FCC CLAMPS DOWN ON SIZE OF CLEC ACCESS CHARGES
In attempt to resolve dispute between long distance providers and CLECs, FCC Fri. placed limits on how much CLECs could charge long distance companies for access to customers. In news release, agency agreed with long distance companies that “certain competitive LECs had used the [tariff rate system] to impose excessive rates for access service.” Issue has been boiling for at least one year, with AT&T, for example, refusing to pay some CLEC access charges because they are so much higher than rates charged by ILECs for same service.
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FCC said CLECs could charge only up to Commission-set benchmark, starting at 2.5 cents per min. for first year, moving to 1.3 cents in 2nd year and 1.2 cents in 3rd year. After that, rate can’t be more than access rate charged by ILEC operating in same geographic area. FCC emphasized that “competitive LEC is always permitted to tariff access rates equal to those of the incumbent LEC with which it competes.” Agency said CLEC could charge more than benchmark rate only if long distance carrier agreed to higher rate in negotiations.
Agency also made it clear that long distance companies were obligated to exchange traffic with CLECs if access services were tariffed at or below benchmark rate. Commission said it was necessary to clarify that requirement because some long distance carriers had threatened to refuse to serve end users that subscribed to competitive LECs charging rates considered excessive.
FCC gave less stringent treatment to CLECs in rural areas, saying it was mindful of “need to encourage competition in rural areas and the unique difficulties faced by rural competitive LECs.” Those CLECs will be allowed to tariff at higher access rates used by National Exchange Carrier Assn. FCC also called for further comment on whether different benchmark mechanism should apply to CLEC access services for toll-free traffic. In general, agency said it decided that “tariffing excessive rates inappropriately shifts onto the long distance market a substantial portion of the competitive LECs’ costs, thus potentially increasing long distance rates.” Comr. Furchtgott-Roth dissented in part and concurred in part. He said he would issue statement later.
AT&T Vp Leonard Cali said order was good because it validated company’s argument that “some CLECs have been attempting to charge excessive and unjustified rates for switched access.” However, decision still “leaves CLEC access rates too high for too long,” he said. “Further actions may be necessary.”
Agency released 60-page order on CLEC access charges (CC Doc. 96-262) at same time it announced decision. It also released 2 related documents Fri., both voted on at agenda meeting last week: (1) Reciprocal compensation order (CC Doc. 99-68). (2) Notice of Proposed Rulemaking on intercarrier compensation (CC Doc. 01-92).
Agency was somewhat tougher on CLECs in order, saying “our goal in this process is ultimately to eliminate regulatory arbitrage opportunities that previously have existed with respect to tariffed CLEC access services.” Complaints filed by AT&T, Sprint and WorldCom showed CLEC charges ranged from 0.4 cents per min. to 9.5 cents per min., FCC said. Agency emphasized that its approach continued to allow carriers to “enjoy the convenience of a tariffed service.” Order said both CLECs and long distance providers had said “their transaction costs would rise substantially if they were required to negotiate the terms on which they exchange access traffic.” The order also permits CLECs to charge more if long distance company agrees to that rate in negotiations. Agency gave example of when higher rates might be agreed upon: “If a particular CLEC provides a superior quality of access service, or if it has a particularly desirable subscriber base, one or more IXCs may be willing to pay rates above the benchmark.”