JUDGES QUESTION ASCENT COMPLAINT AGAINST FCC RESALE RULE
Panel of U.S. Appeals Court, D.C., judges seemed to have mixed views after hearing arguments Fri. about legality of FCC rule that exempts certain advanced services from Telecom Act requirement that ILECs must offer resale discounts to CLECs. Association of Communications Enterprises (ASCENT), representing CLECs, asked court to review decision by FCC last year that said ILECs didn’t have to offer discounts if CLECs planned to resell those advanced services to ISPs for use as part of ISPs’ service offerings.
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Judge Douglas Ginsburg indicated some sympathy for FCC’s view that when CLECs resold those services to ISPs, it wasn’t retail transaction and thus original ILEC sale could be exempted from discount obligations of Sec. 251 of Telecom Act. FCC attorney Rodger Citron said point was simple: CLECs weren’t reselling these advanced services directly to end users but instead to ISPs who used services as “input component” of their own retail offerings. For that reason, ILECs don’t have to discount them in first place, he said.
However, Ginsburg, most active questioner, also seemed somewhat swayed by ASCENT attorney Charles Hunter’s argument that CLECs theoretically could resell those advanced services directly to corporate end users on retail basis from same ILEC tariff, so FCC couldn’t place across-board exemption on them. In response to questions by judges, Hunter and Citron said they didn’t know of any specific data showing how many corporate users were buying such resold services from CLECs. At issue are DSL services, mainly, and Citron said they would have to be companies with more than 250 lines. He also said corporate customers would have to provide their own support functions. Citron said services in question were basically designed by ILECs to sell DSL services to ISPs. “That’s the way the tariffs are written” so it’s “unlikely” that non-ISPs would use the services, he said. If trend developed of CLECs’ wishing to sell to corporate customers from those tariffs, FCC could revisit issue, he said.
Hunter also warned that exempting services that CLEC customers used as “component” of their own service could be “slippery slope” leading to exemptions for all sorts of business customers. Payphone and voice mail providers also use telecom services as part of their own offerings to end users, he said, as do pizza delivery and check verification services. Hunter said ILECs had been refusing to offer those advanced services on discounted basis to CLECs with ISP customers because of FCC rule. He said FCC was “drawing arbitrary distinctions” by saying the services couldn’t be provided to ISPs but could be to other businesses. Ginsburg indicated he didn’t completely buy that argument, which he said “seems vanishingly thin.” Judges Stephen Williams and Judith Rogers also were on panel.
Ginsburg said he didn’t find it “troubling” to allow exemption for CLEC sales to ISP customers but “the question is when a non-ISP buys the service.” Citron said ILEC tariffs were designed for sale of DSL services to ISPs and idea of corporate customers’ buying those services directly was “mere possibility” at this point. However, Hunter said, FCC didn’t draw that distinction in calling for exemption.