[Federal Register Volume 76, Number 154 (Wednesday, August 10, 2011)]
[Proposed Rules]
[Pages 49401-49408]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-20322]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Parts 36, 54, 61, 64, and 69
[WC Docket No. 10-90; DA 11-1348]
Universal Service--Intercarrier Compensation Transformation
AGENCY: Federal Communications Commission.
ACTION: Proposed rule.
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SUMMARY: In this document, the Federal Communications Commission
(Commission) seeks targeted comment on certain issues in the Universal
Service--Intercarrier Compensation Transformation proceeding. The
Commission has received several proposals in the record in this
proceeding to which we would like to receive comment from interested
parties. This opportunity for additional, targeted comment will
facilitate comprehensive universal service and intercarrier
compensation reform.
DATES: Comments on the Pubic Notice are due on or before August 24,
2011, and reply comments are due on or before August 31, 2011.
ADDRESSES: You may submit comments, identified by WC Docket Nos. 10-90,
07-135, 05-337, 03-109; GN Docket No. 09-51; CC Docket Nos. 01-92, 96-
45, by any of the following methods:
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments.
Federal Communications Commission's Web Site: http://fjallfoss.fcc.gov/ecfs2/. Follow the instructions for submitting
comments.
People with Disabilities: Contact the FCC to request
reasonable accommodations (accessible format documents, sign language
interpreters, CART, etc.) by e-mail: [email protected] or phone: (202)
418-0530 or TTY: (202) 418-0432.
For detailed instructions for submitting comments and additional
information on the notice process, see the SUPPLEMENTARY INFORMATION
section of this document.
FOR FURTHER INFORMATION CONTACT: Katie King, Telecommunications Access
Policy Division, Wireline Competition
[[Page 49402]]
Bureau, (202) 418-7400, Daniel Ball, Pricing Policy Division, Wireline
Competition Bureau, (202) 418-1520 or Sue McNeil, Auctions and Spectrum
Access Division, Wireless Telecommunications Bureau at (202) 418-0660,
or TTY: (202) 418-0484.
SUPPLEMENTARY INFORMATION: This is a synopsis of the Public Notice in
WC Docket No. 10-90, GN Docket No. 09-51, WC Docket No. 07-135, WC
Docket No. 05-337, CC Docket No. 01-92, CC Docket No. 96-45, and WC
Docket No. 03-109, DA 11-1348 released August 3, 2011. The complete
text of this document is available for inspection and copying during
normal business hours in the FCC Reference Information Center, Portals
II, 445 12th Street, SW., Room CY-A257, Washington, DC 20554. The
document may also be purchased from the Commission's duplicating
contractor, Best Copy and Printing, Inc., 445 12th Street, SW., Room
CY-B402, Washington, DC 20554, telephone (800) 378-3160 or (202) 863-
2893, facsimile (202) 863-2898, or via the Internet at http://www.bcpiweb.com. It is also available on the Commission's Web site at
http://www.fcc.gov.
Pursuant to Sec. Sec. 1.415 and 1.419 of the Commission's rules,
interested parties may file comments and reply comments on or before
the dates indicated on the first page of this document. Comments may be
filed using: (1) The Commission's Electronic Comment Filing System
(ECFS); (2) the Federal Government's eRulemaking Portal; or (3) by
filing paper copies. See Electronic Filing of Documents in Rulemaking
Proceedings, 63 FR 24121, May 1, 1998.
Electronic Filers: Comments may be filed electronically using
the Internet by accessing the ECFS: http://www.fcc.gov/cgb/ecfs/ or the
Federal eRulemaking Portal: http://www.regulations.gov. Filers should
follow the instructions provided on the website for submitting
comments.
[cir] For ECFS filers, if multiple docket or rulemaking numbers
appear in the caption of this proceeding, filers must transmit one
electronic copy of the comments for each docket or rulemaking number
referenced in the caption. In completing the transmittal screen, filers
should include their full name, U.S. Postal Service mailing address,
and the applicable docket or rulemaking number. Parties may also submit
an electronic comment by Internet e-mail. To get filing instructions,
filers should send an e-mail to [email protected], and include the following
words in the body of the message, ``get form.'' A sample form and
directions will be sent in response.
[cir] Paper Filers: Parties who choose to file by paper must file
an original and four copies of each filing. If more than one docket or
rulemaking number appears in the caption of this proceeding, filers
must submit two additional copies for each additional docket or
rulemaking number.
Filings can be sent by hand or messenger delivery, by
commercial overnight courier, or by first-class or overnight U.S.
Postal Service mail (although we continue to experience delays in
receiving U.S. Postal Service mail). All filings must be addressed to
the Commission's Secretary, Office of the Secretary, Federal
Communications Commission.
[cir] All hand-delivered or messenger-delivered paper filings for
the Commission's Secretary must be delivered to FCC Headquarters at 445
12th St., SW., Room TW-A325, Washington, DC 20554. The filing hours at
this location are 8 a.m. to 7 p.m. All hand deliveries must be held
together with rubber bands or fasteners. Any envelopes must be disposed
of before entering the building.
[cir] Commercial overnight mail (other than U.S. Postal Service
Express Mail and Priority Mail) must be sent to 9300 East Hampton
Drive, Capitol Heights, MD 20743.
[cir] U.S. Postal Service first-class, Express, and Priority mail
should be addressed to 445 12th Street, SW., Washington, DC 20554.
In addition, one copy of each pleading must be sent to the
Commission's duplicating contractor, Best Copy and Printing, Inc, 445
12th Street, SW., Room CY-B402, Washington, DC 20554; Web site: http://www.bcpiweb.com; phone: 1-800-378-3160. Furthermore, one copy of each
pleading must be sent to Charles Tyler, Telecommunications Access
Policy Division, Wireline Competition Bureau, 445 12th Street, SW.,
Room 5-A452, Washington, DC 20554; e-mail: [email protected].
Filings and comments are also available for public inspection and
copying during regular business hours at the FCC Reference Information
Center, Portals II, 445 12th Street, SW., Room CY-A257, Washington, DC
20554. Copies may also be purchased from the Commission's duplicating
contractor, BCPI, 445 12th Street, SW., Room CY-B402, Washington, DC
20554. Customers may contact BCPI through its Web site: http://www.bcpiweb.com, by e-mail at [email protected], by telephone at (202)
488-5300 or (800) 378-3160 (voice), (202) 488-5562 (tty), or by
facsimile at (202) 488-5563.
To request materials in accessible formats for people with
disabilities (Braille, large print, electronic files, audio format),
send an e-mail to [email protected] or call the Consumer & Governmental
Affairs Bureau at (202) 418-0530 (voice) or (202) 418-0432 (TTY).
Contact the FCC to request reasonable accommodations for filing
comments (accessible format documents, sign language interpreters,
CART, etc.) by e-mail: [email protected]; phone: (202) 418-0530 or TTY:
(202) 418-0432.
This matter shall be treated as a ``permit-but-disclose''
proceeding in accordance with the Commission's ex parte rules. Persons
making oral ex parte presentations are reminded that memoranda
summarizing the presentations must contain summaries of the substance
of the presentation and not merely a listing of the subjects discussed.
More than a one or two sentence description of the views and arguments
presented generally is required. Other rules pertaining to oral and
written ex parte presentations in permit-but-disclose proceedings are
set forth in section 1.1206(b) of the Commission's rules.
Discussion
In order to comprehensively reform and modernize the universal
service fund (USF) and intercarrier compensation (ICC) system in light
of recent technological, market, and regulatory changes, on February 9,
2011, the Commission released the Universal Service and Intercarrier
Compensation Transformation Notice of Proposed Rulemaking (USF-ICC
Transformation NPRM). The NPRM sought public comment on reforms to
modernize USF and ICC for broadband, control the size of the USF as it
transitions to support broadband, require accountability from companies
receiving support, and use market-driven and incentive-based policies
that maximize the value of scarce program resources for the benefit of
consumers. Previously, on October 14, 2010, the Commission released the
Universal Service Reform--Mobility Fund Notice of Proposed Rulemaking
(Mobility Fund NPRM), 75 FR 67060, which proposed to expand mobile
voice and data service availability by using a market-based mechanism
to award one-time support from accumulated USF reserves. In response to
the USF-ICC Transformation NPRM, a number of parties have offered
specific proposals for reform, including a proposal by the State
Members of the Federal-State Universal Service Joint Board (State
Members), the ``RLEC Plan'' put forward by the Joint Rural
Associations, and the ``America's Broadband Connectivity Plan'' filed
by six Price Cap Companies
[[Page 49403]]
(``ABC Plan''). We seek comment on how these proposals comport with the
Commission's articulated objectives and statutory requirements. We
invite comment on specific aspects of the proposals and on additional
issues that are not fully developed in the record.
I. Universal Service
A. Separate Support for Mobile Broadband
Several parties propose that the Commission create two
separate components of the Connect America Fund, one focused on
ensuring that consumers receive fixed voice and broadband service
(which could be wired or wireless) from a single provider of last
resort in areas that are uneconomic to serve with fixed service, and
one focused on providing ongoing support for mobile voice and broadband
service in areas that are uneconomic to serve with mobile service
(i.e., a Mobile Connect America Fund), with the two components together
providing annual support under a defined budget. We seek comment on
providing separate funding for fixed broadband (wired or wireless) and
mobility. How should the Commission set the relative budgets of two
separate components? How should the budgets be revised over time?
In the USF/ICC Transformation NPRM, the Commission sought
comment on phasing down high-cost support for competitive eligible
telecommunications carriers (competitive ETCs) over 5 years and
transitioning such support to the CAF. To what extent would projected
savings associated with intercarrier compensation reform for wireless
carriers as proposed in the ABC Plan help offset reductions in high-
cost support for competitive ETCs? We ask parties to substantiate their
comments with data and remind parties that they may file data under the
protective order issued in this proceeding.
B. Elimination of Rural and Non-Rural Carrier Distinctions
In the USF/ICC Transformation NPRM, the Commission sought
comment on two potential paths for the long term CAF: (1) Use a
competitive, technology-neutral bidding process to determine CAF
recipients; or (2) offer the current voice carrier of last resort a
right of first refusal to serve the area for an amount of ongoing
support determined by a cost model, with a competitive process if the
incumbent refuses the offer. Several parties that jointly filed a
letter proposing a path for reform propose a hybrid system in which
support would be determined under a combination of a forward-looking
cost model and competitive bidding in areas served by price cap
companies, while companies that today are regulated under a rate of
return methodology would continue to receive support based on embedded
costs, albeit with greater accountability and cost controls. Similarly,
the State Members suggest that a forward-looking model be used for
price cap companies, while rate of return companies would have the
option of receiving support under a model or based on embedded costs.
We seek comment on the policy implications of eliminating the current
references to rural and non-rural carriers in our rules and of adopting
two separate approaches to determining support for carriers that
operate in rural areas that are uneconomic to serve, based on whether a
company is regulated under rate of return or price caps in the
interstate jurisdiction.
C. CAF Support for Price Cap Areas
1. Use of a Model.
[cir] Both the State Members and the ABC Plan would use a forward-
looking model to determine support amounts for areas where there is no
private sector business case to offer broadband. We seek comment on
what information would need to be filed in the record regarding the
CostQuest Broadband Analysis Tool (CQBAT model) for the Commission to
consider adopting it, as proposed in the ABC Plan.
[cir] The ABC Plan proposes using one technology to determine the
modeled costs of 4 Mbps download/768 kbps upload service, while
permitting support recipients to use any technology capable of meeting
those requirements. Should the amounts determined by a model be
adjusted to reflect the technology actually deployed? Is ten years an
appropriate time frame for determining support levels, given statutory
requirements for an evolving definition of universal service? Should
the model reflect the costs of building a network capable of meeting
future consumer demand for higher bandwidth that reasonably can be
anticipated five years from now?
2. Right of First Refusal (ROFR).
[cir] The ABC Plan would give an incumbent local exchange carrier
(LEC) the opportunity to accept or decline a model-determined support
amount in a wire center if the incumbent LEC has already made high-
speed Internet service available to more than 35 percent of the service
locations in the wire center. We seek comment on this proposal. Would
aggregating census blocks to something other than a wire center be an
improvement to the proposal? Is 35 percent a reasonable threshold?
Should areas that are overlapped by an unsubsidized facilities-based
provider be excluded when calculating the percentage? Is the
opportunity to exercise a ROFR reasonable consideration for an
incumbent LEC's ongoing responsibility to serve as a voice carrier of
last resort throughout its study areas, even as legacy support flows
are being phased down? Should any ROFR go to the provider with the most
broadband deployment in the relevant area rather than automatically to
the incumbent LEC? Alternatively, if there are at least two providers
in the relevant area that exceed the threshold, should the Commission
use competitive bidding to select the support recipient?
3. Public Interest Obligations.
[cir] Last year, the Federal-State Joint Board on Universal Service
recommended that the Commission adopt a principle ``that universal
service support should be directed where possible to networks that
provide advanced services, as well as voice services.'' If that
recommendation is adopted, how could the CQBAT model be improved to
account for the costs of providing both broadband and voice service?
[cir] The State Members propose that recipients of support meet
specific broadband build-out milestones at years 1, 3 and 5 of
deployment. A company that exceeded a specified minimum standard, but
failed to meet the higher standard at a given milestone would receive a
pro rata share of support. We seek comment on what specific interim
milestones would be effective in ensuring that carriers receiving CAF
support are building out broadband at a reasonable rate during the
specified build-out period.
[cir] The ABC Plan proposes that CAF recipients provide broadband
service that meets specified bandwidth requirements to all locations
within a supported area, but does not address the pricing of such
services or usage allowances. Should the Commission adopt reporting
requirements for supported providers regarding pricing and usage
allowances to facilitate its ability to ensure that consumers in rural
areas are receiving reasonably comparable services at reasonably
comparable rates?
4. Eligible Telecommunications Carrier (ETC) Requirements.
[cir] The ABC Plan proposes a procurement model, in which
recipients of CAF support incur service obligations only to the extent
they agree to perform them in explicit agreements with the Commission,
and CAF recipients are
[[Page 49404]]
free to use any technology, wireline or wireless, that meets specified
bandwidth and service requirements. What specific rule changes to the
Commission's rules, including part 54, subpart C of the Commission's
rules, would be necessary to implement such a proposal?
5. State Role.
[cir] The State Members and other commenters propose an ongoing
role for states in monitoring and oversight over recipients of
universal service support. We seek comment on specific illustrative
areas where the states could work in partnership with the Commission in
advancing universal service, subject to a uniform national framework,
and invite comments on other suggestions. For example:
Were the Commission to adopt a ROFR mechanism, could the
states determine whether a provider has already made a substantial
broadband investment in a particular area, and therefore would be
eligible to be offered support amounts determined under a forward-
looking model?
Should ETCs be required to file copies of all information
submitted to the Commission regarding compliance with public interest
obligations with the states, as well as with USAC?
The ABC Plan contemplates that CAF recipients would serve
all business and residential locations within a supported area, but
does not specifically address the obligation to serve newly built
locations within a supported area over the ten-year term of the
funding. Should states be charged with determining whether any charges
for extending service to newly constructed buildings are reasonable,
based on local conditions?
Should states collect information regarding customer
complaints, including complaints about unfulfilled service requests and
inadequate service?
D. Reforms for Rate-of-Return Carriers
In light of the RLEC Plan and the Joint Letter, as well as
proposals by the State Members, we seek comment below on specific
issues relating to universal service support for rate-of-return
companies.
[cir] Re-examining the Interstate Rate of Return. The Joint Letter
proposes that CAF calculations for areas served by rate-of-return
companies would be calculated using a 10 percent interstate rate of
return. The State Members recommended that the rate of return for
universal service calculations be set at 8.5 percent. We seek comment
on what data the Commission would need to have in the record to enable
it to waive the requirements in part 65 of the Commission's rules for a
rate of return prescription proceeding, so that the Commission could
quickly adopt a particular rate of return.
[cir] Corporate Operations Expense Limitation Formula. We seek
comment on applying the following formula to limit recovery of
corporate operations expenses for high-cost loop support (HCLS),
interstate common line support (ICLS), and local switching support
(LSS).
For study areas with 6,000 or fewer working loops, the monthly
amount per loop shall be limited to;
$42.337-(.00328 x the number of working loops) or $50,000/the number of
working loops, whichever is greater
For study areas with more than 6,000 working loops, but fewer than
17,888 working loops, the monthly amount per loop shall be limited to:
$3.007 + (117,990/number of working loops)
For study areas with 17,888 or more working loops, the monthly
amount per loop shall be limited to:
$9.52 per working loop.
[cir] Eliminating Support for Areas with an Unsubsidized
Competitor. In responding to the NPRM, the RLEC Plan suggested that the
Commission could establish a process to reduce an incumbent's support
if another facilities-based provider proves that it provides sufficient
broadband and voice service to at least 95 percent of the households in
the incumbent's study area without any support or cross-subsidy. We
seek comment on such a process, including how to allocate costs to the
remaining portions of the incumbent's study area for purposes of
determining universal service support. Would a cost model be a way to
allocate costs between the subsidized and unsubsidized portion of a
rate-of-return study area that overlaps substantially with an
unsubsidized competitor? Could state commissions administer proceedings
to consider such challenges, similar to the suggestion in the ABC Plan
that state commissions could elect to determine which census blocks
served by price cap companies have unsubsidized competitors, and
therefore are not eligible for CAF support?
[cir] Limits on Reimbursable Operating and Capital Costs. We seek
comment on limiting reimbursable levels of capital investment and
operating expenses for LSS.
E. Ensuring Consumer Equity
Rate Benchmark. In the USF/ICC Transformation NPRM, the
Commission sought comment on the use of a rate benchmark to encourage
states to rebalance their rates and ensure that universal service does
not subsidize carriers with artificially low rates. In response to the
NPRM, one commenter suggested that we should develop a benchmark for
voice service and reduce a carrier's high-cost support by the amount
that its rate falls below the benchmark. Under such an approach, the
Commission would reduce intrastate universal service support
(specifically, HCLS for rural carriers and high-cost model support
(HCMS) for non-rural carriers) dollar for dollar during the transition
to CAF to the extent the company's local rates do not meet the
specified benchmark. These reductions would not flow to other
recipients. We seek comment on this proposal and proposed variations on
it. Should we set the initial benchmark using the most recently
available data that the Commission has regarding local rates? For
example, according to the 2008 Reference Book of Rates, the average
monthly charge for flat-rate service was $15.62 per month. Using the
same data, the average monthly charge for flat-rate service, plus
subscriber line charges of $5.74 per month, would total $21.36 per
month. Should the benchmark rise over a period of three years, for
instance, with an end point of $25-$30 (or some other amount) for the
total of the local residential rate, federal subscriber line charge
(SLC), state subscriber line charge, mandatory extended area service
charges, and per-line contribution to a state's high cost fund, if one
exists? Should this benchmark be the same as the ICC benchmark?
Total company earnings review. The State Members
recommended that a Provider of Last Resort Fund include a total company
earnings review to limit a supported carrier from earning more than a
reasonable return. We seek to further develop the record on the
mechanics of conducting an earnings review to ensure that universal
service is not providing excessive support to the detriment of
consumers across the United States.
[cir] We seek comment on the State Members' recommendation that, at
least initially, the support mechanism should not factor in either the
revenues or marginal costs of video operations to avoid the risk of
subsidizing video operating losses attributable to unregulated
programming costs.
[cir] We seek comment on what total company rate of return should
be used, what the mechanism should be for reducing support to the
extent that total company rate of return is exceeded, and
[[Page 49405]]
how often a total company earnings review should be conducted.
[cir] We seek comment on what carriers should be required to submit
to USAC, in a standard format, to facilitate a total company earnings
review. For example, should we require submission of the audited
financial statements for the incumbent LEC, a consolidated balance
sheet and income statement for the incumbent LEC and its affiliates, a
list of affiliates, a schedule showing dividends paid to shareholders
or patronage refunds distributed to members of cooperatives for the
last five years, a Cost Allocation Manual, an explanation of how
revenues from bundled services are booked, a trial balance of accounts
at a Class B accounting level or greater, and the number of retail
customers served by the incumbent LEC and its affiliates for voice and
broadband service?
F. Highest-Cost Areas
The ABC Plan would rely on satellite broadband to serve
extremely high-cost areas. We seek comment on a proposal by ViaSat to
create a Competitive Technologies Fund to distribute support through a
combination of a reverse auction and consumer vouchers to enable
consumers in highest-cost areas to obtain service from wireless,
satellite, or other providers.
We also seek comment on what obligations are appropriate
to impose on recipients of funding, as a condition of receiving
support, to facilitate provisioning by others in areas the recipients
are not obligated to serve. For example, Public Knowledge has proposed
to require recipients to make interconnection points and backhaul
capacity available so that unserved high-cost communities could deploy
their own broadband networks. Should recipients' Acceptable Use
Policies also be required to allow customers to share their broadband
connections with unserved customers nearby, for example, through the
use of WiFi combined with directional antenna technology?
G. CAF Support for Alaska, Hawaii, Tribal Lands, U.S. Territories, and
Other Areas
GCI has proposed an Alaska-specific set of universal
service reforms that it asserts better reflect the operating conditions
in Alaska and the lower level of broadband and mobile deployment in
that state. We seek comment on this proposal for Alaska, and ask
whether this, or a similar approach, would also be warranted for
Hawaii, Tribal lands, the U.S. Territories, or other particular areas,
and how we should consider such proposals in light of the Tribal lands
exclusion from the current cap on high-cost support for competitive
ETCs. We further seek comment on other proposals relating to Alaska and
Hawaii that have been proposed in the record. We further seek comment
on how such proposals could be improved, if the Commission were to
adopt a plan to constrain the size of the CAF and access restructuring
within a $4.5 billion annual budget, and whether, in the alternative,
other modifications are warranted to the national policy to better
reflect operating conditions in these areas.
H. Implementing Reform Within a Defined Budget
The ABC Plan recommends a five-year transition for phasing
down legacy funding, concomitant with a phase-in of potential CAF
support, including potential access recovery associated with
intercarrier compensation reform; the Joint Letter suggests several
potential measures that could be taken to keep support totals within a
budget, such as phasing in funding for mobility, deferring CAF funding
for study areas served by particular price cap companies, or deferring
reductions in intercarrier compensation. We seek comment on the
implications of these and alternative proposals, including variations
to the Commission's prior proposals regarding safety net additive (SNA)
and LSS, for ensuring that total funding remains within a defined
budget.
I. Interim Reforms for Price Cap Carriers
As an interim step, Windstream, Frontier and CenturyLink
suggest that the Commission could immediately target support that
currently flows to price cap carriers to the highest-cost wire centers
within their service territories, using a regression analysis based on
the Commission's existing high-cost model to estimate wire center
forward-looking costs for both rural and non-rural price cap carriers.
We seek comment on this proposal and how it relates to other proposals
in the record for comprehensive reform.
[cir] In addition to combining and distributing HCLS and HCMS,
should the Commission also include funds currently provided through LSS
and SNA to price cap carriers? Should we also include funds currently
provided to price cap carriers through interstate access support (IAS)
and frozen ICLS?
[cir] Should the Commission increase annual HCMS support by an
additional amount, such as $100 to $200 million, to be repurposed from
ongoing reductions in support for companies that have chosen to
relinquish universal service funding? Should we impose a cap on the
amount of support a carrier is eligible to receive for a wire center?
For instance, should that cap be set at $250 per line per month,
similar to the Commission's proposal for a cap in total support for all
existing recipients?
[cir] What public interest obligations for using funding for
broadband-capable networks should apply to carriers receiving support
under this approach? Should carriers receiving such support be
prohibited from using the funds in areas that are served by an
unsubsidized facilities-based broadband provider?
[cir] Do any special circumstances exist in the states of Alaska
and Hawaii, or Territories and Tribal lands generally, or other areas,
that warrant a different approach for price cap carriers serving such
areas, if the Commission were to adopt this interim measure?
II. Intercarrier Compensation
A. Federal-State Roles
1. Federal Framework.
The ABC Plan proposes that the Commission set the
framework to reduce intrastate access rates, and recovery to the extent
necessary for those reduced intrastate access revenues would come from
the federal jurisdiction through a combination of federal SLC increases
and federal universal service support.
[cir] How would this aspect of the ABC Plan affect states in
different stages of intrastate access reform--those that have
undertaken significant reform and moved intrastate rates to parity with
interstate rates, those in the process of reform, and states that have
not yet initiated reform?
[cir] The ABC Plan provides a uniform, consistent framework for
reform across all states. We seek comment on whether the ABC Plan could
be improved by providing states incentives to increase artificially low
consumer rates or create state USFs for example through the use of a
consumer monthly rate ceiling or benchmark or by requiring states to
contribute a certain amount per line of recovery to offset intrastate
rate reductions?
In calculating access recovery, the ABC Plan proposes a
$30 ``rate benchmark'' for price cap carriers, and the Rate-of-Return
plan proposes a $25 benchmark, both of which are structured as a
ceiling on consumer rate increases (via a federal SLC), to limit
increases on consumer rates in states where such rates have already
been raised as part of intrastate access reform. Is this ceiling
sufficient to mitigate any
[[Page 49406]]
potential impact on consumers in states that have already begun reforms
(and thus are already paying increased local rates and/or state
universal service contributions associated with such reform) relative
to consumers in states that have not yet undertaken such reforms (for
which all recovery would come through the federal mechanism in the ABC
Plan)? Should there be different rate benchmarks for different carriers
or should there be a single benchmark?
In the ABC Plan, in calculating access recovery, the
initial consumer monthly rate is taken as a snapshot in time as of
January 1, 2012. In lieu of a snapshot, and in order to avoid deterring
states from rebalancing local rates and/or establishing state USFs,
should the rate used to determine access recovery be the ``higher of''
(1) The rate as of January 2012 and (2) the rate at future points
before annual access recovery amounts are calculated? In this scenario,
any increased consumer rates as a result of state reforms, would count
toward the benchmark, more accurately reflecting the actual consumer
burden at that time.
A rate benchmark could also be used as an imputation for a
certain level of end-user recovery for intrastate rate reductions,
rather than as a ceiling on federal SLC increases. For instance, the Ad
Hoc Telecommunications Users Committee proposes a local rate benchmark
that could be imputed, rather than used as a ceiling, and commenters
propose a range of possible benchmarks from $25-$30. Would an
imputation approach better encourage states that currently depend on
long distance consumers to help subsidize local phone service for their
local consumers to bring consumer rates to levels more comparable to
the national average? What would be the appropriate level for such a
benchmark, and should it be phased in over time?
Instead of or in addition to a rate benchmark, should
states be responsible for contributing a certain dollar amount per line
to aid in access recovery? The State Members, for example, suggest that
states contribute $2 per line for purposes of universal service. In
this scenario, a state would be responsible for recovery of $2 per line
of reduced intrastate access revenues, which could be imputed to
carriers before they become eligible for federal recovery. Does this
approach appropriately balance the interests of consumers in states
that already have implemented some reforms, with the associated burden
of reform being born by consumers in those states, rather than federal
recovery mechanisms? If so, should states that already have a state
universal service fund be exempted completely from this per-line
contribution, or only to the extent of, for example, the $2 per line
state contribution to recovery?
2. State-Federal Framework.
In the alternative, the State Members propose that the
states reform intrastate rates and that the Commission facilitate this
reform through state inducements rather than a federal framework. We
seek comment on this proposal.
[cir] To address concerns that some states may not reform
intrastate access charges, we seek comment on a framework, similar to a
proposal in the USF/ICC Transformation NPRM, under which states have
three years to develop an intrastate reform plan. Under this
alternative, after three years, the Commission would set a transition
for reducing intrastate access rates and deny any further federal
recovery to offset reduced intrastate revenue.
[cir] If the Commission adopts the state-federal framework approach
advocated by the State Members, how can the Commission best incent
states to reform intrastate access rates? Should the Commission match
some federal universal service dollars to a state universal service
fund for states that are using such a fund to reform intrastate access
charges? Such matching could be structured in several different ways,
including on a per-line basis (such as $1-2), as a percentage of the
state contribution, or on an aggregate state basis. We seek further
comment on how such a match should be structured to provide adequate
inducements and maintain our commitment to control the size of the
federal high cost fund.
Under the framework of leaving reform of intrastate rates
initially to the states, the Commission would begin immediate reforms
of interstate access charges. We seek comment on a glide path for the
Commission to reduce all interstate access rate elements. Should the
length of the rate transition vary, providing three years for price cap
carriers and five years for rate-of-return carriers, given that rate of
return carriers' interstate access rates are higher at the outset? What
should the transition be for competitive LECs? Would an approach that
provides different transitions for different types of carriers, whether
competitive, price cap or rate-of-return LEC raise any policy concerns?
We also seek comment on whether the Commission should reduce
originating interstate access rates and, if so, whether we should
require the reductions at the same time or only after terminating rates
have been reduced.
B. Scope of Reform
We seek comment on the approach outlined in the ABC Plan
to reform substantially terminating rates for end office switching
while taking a more limited approach to reforming certain transport
elements and originating access. Would any problematic incentives, such
as arbitrage schemes, arise from or be left in place by such an
approach, and if so, what could be done to mitigate them?
C. Recovery Mechanism
We seek comment on the appropriate recovery mechanism for
ICC reform, including the ABC Plan's and the Joint Letter's recovery
proposals. We also seek comment on the relative merits and incentives
for carriers associated with an alternative approach that provides more
predictable recovery amounts, such as the alternative described below.
1. Federal-State Role in Recovery.
[cir] As noted above, the ABC Plan proposes to shift recovery for
reduced intrastate access charge revenues to the federal jurisdiction.
Could the Commission achieve more comprehensive reform of intercarrier
compensation rate elements if recovery is achieved through a federal-
state partnership? We seek comment above on different means by which
states could share responsibility for recovery of reduced intrastate
access revenues.
2. Price Cap Carriers.
[cir] For price cap carriers electing to receive support from the
transitional access replacement mechanism, the ABC Plan's recovery
proposal includes annual true-ups to adjust for possible increases or
decreases in minutes of use. Although minutes of use for incumbent LECs
have been declining, the ABC Plan's proposal establishing how VoIP
minutes are included in the intercarrier compensation system
prospectively and addressing phantom traffic could cause minutes of use
to flatten or possibly even increase. In addition, the ABC Plan would
treat all VoIP traffic as interstate, which potentially could reduce
the minutes billed at intrastate access rates (depending upon existing
payment practices). Thus the true-up approach could result in the need
for additional recovery, including additional federal universal service
funding. We seek comment on alternatives to the true-up process.
[cir] For example, as an alternative to true ups, we seek comment
on a baseline for recovery that would be 2011
[[Page 49407]]
access revenues subject to reform, reduced by 10% annually to account
for decline in demand (i.e., 90% of 2011 revenues in year one (2012),
81.0% in year two (2013), 72.9% in year three (2014), 65.6% in year
four (2015), etc.). This (or a similar framework that may be suggested
by commenters) would be a brightline, predictable approach that would
not include true-ups, regardless of whether demand declines more
quickly or more slowly. If carriers reduce costs or are more efficient,
this approach would enable carriers to realize the benefits of these
savings.
3. Rate of Return Carriers.
[cir] We seek comment below on an alternative approach for recovery
(or other approaches that commenters might suggest) that would maintain
the predictable revenue stream associated with rate of return
principles while also providing carriers with better incentives for
efficient investment and operations. This option would provide a fixed
percentage of recovery (which could be 100%) of all reduced terminating
access charges (both intrastate and interstate) based on year 2011
revenues, but without true-ups to reflect changes in the revenue
requirement historically used for interstate access charges. This
recovery mechanism would lock in revenue streams, including intrastate
access revenues, which have been declining annually for many interstate
rate-of-return carriers. It thus provides more predictable revenue
recovery while also providing incentives for carriers to reduce costs
and realize the benefits of these cost savings. The eligible recovery
amount would be recovered through end-user charges and universal
service support as described in the Joint Letter's proposal. We also
seek comment on the duration of recovery funding under this
alternative. Should it be phased out over time following the completion
of rate reforms, such as with the loss of demand?
4. Reciprocal Compensation.
[cir] The ABC Plan's proposal provides recovery for reductions in
reciprocal compensation rates to the extent they are above $0.0007, but
the ABC Plan estimates on the impact of the federal universal service
fund do not include estimated recovery from reciprocal compensation. We
ask whether providing federal universal service support for reductions
in reciprocal compensation rates strikes the appropriate policy balance
as we seek to control the size of the universal service fund, and
whether there are alternatives to such an approach.
5. Originating Access.
[cir] If the Commission were to address originating access as part
of comprehensive reform, should the Commission treat originating access
revenues differently from terminating access revenues for recovery
purposes since, in many cases, the originating incumbent LEC's
affiliate is offering the long distance service? For example, is it
necessary to provide any recovery for the originating access that an
incumbent LEC historically charged for originating calls from the
retail long distance customers of its affiliate?
[cir] Alternatively, should recovery for such originating access
take the form of a flat per-customer charge imposed on the incumbent
LEC's long distance affiliate for each of its presubscribed customers?
Should such a flat originating access replacement charge be used for
recovery of all originating access revenues more generally? How would
any of these approaches be implemented? Should any flat originating
access replacement charge differ by end-user customer class (such as
residential vs. business), by level of demand, or otherwise?
[cir] We seek the following data to help us evaluate originating
access reform:
Separately for price cap and rate-of-return incumbent
LECs, the number of (1) Long distance minutes that the average customer
originates; (2) 8YY minutes that the average customer originates; and
(3) long distance and 8YY minutes that the average customer receives
(terminating minutes); and
Whether the ratio of originated long distance minutes to
originated 8YY minutes varies materially with the level of the
customers' expenditure on telecommunications services.
D. Impact on Consumers
We seek comment on how to ensure that consumers realize
benefits of reduced long distance and wireless rates as part of
intercarrier compensation reform. The ABC Plan attaches a paper by
Professor Jerry Hausman analyzing the consumer benefits of intercarrier
compensation reform. Should the potential realization of consumer pass
through benefits from intercarrier compensation reform be left to the
market, as Professor Hausman asserts, or should any steps be taken to
ensure that such benefits are realized by consumers? If so, what steps
should be taken?
The ABC Plan permits incumbent carriers to increase the
consumer SLC up to $9.20 before increasing the multiline business SLC,
although multiline business SLCs potentially could increase once
consumer SLCs reach that level. To decrease the potential burden on
consumers and the federal universal service fund, should multiline
business customers also see a modest SLC increase and, if so, how much?
The ABC Plan permits incumbent carriers to increase
consumer SLC rates $0.50-0.75 per year for five years or until the
consumer's rate reaches the rate benchmark of $30. Similarly, the Joint
Letter permits incumbent carriers to increase consumer SLC rates $0.75
per year for six years or until the consumer's rate reaches the rate
benchmark of $25. Professor Hausman's paper indicates that companies
are constrained by competition, which could mean that companies may not
be able to increase SLC rates on consumers. We seek comment on the
actual likely consumer impact of SLC increases, in the aggregate and
with as much granularity (e.g., by company, by type of state, by
specific state) as can be provided. We also seek comment on proposals
that the need for any recovery should be based on the carrier's showing
of need based on its operations more broadly.
We seek the following data to help us quantify consumer
benefits from intercarrier compensation reform:
[cir] If ICC termination rates that currently exceed $0.0007 are
reduced to $0.0007, the services where pass through is likely to occur
(perhaps, for example, long distance, wireless service, 8YY services
and monthly line rentals) and the likely extent of that pass through;
and
[cir] Estimates of demand elasticities for those services where
pass through is likely to occur.
E. VoIP ICC
Implementation. We seek comment on the implementation of
the ABC Plan's proposal for VoIP intercarrier compensation. Under that
proposal, VoIP access traffic would be subject to intercarrier
compensation rates different from rates applied to other access traffic
during the first part of the transition.
[cir] How would VoIP traffic subject to the ICC framework be
identified for purposes of the proposed tariffing regime?
[cir] Would it be feasible to use call record information or
factors or ratios to identify the portion of overall traffic that is
(or reasonably is considered to be) relevant VoIP traffic, perhaps
subject to certification or audits?
[cir] Should the Commission identify a ``safe harbor'' percentage
of VoIP traffic for use in this context? If so, what should be the
factual basis for such a safe harbor? For example, Global Crossing
estimates ``that on average
[[Page 49408]]
roughly fifty to sixty percent of the traffic [on its network] is
VoIP.'' Would that, or other data, provide a basis for a safe harbor?
[cir] Are there alternative mechanisms besides tariffs that could
be used to determine the amount of VoIP traffic exchanged between two
carriers for purposes of the VoIP ICC framework, and if so, what would
be the relative merits of such an approach?
Call Signaling. In the USF/ICC Transformation NPRM the
Commission proposed to apply new call signaling rules designed to
address phantom traffic to telecommunications carriers and
interconnected VoIP providers. Some commenters have expressed concerns
about whether and how the proposed rules would apply to one-way
interconnected VoIP providers. In particular, we seek to further
develop the record regarding possible implementation of any new call
signaling rules that apply to one-way interconnected VoIP providers.
[cir] If call signaling rules apply to one-way interconnected VoIP
providers, how could these requirements be implemented? Would one-way
interconnected VoIP providers be required to obtain and use numbering
resources? If not, how could the new signaling rules operate for
originating callers that do not have a telephone number?
[cir] If one-way interconnected VoIP providers were permitted to
use a number other than an actual North American Numbering Plan (NANP)
telephone number associated with an originating caller in required
signaling, would such use lead to unintended or undesirable
consequences? If so, should other types of carriers or entities also be
entitled to use alternate numbering?
[cir] Would there need to be numbering resources specifically
assigned in the context of one-way VoIP services? Are there other
signaling issues that we should consider with regard to one-way VoIP
calls?
[cir] If call signaling rules were to apply signaling obligations
to one-way interconnected VoIP providers, at what point in a call path
should the required signaling originate, i.e., at the gateway or
elsewhere?
[cir] To what extent are such requirements necessary to implement
the ABC Plan's and Joint Letter's proposals that billing for VoIP
traffic be based on call detail information? More broadly, what
particular call detail information would be used for this purpose? What
are the relative advantages or disadvantages of treating such call
detail information as dispositive for determining whether access
charges or reciprocal compensation rates apply?
Federal Communications Commission.
Marcus Maher,
Deputy Chief, Pricing Policy Division, Wireline Competition Bureau.
[FR Doc. 2011-20322 Filed 8-9-11; 8:45 am]
BILLING CODE 6712-01-P