The FCC voted 3-2 to bar local franchise authorities from impeding competitive entry into cable markets by unreasonably deterring Verizon, AT&T and others from getting franchises. The vote at the FCC meeting Wed. was opposed strongly by Comrs. Copps and Adelstein. They said the order could lead to lawsuits, because the FCC lacks authority to limit local govt. actions. The move was quickly assailed by the cable industry and praised by the Bells.
Chmn. Martin’s FCC has a “fundamental misunderstanding” about the cable industry and its role in the market, NCTA Pres. Kyle McSlarrow told reporters on a Tues. teleconference. “It’s almost like they're viewing it through a time warp,” he said. Furthermore, rhetoric from Martin’s office about allowing open market competition hasn’t flowed from Martin’s policy initiatives for cable, McSlarrow said. Martin has pushed for cable operators to sell cable channels a la carte, carry broadcasters’ digital multicast signals, publicize privately negotiated carriage contracts and smooth phone companies’ entry into video, McSlarrow said: “What I see, when you put all those dots together, is an agenda that really represents one of the most sweeping regulatory examples of government micromanagement.”
N.M. regulators approved transfer of Qwest service territory in the Navajo reservation in the state’s northwest quarter to Sacred Wind Communications. The Public Regulation Commission order included transfer of $5.7 million from Qwest’s rural extension fund to a Sacred Wind extension fund. The funds will go to run lines to phoneless Navajo residences and businesses. The PRC noted that Sacred Wind, qualified to get universal service subsidies, recently got a $70 million federal loan for telecom services on the Navajo reservation.
Outgoing House Commerce Committee Chmn. Barton (R-Tex.) introduced a number of last-minute bills -- including measures that had been part of the defunct telecom bill. HR- 6349 would set up an office of emergency communications within the Dept. of Homeland Security, and HR-6351 would establish a voluntary framework through which wireless providers could transmit emergency alerts to subscribers. Other last-minute telecom bills: (1) HR-6410 by Rep. Ackerman (D-N.Y.) would prohibit a telephone exchange service provider or wireless carrier from imposing a charge for number portability. (2) S-4102 by Sen. Obama (D-Ill.) would prohibit the use of telecom devices to obstruct the broadcast or exchange of election-related information. (3) S-4110 by Sen. Smith (R-Ore.) would enhance Federal Trade Commission enforcement against illegal spam, spyware and cross-border fraud and deception. The bills could become attached to the continuing resolution that Congress must pass before it adjourns to keep the govt. operating, since it decided to defer work on incomplete appropriations bills to the next Congress. The continuing resolution often becomes a vehicle for last-minute amendments, and telecom lobbyists were keeping a close eye on efforts to include pretexting legislation. The House has already passed a bill. An effort was made in the Senate to pass similar legislation on a fast- track last week, but Sen. McCain (R-Ariz.) put a hold on it. The vote on the continuing resolution was expected to take place late Fri. night.
The Kan. Corporation Commission agreed to reconsider parts of an Oct. order setting criteria for deciding whether competitive landline and wireless carriers are eligible for universal service subsidies. The KCC said it would rehear wireless carrier objections to requirements that eligible telecom carriers (ETC) offer free optional blocking of usage- sensitive rates to Lifeline subscribers if they don’t provide an unlimited local calling plan and that they offer at least one rate plan without a termination charge. Wireless carriers said the provisions constituted unlawful state regulation of wireless rates and interstate communications. The KCC partly granted wireless carrier requests to rethink a rule requiring ETCs to include language describing their universal service obligations and KCC contact numbers in their advertising. The KCC said it has jurisdiction over wireless carrier advertising under consumer protection laws. But it agreed to consider an amendment applying the ad requirement only to print ads run in newspapers and magazines targeting an ETC’s universal service areas. The KCC (Case 06-GIMT-446-GIT) refused to reconsider a requirement that all competitive ETCs, including wireless, file annual service quality improvement plans. Carriers said the requirement is unfair because it isn’t asked of incumbent telcos. But the KCC said incumbents face quality standards and reporting requirements broader than those for competitive ETCs. It also refused to reconsider a rule giving Lifeline customers a choice of service plans. The KCC rejected carrier arguments that federal law limits Lifeline subsidies to the cheapest generally available rate plan, saying nothing in U.S. law or FCC policy bars states from expanding application of Lifeline discounts to more than one calling plan.
Sprint Communications has developed what some consider a new type of wholesale VoIP business arrangement enabling cable companies to extend competitive voice services deep into rural markets. The company hopes to make this service available to rural cable companies across the U.S. before 2008. Rural incumbent telcos are fighting, so far without success, to keep Sprint and its cable partners out of their markets.
The separations process should be scaled back because it’s outdated, Bell companies told the FCC in reply comments filed Nov. 20. NASUCA and the Ad Hoc Telecommunications Users Committee disagreed, calling the rules “important tools” for regulators. The comments came in response to an FCC request for views on reforming separations -- used to decide if a particular telecom company’s costs are regulated by the FCC or by the states.
State: Alabama Company: All IncumbentsMethod Now in Use: Price Caps (1996)Notes: Basic exchange and access rates under nonindexed caps. Other services can rise up to 10% a year total. Rate design subject to PSC review. Earnings not regulated. No expiration date. A state law allowed incumbents, as of 2005, to opt into a more flexible capping system basing rate regulation on population density. This plan deregulates retail rates other than residential basic exchange in dense urban areas. In less dense suburbs, rate rises are limited to 15% annually through 2006, 20% in 2007 and 25% after that. In rural areas, rises are limited to 5% through 2007, gradually reaching 15% by 2010. A 2005 state law gave incumbents another option: A phase-out of retail rate regulation, deregulating bundled and contract services statewide in July 2006 and detariffing most retail services in Feb. Starting 2008, the law will let incumbents facing at least 2 local competitors opt out of state retail rate regulation. The PSC opened a proceeding to reevaluate its entire regulatory system, hoping to persuade incumbents to remain under state rate regulation. But rural incumbents in Aug. indicated no interest in changing regulatory arrangements, and several opted for phased deregulation under the 2005 law. Nine rural incumbents opted to remain under price capsState: Alabama Company: CLECsMethod Now in Use: Rates Flexibly Regulated Notes: CLEC rates presumed competitive. CLECs get state certificates by showing technical, financial and managerial competence. They must file tariffs and give notice of rate changes. CLEC tariff changes get regulatory staff review but normally aren’t questioned. Starting Feb., CLECs can opt for detariffing of most retail services.--------------------------------------------------State: Alaska Company: All Incumbents Method Now in Use: Rate of Return Notes: All large and most small incumbents are under rate of return regulation. In noncompetitive markets, rate reduction -- and boosts up to 6% -- can be decided in as little as 45 days under rate of return principles in annual filings. Other changes require full rate case. In markets where at least one facilities-based competitor operates, dominant incumbents can reduce rates or introduce new bundles on 30 days’ notice without prior state approval. Incumbents can set limited-duration promotional rates to match competition without prior state approval. In markets where an incumbent faces 2 or more facilities-based local exchange competitors or has lost over 40% market share, and provides essential exchange access to less than half the market, the incumbent is deemed nondominant and gets broad pricing flexibility for all retail services other than single-line basic exchange. Basic exchange in such nondominant competitive markets can rise up to 8% annually. Nondominant incumbency can be decided by market or by specific services within a market. But revenue from all services in competitive markets still counts in rate-of-return calculations. Incumbents with less than $500,000 annual revenue can opt out of state rate and earnings regulation on approval by their ratepayers. Rates and earnings of incumbents with less than $50,000 annual revenue are deregulated.State: Alaska Company: CLECs Method Now in Use: Rates Flexibly Regulated Notes: CLEC rates presumed competitive. CLECs get state certificate by showing technical, financial and managerial competence. They must file tariffs and give 30 days’ notice of changes. CLEC changes receive regulatory staff review but normally aren’t questioned.--------------------------------------------------State: Arizona Company: Qwest Method Now in Use: Rate of Return with Price Caps (2001) Notes: Carriers under earnings-based regulation pegged to rate of return on “fair value” of rate base. Regulators in 2001 set up price capping system to give Qwest some pricing flexibility. Price cap system amended in March 2006 to boost flexibility. Basic service rates frozen. Nonbasic and emerging competitive services can rise up to 25% a year and competitive services are priced flexibly. But the 2 “baskets” are subject to revenue caps for all services. Revenue from all services count in rate-of-return calculations. Revised plan changed the services in the baskets and eliminated productivity indexing. Next review due early 2009.State: Arizona Company: Other Incumbents Method Now in Use: Rate of Return Notes: Other incumbents are under fully-tariffed earnings-based regulation pegged to rate of return on “fair value” of rate base. They don’t have pricing flexibility. State: Arizona Company: CLECs Method Now in Use: Rates Flexibly Regulated Notes: CLEC rates presumed competitive once multiple competitors operate in a market. CLECs get state certificate by showing technical, financial and managerial competence. They must file tariffs and give 30 days’ notice of changes. All changes get regulatory staff review and major changes may be subject to hearings; minor changes generally aren’t investigated. State constitution requires a relationship between CLEC rates and “fair value” of their rate base, but a 2001 state Supreme Court ruling gave state regulators full discretion to decide how to determine fair value of CLEC assets to apply it in setting CLEC rates. Fair value issues are decided case by case as CLECs file tariffs for new services and rate changes.-------------------------------------------------- State: Arkansas Company: AT&T, Windstream, CenturyTel of Central Ark. Method Now in Use: Price Caps (1997) Notes: Basic exchange and switched access under caps indexed to 75% of GDP-PI. Rates for all other retail services deregulated. Companies can request basic exchange rate deregulation in exchanges with effective local competition. AT&T in late 2004 and early 2005 received basic exchange rate deregulation in its competitive urban markets. Earnings not regulated. No expiration date. State: Arkansas Company: CenturyTel of Northwest Ark. Method Now in Use: Rate of Return Notes: Rate of return regulation applies to this business unit, created to take over about 100,000 lines bought from Verizon in 2000. It can switch to price caps but hasn’t done so.State: Arkansas Company: Other Incumbents Method Now in Use: Price Caps (1997) Notes: All other incumbents operate under price caps permitting basic exchange services to rise annually by lesser of 15% or $2 per line monthly. All other service rates deregulated. Earnings not regulated. No expiration date. State: Arkansas Company: CLECs Method Now in Use: Rates Not Reviewed Notes: CLEC rates presumed competitive. CLECs get state certificate by showing technical, financial and managerial competence. They must file tariffs and give 30 days notice of changes but changes normally aren’t reviewed. All CLECs must contribute to state universal service fund regardless of whether they're eligible to receive subsidies from it.-------------------------------------------------- State: California Company: AT&T, Verizon, Surewest, Frontier Method Now in Use: Rate Deregulation (2006) Notes: Residential basic exchange and Lifeline under nonindexed caps through 2008. Rates for all other retail services deregulated in Oct. 2006, except that companies must file tariffs and give customers 30 days’ notice of rate increases. Earnings not regulated. State: California Company: Other Incumbents Method Now in Use: Rate of Return Notes: Eighteen other incumbents are under fully tariffed rate-of-return regulation. PUC 1997-2004 reviewed rates of all small companies. Commission required earnings-regulated small incumbent to file a rate case within 6 years of its last review to keep getting state high-cost subsidies. Otherwise their state high-cost support will be phased out. Eight small incumbents chose not to file rate cases and no longer get state high-cost subsidies. State: California Company: CLECs Method Now in Use: Rates Not ReviewedNotes: CLEC rates presumed competitive. CLECs get state certificate by showing technical, financial and managerial competence. They must file tariffs and give customers 30 days’ notice of rate increases.--------------------------------------------------State: Colorado Company: Qwest Method Now in Use: Price Caps (2005) Notes: First residential line and first 5 business lines under nonindexed caps. Intrastate long distance rates deregulated statewide. Intrastate toll can be deregulated in markets with sufficient competition. Rates for business services to customers over 5 lines and optional or discretionary services deregulated in state’s 5 largest cities, and other markets where sufficient competition is shown. Earnings not regulated. State: Colorado Company: Other Incumbents Method Now in Use: Rate of Return Notes: All other incumbents are under fully tariffed rate-of-return regulation. Other incumbents can petition for alternative regulation but none have. State: Colorado Company: CLECs Method Now in Use: Rates Flexibly Regulated Notes: CLEC rates presumed competitive, except that residential basic exchange can’t exceed $14.74 cap set by state law for all providers. Bundled rates can’t exceed cumulative stand-alone rates of services comprising bundle. CLECs get state certificate by attesting to their technical, financial and managerial competence; affidavits presumed truthful. CLECs at start of service have option to file tariffs or price lists. Changes require 14 days’ notice. Tariff and price list changes get regulatory staff review but normally aren’t challenged. CLECs can opt into program applied to Qwest.-------------------------------------------------- State: Connecticut Company: AT&T Method Now in Use: Price Caps (1996-2007) Notes: Noncompetitive services under caps indexed to GDP-PI; caps can rise 1/2 the amount GDP-PI exceeds 5% a year. Competitive services flexibly priced. Penalties assessed for failing to meet service quality targets. Earnings not regulated. Program last reviewed in 2001 but no changes made. Next review due before 2008. State: Connecticut Company: Other Incumbents Method Now in Use: Rate of Return Notes: Fully-tariffed rate-of-return regulation. No proceedings pending to change that. Regulators gave Verizon some pricing flexibility under RoR in 2001. Verizon in 2003 proposed price cap change, later withdrew application. Regulators in Sept. 2005 reaffirmed continued price flexibility through 2007. State: Connecticut Company: CLECs Method Now in Use: Rates Not Reviewed Notes: Rates presumed competitive. CLECs get state certificate by showing technical, managerial and financial competence. They must file tariffs and give 7 days’ notice of rate changes, but changes normally aren’t reviewed. -------------------------------------------------- State: Delaware Company: Verizon Method Now in Use: Price Caps (1994-2011) Notes: Basic services under caps indexed to GNP-PI minus 3%, plus approved exogenous costs. Competitive services flexibly priced. Earnings not regulated. In June 2005, PSC concluded review of plan by agreeing to extension without change until Sept. 2011. State: Delaware Company: Other Incumbents Method Now in Use: None. State: Delaware Company: CLECs Method Now in Use: Cost-Based Rate Floor Notes: Rates presumed competitive if they stay above floor set at incremental cost. CLECs get state certificate by showing technical, managerial and financial competence. Must post $10,000 performance bond or irrevocable standby letter of credit for equivalent amount. Must file tariffs or price lists, with 3 days’ notice of rate and service changes. Rate changes above cost floor normally get no further review. -------------------------------------------------- State: District of Columbia Company: Verizon Method Now in Use: Price Caps (2000-2006) Notes: Basic residential rate frozen. Other basic residential and business services can rise up to 10% a year. Discretionary services can rise up to 15% annually. Percentage revenue rise from such boosts can’t exceed annual inflation rate. Competitive service rates deregulated, but can’t be below incremental cost. Earnings not regulated. Plan, to expire in 2004, extended through 2006 under pact giving Verizon small local rate increase. No current proceeding on successor plan. State: District of Columbia Company: Other Incumbents Method Now in Use: None.
NASUCA adopted resolutions on Lifeline and inmate payphone services, at the state consumer advocate group’s annual meeting, held along with NARUC’s annual convention in Miami Beach. Meanwhile, NASUCA panelists addressed a Conn. decision declaring AT&T’s IP-based video service not to be cable TV, as well as telecom privacy and the Missoula Plan. NASUCA’s Lifeline resolution was close to one adopted by NARUC. It backed the same Lifeline Working Group recommendations and made similar recommendations on Lifeline promotion and outreach through public-private partnerships, state commissions, other gov agencies, and business. NASUCA’s payphone resolution said inmate interaction with family, friends and professionals is an important part of rehabilitation hurt by unreasonably high rates at inmate payphones. The resolution urged policymakers to ensure fair rates, encourage use of prepaid debit accounts as an alternative to collect calls, and cut or eliminate commissions that inmate payphone providers pay state or local corrections authorities for their contracts. On NASUCA panels, Bill Vallee, attorney with the Conn. Office of Consumer Counsel, said the Conn. Dept. of Public Utility Control (DPUC) misclassified AT&T’s video delivery system because it looked only at the interactive on-demand capability, ignoring AT&T’s plans to offer scheduled cable programming like ESPN and CNN. William Durand, exec. vp of the New England Cable & Telecom Assn., said the DPUC erroneously based its ruling on the video delivery technology, rather than the service. Vallee and Durand said the DPUC decision created an unfair, illegal regulatory imbalance. NASUCA had invited AT&T and Verizon to speak, but they didn’t send representatives. Of various federal suits seeking to stop state regulator inquiries into allegations that telecom companies violated customer privacy rights by unlawful cooperation with federal intelligence-gathering operations, Shayana Kadidal of the Center for Constitutional Rights said states are right to resist “intelligence gathering operations in the guise of law enforcement.” He said broad telephone surveillance actually harms national security because “it diffuses efforts by putting attention on those who pose little or no threat.” He also said it made no sense for the govt. to invoke the state secrets privilege after the National Security Agency’s phone surveillance program became common knowledge. On the Missoula Plan, Doug Kinkoph, XO Communications regulatory vp, said the plan “is overly broad and based on a suspect political and legal foundation.” The plan aims to keep carriers whole by shifting access revenue reductions onto consumers and the federal universal service fund, he said: “It'll present consumers with a $7 billion bill.” It also will impair state jurisdiction over interconnection and prematurely deregulate transit traffic, he said. But Joel Shiffman of the Me. PUC staff called the plan “a reasonable but not perfect transition to the broadband world,” because it will eliminate arbitrary distinctions among jurisdictions and traffic types. Work is needed in some areas, like with “early adopter” states that moved to reform intercarrier compensation, he said. -- HK
The Progress & Freedom Foundation (PFF) released a report recommending FCC restructuring and sponsored a panel of lawyers and scholars who had other ideas on how to change the agency. “If you ask 50 telecom lawyers how to restructure the FCC, you'll get 50 answers,” said an audience member afterward. Sen. DeMint (R-S.C.), however, told the audience the chances of such change are small, given the changeover in congressional leadership.