Colorado Telcos Unite to Cut State High-Cost Funds, Minimize VoIP Regulation

Colorado telecom companies are struggling to form a consensus on the state’s plan to overhaul its telecom rules and high-cost fund, as demonstrated by reply comments with the Colorado Public Utilities Commission made public after our deadline Wednesday. The PUC initiated the new rulemaking in August, heard initial comments Aug. 29, is holding meetings throughout September and will formally address concerns in hearings Oct. 1-4. Colorado’s biggest companies show broad agreement on deregulating VoIP and reducing the state’s high-cost fund but parties are still divided on whether the state commission should help fund broadband. Rural advocates have previously worried about how the reform may hurt rural broadband buildouts (CD Sept 10 p5).

There’s “substantial agreement” that the high-cost fund needs “significant reform,” Verizon said (http://bit.ly/SES93O). It urged the PUC to “push ahead with its efforts to reduce the size of the fund commensurate with any demonstrated, remaining need to subsidize ‘basic’ telephone service in certain geographic areas.” But the commission should rely on “facts and analysis,” said CenturyLink (http://bit.ly/UlwLBZ). Calls to reduce the fund are too often “based on feelings,” it said. The company criticized action made in “urgency or political pressure.” CenturyLink agrees with PUC staff that the high-cost reform should be decoupled from market regulation reform, dismissing the use of “the same, arbitrary ‘effective competition’ test.” Cablevision slammed high-cost fund advocates as revealing “their parochial and self-serving interests in continued government assistance according to a decades-old regulatory model” (http://bit.ly/OHnfML).

"The [proposed] model described by CenturyLink [in its initial comments] offers the possibility of a new paradigm for determining high cost support in a way that is both equitable and consistent with Colorado law,” the Colorado Telecommunications Association said (http://bit.ly/Sbzwtk). “Assuming the model works, the outputs from the model would place the Commission in a better position to make informed funding and allocation support decisions."

Federal actions shouldn’t influence a move to cut the fund, Verizon said. “The Commission should not be deterred from limiting the size of the CHCSM [Colorado High Cost Support Mechanism] based on speculation about the possible impacts of ongoing FCC reforms of the intercarrier compensation and universal service programs."

Many parties pushed to keep VoIP regulation to a minimum and away from state entities. “There is strong consensus that keeping VoIP and IP-enabled services free of state regulation is the best way to promote development of the broadband ecosystem in Colorado,” Verizon said, saying legislation is the most effective way to institutionalize this sentiment, as 24 states have done. Other companies, including AT&T, Cablevision and Comcast, agreed that states shouldn’t regulate VoIP. Cablevision and Integra want the PUC to oversee IP-to-IP interconnection, the two companies said. Integra called the commission’s authority there “crucial” (http://bit.ly/S9RpHJ).

Companies in favor of VoIP deregulation “are wrong on the law, and are pressing a position that would threaten the efficiency of 9-1-1 service and ultimately impose costs of 9-1-1 service and increase 9-1-1 surcharges,” said the Boulder Regional Emergency Telephone Service Authority (BRETSA) (http://bit.ly/P3xkPK). Current FCC and Colorado state 911 rules should apply to next-generation 911, the authority said. “The FCC has not fully preempted state regulation of VoIP, and 9-1-1 is a wholly intrastate service,” BRETSA said. The PUC “may regulate VoIP services, as long as the regulations do not include entry regulation,” it said. Colorado’s consumer counsel suggested the state not wait on the FCC. “The Commission should look to its own laws to determine whether these facilities or technologies, when used to provide basic local exchange service, fall within the General Assembly’s definition of telecommunications service,” its office said (http://bit.ly/QoETUc). “The FCC has failed to act [in defining VoIP], and the Commission has shown deference to the FCC for over eight years."

Verizon’s position raises “an issue of immediate concern,” CTA said. It criticized the idea that VoIP- and IP-enabled providers shouldn’t have to pay into public policy funds. “Contrary to Verizon’s assertion, there are indeed factual, legal and policy reasons to require providers of VoIP and IP-enabled providers to pay into public policy funds,” CTA said. “These providers use and rely on the public switched network to transmit calls. They should be required to pay into the very funds that make their businesses possible."

CenturyLink warned the PUC against taking on new issues. Its agenda already addresses the “most fundamental issues to telecommunications regulation,” which “demand focused inquiry,” the company said. “Considering IP interconnection rules (as Cablevision and Sprint suggest), converting the CHCSM to a broadband fund (as Viaero proposes), or changing the way basic emergency service providers ('BESPs') develop costs and prices for their services (as Intrado and BRETSA suggest), may be legitimate areas for future discussion and debate, but would distract from the core reforms that the Commission is addressing in this rulemaking,” CenturyLink said. AT&T advocates for limiting the scope as well. BRETSA’s comments “go beyond the scope” of rulemaking, AT&T said (http://bit.ly/T9wIyg). BRETSA had introduced “an explicit subsidy through the CHCSM for 9-1-1 services as a means of defraying a BESP’s overhead and administrative costs,” AT&T noted. The PUC rulemaking shouldn’t delve into 911 service unless VoIP is deregulated, the telco said. It referred to the commission’s “exception for IP-enabled 9-1-1 service as [the PUC] intends to retain its current authority over 9-1-1 service regardless of the technology involved.” Comcast also opposed BRETSA’s suggestion (http://bit.ly/P3xM0o).

Many parties dismissed the idea of PUC broadband funding. Verizon asked the commission to reject Viaero’s proposal to transfer the high-cost fund to a broadband fund. Broadband shouldn’t be included in the high-cost fund, Sprint said (http://bit.ly/UdUJU1). AT&T calls such proposals “premature” due to other broadband resources available. Comcast said the same and worried PUC broadband efforts “may be redundant, inconsistent or even counterproductive.” Funding broadband would create “cross-subsidy” problems, Colorado’s consumer counsel cautioned. CTA dissented and called such broadband funding “critical” and “entirely consistent with FCC policy that mandates the provision of broadband services by rural carriers that receive universal support."

The PUC “should take as much time as necessary for a successful overhaul and rewrite of the rules,” said CTA, worrying not enough time is built into the proceeding. There’s a high risk associated with poor decisions, it said. The commission must also maintain universal service commitments as it deregulates, BRETSA said.