ROW REPORT SPARKS CONTROVERSY AT NARUC SUMMER MEETING

Report said access to rights-of-way on streets, roads and other public lands had become major issue as emergence of Internet, exploding demand for data services and growth in telecom competition had led to increased demand for access to public rights-of-way. It said rising demand had led to need for policies that allowed carriers to gain access to ROW in timely manner and at reasonable rates and terms while also accommodating local govts.’ duty to manage their rights-of- way in public interest. To help with development of appropriate ROW policies, report: (1) Offered model legislation on rights-of-way management. (2) Suggested compilation of exemplary best practices in right-of-way administration by states and localities as resource for other govt. units confronting ROW issues. It also called for changes in FCC right-of-way policies to: (1) Speed resolution of ROW disputes brought to agency. (2) Develop and promote model processes for timely access to public ROW. (3) Promote adoption of best practices by state and local govts. (4) Track and publish current assessments for ROW access. Study committee included representatives of states, industry, municipalities.

Although NARUC Telecom Staff Subcommittee advanced resolution commending study group’s effort, many states said they wanted it made clear in resolution and in final text of report that its content in no way reflected official NARUC policy and didn’t carry its endorsement. Resolution ended up commending work and urging that any parties with interest in ROW issues and their effects on telecom review report, but also said NARUC didn’t endorse report’s content or conclusions. To further assure it wouldn’t be taken as official NARUC policy, study group representative John Mann of Fla. PSC staff agreed to include on final report’s title page disclaimer that it represented work product of study committee but not official view of NARUC.

During debate, local govt. and industry representatives clashed over options for ROW fees offered in model legislation. Local govt. interests wanted inclusion in report of language, based on Kan. and Ore. statutes, allowing for fees based on economic value of property rights within rights-of-way, such as annual fee equal to percentage of gross receipts, in addition to cost-based fees. Incumbent telcos and CLECs joined to object, saying inclusion of such language could be read as support for local ROW fees that were above cost. Localities balked at panel members’ suggestion that their position could be aired in supplemental comments attached to report but not part of it. States’ participation in debate over content was limited because many on staff subcommittee hadn’t had chance to read lengthy report. Despite clash over fees, local govts. and industry said report represented important step toward resolving telecom ROW issues. ROW report and resolution relating to it were expected to be addressed again by full Telecom Committee in sessions this week.

NARUC meeting also saw proposed telecom policy resolutions advanced by staff subcommittees on telecom and consumer affairs. Telecom staff panel advanced resolution urging FCC to keep in mind in all relevant broadband dockets that broadband users should have right to unrestricted access to Internet content. Resolution suggested that any attempts by broadband access providers to steer users toward favored content or block access to content they didn’t favor could harm free and open online information exchange. Telecom staff also backed resolution urging FCC to change its number portability policies to give states authority to require that facilities-based rural local exchange providers implement local number portability and thousand-block number pooling in order to conserve phone number supply. FCC policy now doesn’t allow imposition of number portability and pooling requirements on rural carriers solely to conserve phone numbers, but resolution said that policy had led to unnecessary stranding of numbers and had created unnecessary barrier to competition.

Consumer Affairs staff advanced resolutions: (1) Urging FCC to establish minimum income eligibility standards for Lifeline service and to require automatic enrollment. (2) Asking FCC to explore ways for wireless customers to reuse or recycle their phones when they changed carriers and to encourage wireless carriers to implement local number portability as soon as possible. (3) Setting forth general principles for customers’ telecom billing rights, including rights to disclosures, choices, privacy, safety, accuracy and nondiscrimination in billing. (4) Urging FCC to consider impact on universal service before imposing any new or increased flat-rate charges, and to conduct cost analysis of its most recent increases in federal subscriber line charge. Consumer Affairs staff tabled resolution urging wireless carriers to hire sufficient staff to address problems of billing and service quality and encouraging states to resolve wireless service and billing problems. But that issue is likely to be taken up again by full Consumer Affairs Committee later this week. -- Herb Kirchhoff

NARUC Notes…

FCC Comr. Copps told NARUC that telephone and broadband services had important role in global struggle to lift people above subsistence level. “Telecom is not one of life’s little luxuries but a tool for opening the door to decent living for the world’s citizens,” Copps told NARUC International Relations Committee at NARUC summer meeting. He said he had been working to give international telecom issues higher profile at FCC as being critical to fostering global community. He said neglecting global community could have tragic consequences, as events of Sept. 11 proved. Vast majority of regulators around world, he said, share issues in common with FCC and U.S. state commissions including on narrowing digital divide, protecting consumers from fraud and other abuses, managing convergence and transition from closed to open systems, and encouraging infrastructure investment. Copps said U.S. and global regulators should engage in dialog to share their successes and shortcomings in addressing issues they all face. Wise telecom regulation can lay foundation for economic growth but effective regulation requires regulatory agency that’s independent of politics and industry, has clear authority to make and enforce policies, has qualified and independent staff, and open, transparent policymaking processes. Telecom, along with energy and transportation, is one of the “great enablers” of prosperity worldwide, Copps said. Troubles facing WorldCom and other telecoms in U.S. and other countries have created irrational investor pessimism about industry, he said. Eventually, investment will return to telecom, he said, but it will flow to countries with sound telecom policies that encourage innovation and economic growth.

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David Dorman, AT&T chmn. and CEO-designate, commended state regulators for adopting procompetitive policies that now are starting to pay off for consumers in form of millions of dollars in savings on their local phone bills. But at NARUC conference Mon., he said states and FCC could do more if they required Bell companies to implement fully electronic methods for switching local phone customers. Dorman said Bell companies inevitably would have to undergo same sort of painful metamorphosis that AT&T did in wake of 1984 long distance market opening in order to remain healthy in competitive local and long distance marketplaces. He said Bells’ reliance on their near-monopoly position in local markets wasn’t viable business model, given growing inroads by competitors using unbundled network elements (UNEs) and other paths. “We aren’t the same company we were 20 years ago,” he said, and Bells won’t be same 20 years from now if they mean to survive. Dorman said at some point Bells like AT&T would have lost enough retail market share to start considering wholesale services as valuable business opportunity. “That just won’t happen with a 98% local market share,” he said. Dorman said state regulators’ unbundling and pricing policies had allowed carriers such as AT&T reasonable chance to make money. He said AT&T entered local markets in Ill., Mich., N.Y. and other states after state commissions reduced UNE prices, and said he expected to have AT&T local service to be available to half of all Bell-served households in U.S. by year-end. He said competitive entry forced Bells to respond in 2 ways, by cutting rates and improving service, and by pressing “shameless” campaigns in states and in Washington for protection from same industry trends and economic forces that every other telecom player must suffer. Dorman urged states and FCC to facilitate local competition by streamlining local carrier changeover process through concept of electronic loop provisioning (ELP), which would make local carrier changeovers as fast, cheap and seamless as changing IXCs is today and do away with current cumbersome and error-prone changeover process. He said FCC and states would drive implementation of ELP not only to promote competition but also to permit voice and data traffic to converge efficiently on next-generation packet-switched networks. He said Bell companies would benefit as much as competitors if ELP were implemented. Responding to questions, Dorman said financial troubles of WorldCom and other telecom players reinforced AT&T’s belief that balance- sheet strength and investment-grade credit rating were as important as marketing and sales for telecom companies that wanted to remain viable players. “We've been scrupulous in our financial reporting. We've been criticized for selling assets to pay down debt, but now we have the strength to keep fighting another day while others haven’t fared so well,” he said.