FCC Proposes Extending Separations Rules Freeze Additional 6 Years

The FCC proposed extending for an additional six years its freeze on federal-state jurisdictional separations of telecom costs and revenue. The current freeze is set to expire Dec. 31 (see 1812170049). The proposed extension would let the commission continue working with the joint board on jurisdictional separations to "determine next steps" in amending the rules "in light of sweeping technological and regulatory changes since these rules were initially adopted," according to an NPRM Monday. Comments are due 30 days after Federal Register publication, replies 45 days after, in docket 80-286.

"The jurisdictional separations rules no longer apply to the majority of carriers currently providing telecommunications services," the NPRM said. It also noted that the commission expects additional rate-of-return carriers to take advantage of the enhanced alternative connect America model program and select to be subject to incentive regulation for business data services, making the number of carriers subject to separation rules to "decrease even further."

The commission noted that the separations process has "increasingly limited application because of regulatory reforms" for carriers that remain subject to the separation rules. The Dec. 31 expiration of the freeze leaves "limited and insufficient time within which to develop and advance recommended decisions," the NPRM said.

The FCC noted the recent addition of members to the joint board who are "just beginning their opportunity to delve into the complicated issues they need to grapple with in considering reform measures" (see 1812200069). It also warned that letting the freeze expire would "impose significant burdens on rate-of-return carriers." The commission approved the current extension in 2018 in part because reinstating the separation rules would "make it extremely difficult, if not impossible, for most carriers to perform all of the studies needed to remain in full compliance."

The item proposes allowing direct rate-of-return incumbent LECs to continue using the same frozen category relationships and jurisdictional allocation factors. Three carriers opted to use those factors when the FCC in 2018 allowed a one-time unfreeze of category relationships. The FCC wants comments on whether it should reintroduce the option to unfreeze category relationships.

In addition, the FCC sought comment on the length of the proposed freeze extension, noting the commission initially proposed a 15-year freeze in 2018 (see 1807200018). The NPRM asks whether the commission should adopt "an unlimited extension until comprehensive reform is achieved."

An attached order also renews the commission's existing outstanding referrals to the joint board on "comprehensive and interim reform measures to the separations process." The commission renewed its referrals "in light of the substantial changes that have unfolded" within the telecom industry, the order said, as well as the "extensive changes in federal and state regulatory frameworks" since the commission issued its 1997 and 2009 comprehensive reform referrals and 2018 interim reform measures referral.