3 FCC COMMISSIONERS SHARE COMPETITION POLICY VIEWS AT NARUC

FCC Comr. Copps, speaking on competition policy, said Telecom Act was far from perfect but also far from flop. While economic, financial and regulatory uncertainties facing competitive telecom industry have prompted some incumbents to label telecom competition failed experiment, Copps said, “the announcements that competition is dead are premature” and competitors still are in there fighting. But he said competition did need some attention to remain viable. He said FCC should open new proceeding aimed at avoiding major industry disruptions and consumer harm when telecom providers fail. Commission should consider how best to use its current authority to reduce chance that accounting irregularities, marketplace misdeeds and corporate mismanagement will injure consumers, Copps said. He suggested FCC consider expanding its accounting rules and start its own data collection and independent analysis rather than relying on industry’s reports.

New proceeding also should establish concrete plan for protecting consumers in event their carrier ceased operation or otherwise disrupted service, Copps said. Lastly, he said FCC proceeding should examine what additional authority it might need to do its job. He cautioned against using current distressed situation in telecom as excuse to back away from competition. “Re-monopolization is exactly the wrong prescription for the industry and the wrong medicine for consumers.”

Copps said FCC had competition policy decisions pending on broadband, UNEs and other issues that “could fundamentally remake the telecom landscape.” Competitive telecom revolution, he said, is “alive and strong enough to power the new economy of the 21st Century,” and promised advances that would make last century pale by comparison. “I hope NARUC will be leading the charge. We'll need unparalleled cooperation to do what we must to safeguard the public interest.”

FCC Comr. Abernathy, speaking on universal service policy, said Commission had been presented with various alternative proposals for further reform of universal service contribution system to ensure long-term viability of program in competitive marketplace. She said proposals attempted to address distortions created by declining interstate revenues, coupled with rise of wireless services, new kinds of competitive carriers and offerings of bundled packages that blurred traditional distinctions on which present funding system was built. “We know it can’t continue as it is today, but where do we go? We want input from our state colleagues. This is a problem we share and it won’t go away.”

FCC Comr. Martin, speaking on broadband policy, cited statistics showing 2/3 of U.S. households had cable modem or DSL service available, but only 10% actually subscribed. He described FCC’s major pending broadband policy proceedings that would affect advanced services and providers. He said they all shared common policy goals of encouraging ubiquitous broadband availability, promoting competition, imposing minimal regulation and removing legal barriers and regulatory impediments. Martin said FCC in its broadband proceedings should follow coordinated approach under unifying principles rather than “firefighting” in multiple proceedings. He said some of proceedings threatened to drag on. “We need to reach decisions on these things, to relieve the uncertainty. My personal preference is to see most of them resolved within a year or less.”

Other policy panel speakers included Cheryl Parrino, CEO of Universal Service Administrative Corp., who described recent universal service program trends. She said there had been some decline in revenue base over last couple of quarters and in receipts. On disbursement side, she said, there’s been fourfold boost in high-cost support paid to competitive eligible telecom carriers (CETC) over last 2 years, even though amount they collectively receive is only small part of total fund payments.

Nan Thompson of Alaska Regulatory Commission said CETCs had had impact on incumbent rural carriers and on rural customers, bringing new services, more choices and lower rates, but it remained to be seen whether advent of CETCs would cause rural incumbents to withdraw from marketplace. W.Va. Consumer Advocate Bill Jack Gregg said FCC had done things to universal service system to make it more consistent with competition, such as making support portable, explicit, targeted. But there still are important unresolved issues, he said, such as whether all lines in high-cost areas required support.

Edward Young, Verizon senior federal policy vp, said national telecom policy should “reflect symmetry between telephone and cable in advanced services.” He said there were 2.2 million cable telephony subscribers, and current regulation heavily favored cable’s phone services. He said competition came not only from cable but also wireless carriers, e-mail, instant messaging and online chats. Young said 20% of wireless subscribers considered their mobile phone as their primary line, and consumers in Verizon states had saved $1.8 billion due to open competition. Because there are many types of viable competitors out there, Young urged FCC to eliminate switching, high-capacity loops and dedicated transport as unbundled network elements (UNEs) and transition away from availability of UNE platforms. He said Verizon wanted to continue providing competitors with wholesale access to its networks, “but when it comes to providing advanced services over our networks, we want to get a fair market price for access.”

CompTel Pres. Russell Frisby disagreed with Young’s call to reduce UNEs and phase out UNE-P. Instead, he said UNE and UNE-P rates should be cut. He said N.Y. saw increase in competition after UNE rates were cut. He also suggested FCC suspend its triennial UNE review and certain broadband proceedings until performance measures for provisioning of UNEs and special access circuits had been determined. That would help bring more certainty to industry, Frisby said. If current UNE rules were substantially changed, he said, competitors in current investment climate would find it nearly impossible to raise capital necessary to replace UNE and UNE-P with their own facilities and would be forced to exit marketplace. -- Herb Kirchhoff

NARUC Notebook…

NARUC’s Finance & Technology Committee adopted policy resolution asking FCC to “immediately” terminate proceeding that proposes sunsetting Commission’s current regulatory accounting rules. Resolution said: (1) Elimination of certain FCC accounting rules and reporting requirements would “further exacerbate market uncertainty arising from financial accounting irregularities” such as WorldCom’s. (2) FCC’s Part 32 accounting rules and its ARMIS reports should be retained so long as state commissions needed them. (3) FCC’s uniform accounting and reporting requirements had “proven invaluable to states in monitoring the financial and operational performance” of telecom carriers. (4) FCC should set up federal-state joint conference on accounting to review adequacy and effectiveness of current regulatory accounting safeguards. Resolution must be approved by NARUC’s board before becoming official NARUC policy.