Rate-of-Return Carriers’ Operating, Capital Recoveries to Be Capped under FCC Order, Official Says
Rate-of-return carriers would be subject to recovery caps on capital and operating expenses from July 1, 2012, under FCC Chairman Julius Genachowski’s universal service reform order, a telecom official told us Friday. The commission would use a regression analysis to come up with a formula for the caps initially, but will publish a further rulemaking notice seeking comment on how to structure cap formulas, the official said. A revised draft of the order was expected to circulate among commissioners and their aides late Friday.
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Rate-of-return carriers would also be subject to a $3,000 per line, per-year cap on universal service recovery under Genachowski’s plan, the telecom official said. Word has been trickling out through the week on the contents of Genachowski’ 400-plus-page order and industry officials are worried. Despite Genachowski’s assurance that he would not “rubber stamp” any sector’s proposal, his plan largely lifts from the incumbent-backed ABC plan, telecom and FCC officials have told us. His departures from the ABC plan, however, have been significant enough that no one in industry has been willing to speak out in favor of the order (CD Oct 13 p3).
Architects of the ABC plan were scheduled to talk to Zac Katz, Genachowski’s top wireline aide, over the weekend, lobbyists said. The ABC plan advocates were hoping to alter what they consider to be some of the most objectionable parts of the plan, the lobbyists said. An FCC spokesman didn’t respond to an email seeking comment.
Genachowski’s staff has told industry officials that it’s gratifying that industry is united in its concerns about the order, telecom officials have told us. The question, though, is whether anyone supports it. State groups have condemned it roundly as a free gift to AT&T and Verizon because it preempts state authority and reduces intrastate rates from day one; consumer groups have condemned it because it passes the burden of lower intercarrier compensation rates onto customers without securing guarantees from the incumbents.
Consumer groups were briefed on the order last week. Staff told the advocates that the order would not increase the subscriber line charges and instead create an explicit “access recovery charge,” a telecom lobbyist told us. The advocates saw that as a step in the right direction, but still weren’t ready to sign off on the plan, the lobbyist said. That’s in part why the advocates weren’t sure whether the customer “benefits” being promoted by Genachowski and his staff were reduced customer costs or “increased value,” such as increased minutes of usage, the lobbyist said.
Speaking before the telecom committee of the U.S. Chamber of Commerce on Friday, Genachowski said he was confident that his order met his goals of reforming the system and expanding broadband. He said that his staff put together the order after “an open and fact-based process and a great deal of productive input from my fellow Commissioners and many stakeholders.” He “couldn’t be more pleased by the engagement we've seen,” Genachowski said.
In May, Genachowski all but ordered industry to come up with a reform package (CD May 20 p1). Some telecom lobbyists involved in drafting the ABC plan wondered aloud last week whether all their efforts were worthwhile.