copper retirement so long as the application was submitted to the Commission 40 days before the retirement date," the company said in a filing posted Friday. In another filing, NARUC called attention to its resolution urging the commission to partner with state regulators to protect customers during the tech transitions, including by adopting nationwide performance criteria for networks replacing traditional services. It also noted its belief that the commission's reclassification of broadband internet access as a telecom service under Title II of the act removes any argument that VoIP isn't a telecom service.
FCC staff teed up FairPoint Communications' cost-assignment compliance plan for meeting its remaining statutory and regulatory obligations after receiving agency relief. The commission in 2013 approved price-cap carriers' forbearance from the application of rules that required them to assign network costs and revenue to regulatory categories. The relief was granted subject to certain conditions, including plans for complying with their continuing duties. Initial comments are due Aug. 8 and replies Aug. 22, said a Wireline Bureau public notice Thursday in docket 12-61.
Verizon and XO Holdings answered FCC staff queries about Verizon's planned buy of XO Communications and its wireline assets. The companies provided detailed responses to numerous Wireline Bureau questions in their filings (here and here) submitted Thursday and posted Friday in docket 16-60. Some of the information was redacted. Verizon said it would provide further documents Friday.
VTCSecure asked the FCC to allow providers of direct sign-language support services to access the telecom relay service (TRS) numbering directory. About 10 percent of video relay service (VRS) calls, which use a sign-language (SL) interpreter to relay voice communications to the deaf and hard of hearing, go to just 100 customer-service phone numbers in large corporations and government agencies, said a VTCSecure petition for waiver and declaratory ruling filed in docket 03-123 Wednesday. Such interactions would more closely resemble regular phone conversations -- increasing "functional equivalence" mandated under the law -- if the customer-service representative and the deaf consumer could communicate directly using sign language rather than through an SL interpreter, said the petition. It said the service also would save the TRS Fund tens of millions of dollars annually and employ deaf persons as customer-service representatives. But providers of direct SL customer-support services need access to the TRS numbering directory to obtain routing information and so VRS providers will know calls to customer-service numbers should be handled as point-to-point video calls without an interpreter, the petition said. The commission also should require VRS providers to include direct SL customer-support service providers on their "white list" of known IP domain names they have agreed to recognize as valid for routing point-to-point video calls, it concluded.