USTelecom Urges FCC to Finalize 8YY Order; RLEC Interests Cautious

USTelecom and its members urged the FCC to launch an order soon on a February consensus proposal on toll-free access rates. Rural and competitive LECs want to make sure they don't lose revenue in the process or face added costs. Activity in docket 18-156 heated up in recent weeks as stakeholders lobby Wireline Bureau staff and commissioner offices. The commission issued a Further NPRM two years ago (see 1807020040). At issue is who pays to move toll-free traffic and who gets revenue for it.

USTelecom wants the FCC to finalize 8YY access charges rules and have them take effect Jan. 1, said Vice President-Strategic Initiatives and Partnerships Mike Saperstein, saying there's no statutory deadline for acting. The commission's 2020 agenda priorities shifted with COVID-19, Saperstein said, but USTelecom is "firmly encouraging" the FCC to address the 8YY access order as quickly as possible. He doesn't think the FCC needs a new comment cycle. The opportunity to weigh in on the docket "is now," he urged.

Telecom consultant Genny Morelli thinks Wireline Bureau staff is actively working on the FNPRM. Bob McCausland, Intrado vice president-regulatory and government affairs, said he suspects Chairman Ajit Pai would like to resolve the matter by the end of his term. The FCC declined to comment.

NTCA isn't eager for the agency to consider the order, but if it feels compelled to do so, "the finality we want is one carefully tailored to address our issues," said Senior Vice President-Industry Affairs and Business Development Mike Romano. Small providers get a sizable amount of their revenue through toll-free long-distance calls, Romano said. Some revenue lost through a new order would be picked up through USF subsidies but some wouldn't, he said.

AT&T said 8YY originating minutes grew from 64% of all its originating access minutes in 2008 to 83% in 2019, in a filing posted Friday. This "understate[s] the extent to which the CLECs’ share of 8YY originating access minutes has ballooned, even as the number of ILEC 8YY originating minutes has declined," the telco said.

“Frontier has been working with others in the industry, including the major long distance providers, on a reasonable transition plan to 8YY access charges," emailed Vice President-Federal Regulatory Affairs AJ Burton. "We hope that if the Commission moves forward, it will adopt this plan and provide local telephone providers opportunity for adequate revenue recovery over the transition.” CenturyLink supports USTelecom’s proposal and hopes the FCC will act soon, a spokesperson emailed.

USTelecom proposed a nationwide rate for 8YY tandem switched services, said Saperstein. There's lots of agreement on the concept, but some disagree on the rate, he said: "We want a low enough rate to disincentivize arbitrage but high enough to allow providers to recover revenues." Inteliquent proposed a weighted national average rate of .0017 cent per minute for 8YY tandem switching and transport, in a filing earlier this spring. That's almost double the rate of .001 cent that USTelecom proposes, said Saperstein.

Carriers that provide tandem transport might re-evaluate whether that business would still be profitable, depending on any coming order, McCausland said. "If I can't make money on the services I produce, I may have to withdraw" from providing 8YY switched access service, he said. If too many companies leave that market, there mightn't be enough capacity to handle spikes in toll-free calling traffic during emergencies, he said.

The ACAM Broadband Coalition opposes any FCC order that would move 8YY access to bill and keep, said Morelli. "We think it is overreaching," she said. "If there is arbitrage, there are other ways to address it." If the agency does act on 8YY bill-and-keep, she said, the coalition wants the order to address revenue recovery mechanisms for both interstate and intrastate traffic. Small RLECs rely on 8YY access revenue to maintain and build their networks, she said. A-CAM refers to the FCC's alternative connect America model.

USTelecom continues to refine its consensus proposal. It asked the FCC in a filing posted Monday to provide adequate recovery mechanisms both for price-cap and rate-of-return regulated carriers. For price-cap carriers, the group proposes raising the subscriber line charge cap "by a maximum of $0.50/month annually for two years."