FCC Proposes 18-Month Extension of Freeze on Federal-State Separations of RLEC Costs

The FCC proposed an 18-month extension of a freeze on jurisdictional separations of rural telco cost calculations while the commission works with a federal-state joint board on proposals to overhaul the current system. The joint board is expected to make recommendations for "comprehensive separations reform" by April 2018, said the FCC in a Further NPRM adopted and released without dissent Monday in docket 80-286.

“Having made progress in implementing changes to our intercarrier compensation regime and to the high cost universal services support program, and having recently reformed our Part 32 accounting rules, now is the time to address the separations rules," the FNPRM said. Commissioner and Joint Board Chairman Mike O'Rielly has said he seeks "comprehensive reform" (see 1702230051). Telco trade groups and NARUC didn't comment Monday.

Part 36 rules, which separate regulated rate-of-return telco costs between the intrastate and interstate jurisdictions, were frozen in 2001 on an interim basis for five years, and that freeze that has been repeatedly extended, given "the sweeping technical and regulatory changes" in the communications sector, the commission said. The current freeze of "jurisdictional separations category relationships and cost allocation factors" for rate-of-return ILECs expires after June 30.

“We propose to extend the existing separations freeze for an additional eighteen months while we work to reform the separations rules," the FNPRM said. "As with our prior freezes, we propose that the freeze extension be implemented as described in the 2001 Separations Freeze Order. Specifically, we propose to direct rate-of-return ILECs to continue to use the same frozen jurisdictional allocation factors, and the same frozen category relationships if they had opted previously to freeze those relationships.”

Extending the freeze for 18 months would give the joint board time "to consider the impact of recent reforms on the separations rules and will allow us the opportunity to fashion a Notice of Proposed Rulemaking that benefits from the Joint Board’s consideration of how best to approach separations reform," the commission said. "One significant benefit of extending the freeze while we undertake reform will be to provide stability and regulatory certainty for ILECs during the reform process.”

“The Joint Board has a pending referral to consider broadly any appropriate changes to the separations rules," said the FNPRM. "We will evaluate whether other discrete issues should be referred to the Joint Board. We anticipate that the Joint Board will meet in July 2017 to consider reform of the separations process. We expect to receive the Joint Board’s recommendations for comprehensive separations reform within nine months thereafter, that is, in April 2018.”