Price-cap telcos disputed FCC justifications of orders requiring carriers to continue to provide voice service in certain high-cost areas on an interim basis without USF subsidy support during a transition to broadband-oriented funding (see 1609070029). The Communications Act requires eligible telecom carriers (ETCs) to provide services "that are supported" by the commission's USF mechanism, said petitioners AT&T and CenturyLink and intervenor USTelecom in a reply brief (in Pacer) Thursday to the U.S. Court of Appeals for the D.C. Circuit, which is reviewing their challenges to 2014 and 2015 orders (AT&T, CenturyLink v. FCC, No. 15-1038 and consolidated cases). The FCC argument that it can "force ETCs to provide service in areas 'where they are not supported' (emphasis added) thus conflicts with the statute's text, and the agency's defenses are unpersuasive," the brief said. The commission ignored mandates to ensure "sufficient" support and competitive neutrality, it added.

The FCC asked a court to suspend its review of the agency's Lifeline USF overhaul, pending agency resolution of petitions to reconsider its order. When such petitions are filed for an order being challenged in court, "it is a common practice for the reviewing court, on request by the agency or other parties, to hold its review proceeding in abeyance pending agency action on the petitions for reconsideration," said an FCC motion (in Pacer) Thursday to the U.S. Court of Appeals for the D.C. Circuit to hold in abeyance NARUC v. FCC, Nos. 16-1170 and 16-1219. The commission said the usual court considerations "are especially weighty in this case" because some recon petitions implicate two questions that judicial petitioners plan to raise before the D.C. Circuit: whether the agency should phase down stand-alone voice support and on state authority to designate USF "eligible telecom carriers" (ETCs). State judicial petitioners Thursday made a filing (in Pacer) saying they would oppose the abeyance motion and proposing a briefing schedule and format agreed to by all the parties, "subject, of course, to this Court's ruling" on the motion. The FCC March 31 adopted an order extending Lifeline low-income support to broadband service and streamlining program administration (see 1603310056). NARUC and individual states challenged the decision to create a federal Lifeline broadband provider designation process that bypasses state ETC reviews (see 1606030053 and 1607010057). CTIA, General Communication Inc., Joint Lifeline ETC Petitioners, the National Association of State Utility Consumer Advocates, NTCA/WTA, the Pennsylvania Public Utility Commission, TracFone and USTelecom petitioned the FCC to reconsider or clarify aspects of its order (see 1608090023).

Incumbent telcos voiced concerns about certain FCC tech transition duties of ILECs seeking to discontinue legacy voice services. "Regarding the requirement to certify or show that a replacement service offers comparably effective protection from network security risks, we sought clarification that 'enterprise-wide' refers only to those portions of the provider’s enterprise or business that involve the provision of voice service," said a USTelecom filing Friday in docket 13-5 on a meeting representatives from the ILEC group, AT&T, CenturyLink and Verizon had with Wireline Bureau and Public Safety Bureau staffers. "The option for providers to demonstrate compliance with the latency benchmark described in Appendix B of the Second Report and Order is not feasible for use with incumbent providers’ managed voice services, and [they] sought confirmation that providers can demonstrate compliance using other existing methods." The FCC held an information session Monday on how technology transitions and commission rules affect consumers. Archived agency webcasts can eventually be viewed here.

USTelecom cited "shortcomings" in the FCC's business data service collection of data and said "regressions using that data" don't support an inference of market power. "Imposing price regulation based on the flawed data runs the risk of discouraging investment, innovation and further entry, the costs of which could easily outweigh any modest price reductions that could be gained," the ILEC group said in a filing Wednesday in docket 16-143 on a discussion with Office of Strategic Planning Chief Paul de Sa and another OSP staffer. USTelecom also discussed the basis for its proposed test to deem a market competitive where two or more facilities-based competitors are present (see 1609120048). Communications Workers of America President Christopher Shelton noted CenturyLink recently announced plans to lay off up to 3,500 employees, reportedly in response to declining legacy revenue. "Surely, we don't want to see more of these headlines," said Shelton's letter to FCC Chairman Tom Wheeler. "I know this is not a legacy you want for your tenure, but I fear we may see more of this if the Commission radically slashes" BDS rates. But Sprint urged the FCC not to delay implementation of new BDS rules as some parties have argued. A new order "should address mechanisms for expedited BDS challenge proceedings and the effect of changed BDS rules on existing and new BDS agreements," said a Sprint filing on discussions with de Sa, Wireline Bureau Chief Matt DelNero and a Wheeler aide.

AT&T called Incompas/Verizon business data service regulatory proposals nothing like the compromise the two parties suggest it is. Verizon sold so many wireline systems, it "is almost certainly a net purchaser of BDS whose interests are more aligned" with Incompas than with other ILECs, said an AT&T filing posted Monday in docket 16-143, calling their joint recommendations "cynical." As Incompas and Verizon reveal details of their proposals, it's becoming clear their proposals are "structured as a massively one-sided giveaway to Verizon at the expense of consumers, competition and virtually all other BDS competitors," AT&T wrote. It said Verizon had some of the highest BDS rates in the industry where it's the incumbent, "significantly higher than AT&T's, for example." But Incompas is willing to protect Verizon's high in-region rates to win the telco's support for "radical and debilitating rate reductions on all other ILECs and Ethernet providers outside of Verizon's territory," AT&T said. "That may be a win-win for Verizon and INCOMPAS, but it would be hard to design a proposal more inimical to the public interest." AT&T said "Verizon would be rewarded for having DS1 rates that far exceed those of AT&T, because those high DS1 rates translate directly into higher benchmark Ethernet rates for Verizon." Incompas and Verizon didn't comment to us. In a Monday filing, Verizon said cable provides BDS offerings the same way others do, via common carriage. Verizon also asked the FCC to allow existing BDS contracts to run their course rather than void them through "fresh look" requirements, in the filing on a call with Wireline Bureau Chief Matt DelNero. In a blog post, USTelecom said Friday the FCC should stop barring incumbents from discounting BDS prices in about one-third of the country. "Prices could be lower in those areas if the FCC simply granted more flexibility to incumbent providers to lower their prices in all areas of the country," the ILEC group said. A Macquarie Securities note to investors Monday said the impact of new FCC BDS regulation "could be greater" for Frontier Communications and CenturyLink.

Senate Commerce Committee Chairman John Thune, R-S.D., expects all the prime FCC proceedings to face scrutiny Thursday during an oversight hearing featuring FCC Chairman Tom Wheeler and the four other commissioners. This is the first Senate Commerce oversight hearing since March and the first since Thune took to the Senate floor in July to disparage the style and substance of Wheeler’s time leading the agency (see 1607070049).

CTIA, USTelecom and other industry groups told the Office of Management and Budget that FCC estimates on the costs of complying with the 2015 “enhancements” to transparency parts of 2015 net neutrality rules are inadequate and should be rejected. OMB sought comment under the Paperwork Reduction Act. The comments were filed at OMB and in FCC docket 14-28.

Judges sparred with both sides at oral argument on Neustar challenges to FCC orders picking Telcordia to become the next local number portability administrator (LNPA). Judges Harry Edwards and David Sentelle of the U.S. Court of Appeals for the D.C. Circuit questioned whether the FCC adequately addressed concerns about the impartiality of Telcordia, given its ties to parent Ericsson, a telecom equipment manufacturer. But they also seemed to suggest the FCC could remedy the concerns through its neutrality safeguards, with Edwards questioning Neustar arguments that no safeguards could be sufficient. Judge David Tatel suggested he might not agree with a core Neustar argument about Delaware corporate law.

USTelecom proposed a business data service market test at the census tract level that the FCC could use to determine where facilities-based competition instead of regulation could constrain BDS pricing. "The test proposes that the FCC step back from dictating prices for BDS services wherever two competitors exert competitive discipline over pricing," said a USTelecom filing posted Monday in docket 16-143. Parties on all sides are continuing to lobby the FCC as Chairman Tom Wheeler attempts to push through an overhaul this year (see 1609070033).

USTelecom opposed a business group's petition asking the FCC to revisit a ruling granting incumbent telcos nondominant treatment of their interstate switched-access services connecting local callers to long-distance networks. The petition of the Ad Hoc Telecommunications Users Group "is late-filed, and thus should be dismissed with prejudice on procedural grounds," said USTelecom in opposition in docket 13-3. "Moreover, Ad Hoc raises no new facts or changed circumstances that have not already been considered by the Commission." Ad Hoc said the FCC provided ILECs relief despite its "failure to finalize access rate regulations for toll-free originating access minutes" (see 1608240045).