Adam Bender

A “hidden dagger” in FCC Chairman Kevin Martin’s draft order on a comprehensive intercarrier compensation overhaul could mean no more access charges for AT&T and Verizon, said a National Telecommunications Cooperative Alliance official in an interview. If the Bells can avoid access charges, everything else in the comprehensive overhaul becomes “inconsequential” and a “distraction,” said Dan Mitchell, NTCA legal vice president. AT&T, which endorsed Martin’s draft, denied the NTCA claims.

In the wake of the financial crisis, government will probably try to do more telecom regulation, said panelists at a New York Law School Advanced Communications Law & Policy forum Friday. Comparing banking to the telecom industry is like comparing “apples and freight trains,” said James Gattuso, a Heritage Foundation senior research fellow. But after eight-plus years of market-based regulation, the “knee jerk reaction from government” may be that “we have to do something” different, said Republican Missouri state Rep. Ed Emery.

Wireline officials raised red flags about the FCC’s draft intercarrier-compensation overhaul the day after Chairman Kevin Martin unveiled it (CD Oct 16 p2). The plan isn’t publicly available, but industry officials in interviews said the package favors the largest carriers and hurts small and midsized companies. If the FCC adopts the plan as is, the National Telecommunications Cooperative Association may challenge it in court, said Dan Mitchell, NTCA legal vice president, in an interview.

FCC Chairman Kevin Martin wants to add broadband obligations to the Universal Service Fund, move to numbers- based USF contribution and apply reciprocal compensation rates to all traffic, he said Wednesday. At a news briefing, the chairman said implementing his plan would “modernize” USF and intercarrier compensation for a broadband, IP-based world. Martin late Tuesday circulated a draft version of the plan, including a report and order, order on remand and further notice of proposed rulemaking. Commissioners will vote at the agency’s Nov. 4 meeting. If the item is adopted, it would apply to 48 states, exempting Alaska and Hawaii, Martin said.

ORLANDO -- The telecom industry still is divided on how to revamp intercarrier compensation, indicated speakers at a CompTel panel on the topic. The FCC appears to be teeing up the topic for a Nov. 4 vote. But in a late Monday panel, officials from AT&T, XO Communications the VON Coalition and the National Association of State Utility Consumer Advocates disagreed not only on overhaul proposals, but on whether the current system even needs fixing.

ORLANDO -- Due to more pressing issues, neither presidential candidate will focus on telecom policy immediately after the election, surrogates for Sens. Barack Obama, D-Ill., and John McCain, R-Ariz., said in a CompTel debate Tuesday. However, candidates are interested in telecom issues, differing on broadband deployment and network management, among other issues, surrogates said. Larry Irving, Internet Innovation Alliance co-chairman, represented Obama. Lee Dunn, a legislative aide to the McCain presidential campaign, took the Republican side.

ORLANDO -- Rep. Chip Pickering, R-Miss., urged competitive telecom companies to form a Washington alliance to fight large phone company lobbying. In a CompTel keynote, he said the alliance should include Comcast, Sprint Nextel, Clearwire, Google and competitive local exchange carriers. A coalition of that scale could be effective in combating AT&T, Verizon and other large companies’ significant Hill presence, he said. Strategy aside, Pickering predicted sunny days for competitors. Election day and the financial crisis create new opportunities for CLECs to push policy goals, he said.

A disputed $0.0007 uniform terminating access rate may work as an interim solution, but it isn’t the best permanent tack on intercarrier compensation, the VON Coalition said. In August the VoIP group endorsed the so-called triple-oh- seven rate but Thursday it asked the FCC to adopt a bill-and- keep system. “The commission can and should adopt a bill- and-keep approach,” but if the FCC “decides it needs an interim transition plan, a uniform terminating rate of no higher than $0.0007” a minute “is the most equitable approach,” coalition executive director Jim Kohlenberger said. Before endorsing a uniform terminating rate, the coalition supported bill and keep in 2005. The Wireline Bureau is said to be considering three approaches to revamping compensation: A uniform rate, bill and keep and reciprocal compensation (CD Sept 15 p2). Verizon’s proposed $0.0007 uniform rate is similar to bill and keep in that it would allow terminating carriers to pass along unrecovered costs to customers through increased subscriber line charges. Under a true bill-and-keep system, though, terminating carriers would charge originating carriers nothing and pass all terminating costs to customers. VON’s approach differs from that only in that it also would allow carriers, in “limited circumstances,” to recover costs from an “explicit subsidy,” the coalition said in the ex parte.

Chairman Kevin Martin’s trip to Denmark this week may have held up an FCC order on submarine cable regulatory fees, said an industry official close to the proceeding. Martin was in Copenhagen at a Danish government-sponsored conference on open networks regulation and wireless innovation. The submarine cable item hasn’t circulated among commissioners, despite the FCC promising to release a final order this week, an agency official confirmed Thursday. Now the order isn’t expected until next week, the industry source said. Two months ago, in an order on regulatory fees, the commission gave itself 60 days to address submarine cable systems. The issue hasn’t been controversial since submarine cable operators found consensus with Verizon and AT&T last month (CD Sept 29 p11).

Rural carriers don’t necessarily think a proposed $0.0007 uniform terminating access rate is gaining traction at the FCC, Dan Mitchell, legal vice president for the National Telecommunications Cooperative Association, said in an interview. That’s so even though the rural carrier trade association has asked Congress to quash that proposal (CD Oct 2 p7), he told us. Watching Bells “actively engage” the FCC in support of the “triple-oh-seven” plan pushed rural carriers to act, he said. NTCA wants to make sure the agency has the “complete story,” Mitchell said. Wednesday, NTCA CEO Michael Brunner urged Congress to intervene, saying the FCC was “seriously considering” a proposal by Verizon, AT&T and others to set a $0.0007 uniform terminating access rate for all traffic. NTCA has condemned that plan as legally unsound and hurtful to rural carriers.