MOBILE CARRIERS, RURAL LECs DISPUTE WIRELESS TERMINATION TARIFFS

Nextel, T-Mobile USA and Western Wireless petitioned the agency last year to “reaffirm” that wireless termination tariffs weren’t the proper tool for creating reciprocal compensation arrangements for the transport and termination of traffic. Mobile operators frequently interconnect indirectly with a rural ILEC by exchanging traffic through an intermediate carrier, often a Bell company. Carriers that handle such indirect interconnections often hand off traffic under bill & keep arrangements, not interconnection pacts, for wireless-to-wireline traffic. Wireless carriers have argued that some rural carriers turn to wireless termination tariffs to bypass the negotiating process. Groups such as OPASTCO have contended that the Telecom Act established voluntary negotiations as the preferred means for creating reciprocal compensation arrangements between carriers, but the Act laid the responsibility for initiating such talks on the requesting carrier, not the ILEC (CD Oct 23 p5). Rural carriers say tariffs are filed to encourage negotiations, not bypass them.

Because the issues still are being dealt with at the bureau level, they haven’t yet bubbled up to the 8th floor and it wasn’t clear whether those questions would be part of a broader intercarrier compensation proceeding or would be dealt with separately, several sources said. In a recent flurry of FCC filings, both rural LECs and wireless carriers said some interconnection agreements were being signed, although wireless carriers had complained the low volume of traffic at issue could diminish the cost-effectiveness of such billing arrangements. Some carriers have underscored the urgency of the Commission’s acting soon on the wireless termination tariff because of what Verizon Wireless described in a recent filing as the “continued proliferation” of such tariffs.

AT&T Wireless told the FCC this month that state PUC activity on rural interconnection issues was “on the rise,” citing formal proceedings in more than 13 states. Wireless termination tariffs have been filed in at least 20 states, the carrier said. One concern AT&T raised about resolution of rural LEC/wireless interconnection issues on a state-by- state basis was the “cost and burden of resolving issues in multiple states and the risk of inconsistent results with multiple proceedings and arbitrations.”

The company asked the FCC to: (1) Rule wireless termination tariffs were illegal. It said they weren’t in line with Sec. 252 of the Act, which covered negotiation of interconnection agreements and FCC rules, which require that compensation between LECs and wireless carriers be reasonable and reciprocal. AT&T Wireless said rates covered under those tariffs usually were “significantly higher” than negotiated rates and didn’t provide for reciprocal compensation. It cited “practical problems” with the tariffs, including the extent to which notice wasn’t provided and the difficulty in challenging them. AT&T said they provided a disincentive for rural LECs to negotiate. (2) Act on a separate petition by Sprint by affirming that a carrier could have disparate rating and routing points. In line with FCC rules, “the Commission should also affirm that carriers only need to have one point of interconnection per LATA and the originating carrier bears the cost of transporting intraMTA [Major Trading Area] calls to the point of interconnection.” (3) Affirm that all intraMTA calls between a wireless carrier and a LEC were subject to transport and termination at TELRIC rates “to the extent carriers are not receiving other intercarrier compensation, regardless of what entity carries the calls.” AT&T Wireless said that would let rural LECs continue to use IXCs for land-to-mobile traffic if they chose, avoiding a state PUC policy issue on whether a rural LEC was providing service beyond its local territory. That also would let wireless carriers receive compensation for terminating land-to-mobile calls.

States that already have approved local wireless termination tariffs include Ala., Mo., Okla. and Wash., a source said. The Ala. PSC allowed a wireless termination tariff to take effect June 1. The Wash. Utilities & Transportation Commission (WUTC) recently allowed a local wireless termination tariff filed by CenturyTel to move forward. The Colo. PUC has scheduled a hearing before an administrative law judge on a similar CenturyTel tariff for Sept. Nextel recently highlighted for the FCC what it said was a conflict between the WUTC decision to let the tariff take effect and the Colo. PUC action to suspend the CenturyTel tariff and hold a hearing. Nextel said those 2 “contrary” decision on the same tariff filing “demonstrate the need for Commission action” in that area.

But CenturyTel told the FCC that the WUTC staff ultimately found its tariff met its obligation to make reciprocal compensation arrangements for transporting and terminating local traffic, “without precluding negotiation or arbitration as provided for in the Communications Act.” CenutryTel said in a July 11 filing that Wash. regulators initially shared some of the same concerns as were raised by wireless carriers, but ultimately let the tariff take effect. CenturyTel said the WUTC staff rejected arguments that the tariff wasn’t cost-based, concluding that the company hadn’t refused to negotiate and had proposed to charge the tariffed rate only when a wireless carrier “casually originated or terminates traffic, not otherwise subject to an agreement between the parties.” CenturyTel also said staff found the tariffs didn’t preclude reciprocity.

“States are doing this and they don’t have authority over wireless rates,” an industry source said. “A lot of it is getting slipped by in a tariff proceeding and there’s no notice to anybody. It would be great if the FCC could be rule on this and clarify that they are clearly illegal on their face.” Several sources said it wasn’t clear whether the FCC would address the wireless-rural LEC intercarrier compensation issues on a standalone basis or as part of broader issues on carriers’ paying one another for exchanging traffic. The Commission has been weighing the idea of making intercarrier charges more uniform to replace a patchwork of compensation regimes, including reciprocal compensation and access charges. One industry source said the wireless industry hoped that if the FCC ruled on the CMRS-rural LEC issues first, they could provide a test run for using bill-&- keep arrangements to replace legacy intercarrier compensation schemes.

While both rural LECs and wireless carriers point to interconnection agreements they have reached voluntarily, in other cases they also disagree on how difficult it is to get both sides to the table to work out such pacts. Besides questioning the legal footing of wireless termination tariffs, wireless carriers contend they are higher than negotiated rates. But some rural LECS have said a hurdle to obtaining payment for terminating wireless traffic has been that a 3rd-party carrier does tandem-switching for the mobile operator but doesn’t always forward call origination information to the LEC terminating the call. “The LECs are in some cases not getting paid,” a wireless industry source said. “They [rural LECs] argue that we won’t come to the table and negotiate with them. It’s they who won’t come to the table and negotiate with us and they say that they need to file these termination tariffs to get us to pay them.” Many of the legacy settlement arrangements in which a Bell company acts as a 3rd party for transiting traffic between a rural LEC and a wireless carrier are one-way arrangements, rather than reciprocal, the source said.

For their part, rural LECs simply don’t want the FCC to intervene in PUC decisions on wireless termination tariffs, another source said. “States clearly have authority,” the source said. A fundamental problem is that the Communications Act doesn’t explicitly require wireless carriers to negotiate interconnection arrangements with wireline companies when older arrangements expire, the source said. For wireline traffic that is interexchanged, if a renegotiation agreement isn’t reached on legacy arrangements between a CLEC and an ILEC, arbitration kicks in to reach a resolution, the source said. But without such safeguards for wireless-landline traffic, “wireless carriers simply send traffic and, without an agreement, the wireline carrier is stuck. If there’s no compensation arrangement in place, the wireless carrier really has the wireline carrier over a barrel,” the rural source said. Such scenarios provide little incentive for wireless carriers to renegotiate interconnection pacts, the source said. “Why should they when they are getting it for free,” the source said.

While contending that wireless termination tariffs are unlawful, Verizon Wireless told the FCC that rural and other ILECs were “unlawfully avoiding reciprocal compensation obligations, undercutting one of the Telecom Act’s key goals.” It said mobile operators were paying access rates and “in most cases not receiving any reciprocal compensation for intraMTA traffic.” It said: “Rural LECs are refusing efficient indirect interconnection unless access rates apply.” Part of the solution, Verizon Wireless said, would be for the FCC to conclude that traffic to or from LECs and wireless carriers that originated or terminated in the same MTA “is local and subject to reciprocal compensation unless it is carried by an IXC.” It also said LECs had an obligation to deliver traffic to wireless providers without charge within an MTA, subject to LATA restrictions.