FCC Suspends and Investigates NECA Special Access Rate Increase
The FCC is investigating a special access rate increase proposed by the National Exchange Carrier Association. “NECA’s tariff revisions raise substantial questions of lawfulness that require further investigation,” wrote Victoria Goldberg, acting chief of the Wireline Bureau Pricing Policy Division (http://xrl.us/bnos23). The division was responding to a request by AT&T to suspend the tariff, investigate and issue an accounting order.
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NECA said the 5.4 percent increase was in response to two events: Withdrawal from the NECA pool of 15 rate-of-return carriers affiliated with Consolidated, Frontier and Windstream; and Eastex’s reallocation of costs between jurisdictional cost categories. “The proposed rate increase still results in special access rates lower than those in effect prior to July 3, 2012,” NECA wrote in a tariff transmittal “description and justification” (http://xrl.us/bnos4i).
But the NECA filing “does not provide sufficient justification tying these events to its proposed rate increases,” AT&T argued in a petition for investigation (http://xrl.us/bnos3m). AT&T said the data NECA provided concerning the impact of the exit of the withdrawing carriers was “inconsistent with information those carriers have submitted in support of their own tariff filings.” And NECA’s tariff left out adjustments that could offset its increased special access rates with lower switched access rates, which “may otherwise be needed to avoid over-recovery,” the company wrote. “NECA essentially asks the Commission to approve on a stand-alone basis one small piece of a much larger complex and interrelated picture. The Commission should not adopt this piecemeal approach. ... These issues raise significant questions of lawfulness, reasonableness and just treatment of ratepayers."
The commission shared AT&T’s concerns. “For these reasons, we conclude that substantial questions of lawfulness of NECA’s F.C.C. Tariff No. 5, Transmittal No. 1358, exist that require further investigation,” the commission wrote. The agency suspended the rate increases while it instituted an investigation, the document said. “The specific issues that will be the subject of the investigation will be identified in an upcoming designation order and may include, but not be limited to, the issues identified in this paragraph."
"We disagree with AT&T’s arguments,” said Jeff Dupree, NECA vice president-government relations. “We believe the data we filed was reasonable and we're planning to work with FCC staff to resolve their concerns.” Dupree characterized the concerns as more of a “wide difference of opinion” than a question of lawfulness. “The only way you can really suspend and investigate a filing is if you identify ’substantial questions of lawfulness,'” which is the standard language the FCC has to use to suspend and investigate a filing, Dupree told us.
NECA argued to the FCC that the association’s revenue projections for the 15 withdrawing companies are “consistent with those filed by the companies themselves,” and represents “reasonable growth in special access revenue.” NECA said its estimate of the projected impact of Eastex’s cost re-categorization on the association’s revenue requirement was “also reasonable.”
NECA has five business days to file a supplement “reflecting the suspension,” and must “keep accurate account of all amounts received that are associated with the rates that are subject to this investigation,” the FCC said. The FCC has a five-month statutory deadline to conclude tariff investigations.