Tennessee to See New Access Charge Regime
Tennessee legislation that would bring interstate and intrastate access charges to parity was passed in the state’s Senate Commerce Committee and the House’s Commerce Subcommittee after a compromise was reached between a coalition of operators including AT&T and cooperatives and independent companies. The bill is expected to pass in the full House Commerce Committee vote soon, industry officials said.
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SB-598 would reduce the access rates paid by long-distance companies from an average of seven cents per minute to two cents per minute, bringing intrastate access rates in line with interstate access fees. Sponsored by the House and Senate Republican leaders, the proposal had a bipartisan mix of supporters and critics.
There’s broad support for the legislation, an AT&T spokesman said. It’s time to update the state’s telecom regulation to remove the outdated subsidies that some independent companies use to charge higher rates, he said. Research has shown that long distance prices would go down when access charges are reduced, he said. That would spur investment in new technologies, he said.
Access fees are a major revenue source for many small cooperative or independent companies in the state, said Larry Drake, executive director of the Tennessee Telecom Association. The legislation would endanger the financial stability of rural local exchange carriers and cooperatives, which in some cases, could be the only facilities-based wireline providers in their rural service areas, he said.
The bill, as introduced, proposed that the reduction be phased in over four years, but an agreement was reached to extend the time period to 2016. Meanwhile, critics of the legislation claimed it makes no sense to pass legislation when it may conflict with potential federal regulations, considering that the FCC’s currently considering a USF/intercarrier compensation revamp. But Tennessee’s proposal to bring access charges to parity is largely in line with the FCC’s rulemaking notice and the goals outlined in the National Broadband Plan, said Kelly Cobb, an executive director with American for Tax Reform. The state’s revamp wouldn’t preempt the FCC, he said. It would lend credence to the FCC’s recognition that access charges are “antiquated regulations that no longer reflect modern communications.” Tennessee has the opportunity to set a marker out as the FCC’s revamp moves forward, he said.