States Think Time is Ripe to Fix Intercarrier Compensation

The current version of the NARUC proposal incorporates elements from several of the plans proposed by industry groups, plus some new ideas, into a plan that would unify compensation by jurisdiction, by paying carrier, and by technology. It would permit states to opt into a new national system of uniform rates, and would substantially reform universal service mechanisms in light of proposed ICC changes that would alter the current balance between explicit and implicit universal service support.

The resolution acknowledged the states aren’t in agreement on some key ICC reform issues, such as whether to retain an originating access charge, but urged that the FCC study the areas of consensus already reached in the NARUC Task Force proposal “while discussions continue on this proposal in an attempt to reach a still-broader consensus on key issues.”

State staffers at the meeting Sun. -- noting NARUC in May had agreed on a set of ICC policy principles the FCC should consider if it were to take up ICC reform -- but said this resolution goes further. During the discussion, all the states seemed to agree the current ICC structure is collapsing because of technology and market changes, and it’s no longer possible to put off fundamental reform. They said the FCC’s further NPRM offers an opportunity to thoroughly reform the system.

“In May, we said that if you want to fix the system then you should follow these principles,” said one staffer after the Sun. meeting. “Now we are saying that it’s time for action to fix the system and that we have some suggestions for how.” The resolution will be taken up by the full Telecom Committee this (Tues.) afternoon and if passed would go to the NARUC board tomorrow (Wed.) for ratification as official policy.

The telecom staff subcommittee also advanced a Telecom Act resolution to establish a legislative task force “in anticipation of efforts to amend existing federal telecommunications law in response to the evolving telecommunications marketplace” and outlining the state policy positions the task force should advocate as Congress considers a Telecom Act rewrite.

The resolution said “a meaningful state role must exist, notwithstanding the jurisdictional nature of any technology, when there are substantial state interests in the policies that substantially affect consumers within their jurisdictions, and that implicate state public health, safety, welfare and fiscal issues.” It said any federal statutory reform should consider the relative knowledge, expertise, interests and resources of the states and FCC when assigning regulatory functions.

Areas where the resolution said the states and FCC share a regulatory interest include protection of consumer rights, 911, some aspects of transmission, deployment of new technologies and availability of advanced services, numbering, interconnection, use of wholesale and retail market power, universal service and service quality. It included a list of specific issues within these broad areas where the states have substantial interests. The resolution acknowledged that traditional economic and common carrier regulations may not be appropriate for new types of providers. It said federal statutory reform “should recognize and preserve the states’ unique abilities to ensure their core public interests while also respecting the need for nationally applicable rules where necessary or appropriate.” This resolution also was scheduled for Telecom Committee consideration today.

The Telecom Committee adopted Mon. a numbering resolution advising the FCC that a request by the U.S. Dept. of the Navy for assignment of the 366 area code as a nationwide code overlay for all Navy personnel and facilities raises major policy and technical issues that need to be addressed. It said the Navy’s request for a decision by May doesn’t allow enough time for full consideration of the concerns raised by this proposal. The resolution said if the Navy isn’t willing to wait for several months while concerns are addressed, its application should be dismissed.

The resolution said this request could affect number portability, intercarrier compensation, 911 systems, dialing patterns and number supplies. If granted, the Navy request also could set a precedent for other nongeographic based entities to seek their own national area codes, which could hasten area code and number exhaustion. The resolution suggested the parties explore alternative ways to achieve the telephone efficiencies and cost savings that prompted the Navy to seek its own area code.

NARUC’s Consumer Affairs Committee adopted a resolution urging the FCC to act quickly to delineate the specific role state commissions will have in managing VoIP consumer issues. The resolution said VoIP penetration is increasing and offers the promise of promoting more telecom competition. But it said “an appropriate regulatory balance between the FCC and states is critical if the industry is to prosper and consumers are to benefit.” The resolution said the FCC in its Vonage order acknowledged that states have a vital role in VoIP consumer protection, and noted states already are receiving complaints about VoIP service problems. It reminded the FCC that the state commissions, with their “vast expertise” in consumer protection, are in the best position to investigate and resolve consumer-related issues such as billing, business practices and frauds. The resolution was forwarded to the NARUC board.

Meanwhile, FCC staff members told NARUC’s Telecom Committee that the Wireline Bureau expects to act by the end of the month on reforms of the process for designating eligible telecom carriers for universal service subsidies, staff members told NARUC’s Telecom Committee. The bureau also expects this spring to release an order on reforms to the Universal Service Administrative Corp. (USAC) to improve efficiency and deter abuses. Just before Carver spoke, USAC Administrator Lisa Zaina told the telecom panel her agency plans to conduct 700 audits of universal service funding recipients this year as part of the effort to eliminate fraud and abuse in the programs. She said plans call for 250 audits of schools and libraries program participants, 250 of high-cost fund recipients, 100 of low-income programs and 100 of rural health care programs. She said USAC is soliciting bids for an auditing firm, and has hired a firm to conduct 1,000 site visits this year to inspect locations where universal service funds are going.

John Muleta, Wireless Bureau chief, said that in addition to the wireless merger reviews, the bureau hopes to achieve 95% coverage of the Phase II wireless E-911 location system that pinpoints a caller’s location within a cell. Consumer Bureau Chief Dane Snowden said the bureau handled a 33% increase in consumer contacts in 2004, and was able to return to consumers $7 million in refunds, including $800,000 in slamming restitution. He said the slamming restitution represented a 300% increase over 2003’s figure. He said the bureau will monitor the transition from traditional voice/text deaf relay services to video relay services, made possible by the spread of broadband service. He said his bureau also plans in late spring to release truth-in billing and customer records exchange orders that hopefully will produce major reductions in slamming complaints. Dave Solomon, Enforcement Bureau Chief, said the bureau collected $28 million from enforcement during 20043, or about double what it got in 2003. He said the bureau also succeeded in collecting $20 million in delinquent universal service contributions in 2004.