NRIC: “Maintaining Reasonable ICC Revenues is a Matter of Survival”
The USF/ICC Transformation Further Notice of Proposed Rulemaking covered a wide range of topics in sections L-R pertaining primarily to intercarrier compensation and IP-to-IP interconnection. In the initial comment round, the Rural Associations and the Nebraska Rural Independent Companies (NRIC) asserted that the FCC should refrain from imposing further drastic changes, such as reducing originating access to bill-and-keep and phasing-out the Recovery Mechanism, until the impact of the Order can be fully analyzed. Reply comments were due on March 30, 2012. The Rural Associations and NRIC held their ground on these issues and struck down comments from opposing parties—primarily cable, wireless, and large ILECs.
The Rural Associations (NTCA, OPASTCO, NECA, and WTA) insist that “substantial confusion and disputes already surround [the] interpretation and implementation” of the new USF and ICC reforms, and “It is essential that the FCC gather data and evaluate the impacts of the reforms just adopted prior to taking further steps.” The Rural Associations believe that “Consumers, lenders, investors, service providers, and the Commission itself would all be better served by a ‘data-driven’ reform process.” Furthermore, they argue that rural consumers could be left with “unaffordable and/or substandard services or, in some cases, with no services at all” if any additional ICC reductions are not matched with “a meaningful alternative for revenue replacement.”
The Rural Associations take a no-nonsense tone with their replies to commenters who argue that originating access and other rate elements should be transitioned to bill-and-keep along with terminating access. The Rural Associations name Time Warner, XO Communications, Leap and Cricket, T-Mobile, Bandwidth.com, CTIA, Google, VON, and MetroPCS as the “few parties supporting the hasty reduction of ICC rates beyond measures adopted in the Order.” The Rural Associations argue that these parties disregard the FCC’s commitment to a data-driven process; ignore the mandate of reasonably comparable services and rates; and prioritize their own policy needs over the needs of consumers in high-cost areas.
The Rural Associations likewise reject arguments from CTIA, NCTA, and T-Mobile that the Access Recovery Charge (ARC) and CAF ICC recovery mechanism should be phased out rapidly. The Rural Associations explain, “The few commenters that support a phase-out or accelerated reduction of the ARC and/or CAF ICC mechanism for RoR carriers advance a number of oft-repeated arguments regarding the alleged inefficiencies in the current ICC system or RoR carriers’ supposed above-cost rates. What none of these commenters consider, however, is the critical role that these revenues—which are derived from providing other carriers and their customers with access to ubiquitous and highly reliable COLR networks—have had on the deployment and affordability of basic and advanced service to rural consumers. Here again, such parties rely upon overly broad and self-serving policy pronouncements without pausing for even a moment to even consider the potential quantitative impacts of their proposals (other than the quantitative impact to their own budgets and profit margins).”
NRIC took a no-holds-barred approach with their foes in their reply comments as well. NRIC argued that the largest carriers will benefit the most from the transition to bill-and-keep, and “These same large carriers now seek to expand that windfall by urging the Commission to expand bill-and-keep to originating access, 8YY traffic, and transport.” NRIC explains that the supporters of bill-and-keep for originating access are “wireless carriers and other large carriers that may not have the same commitment as RoR ETCs to serve sparsely populated, rural areas.” NRIC adds, “Maintaining reasonable ICC revenues is a matter of survival” for small companies.
NRIC sees the debate over bill-and-keep for originating access and other rate elements falling on two “crystal clear” lines: on one side, there are companies who are committed to serving rural areas. These companies—which include both RoR and price cap carriers—call for the FCC to continue ICC compensation and evaluate the impacts of the Order before making further changes. On the other side are the companies who do not “have a business priority of serving rural areas.” These companies, NRIC argues, “line up behind elimination of…ICC fees.” NRIC categorizes the two sides as “rural network builders” versus “rural network users.”
One of the more memorable quotes from the initial round of comments was Verizon’s claim that “there are no incumbent IP network providers.” NRIC disagrees, responding that “Verizon is simply wrong.” According to NRIC, “While the technology has changed, that change does not render their ILEC classification and attendant regulatory obligations obsolete, and Verizon cannot be exempted from such obligations.” Although the explicit topic of transitioning the PSTN to all-IP networks was not directly addressed in the FNPRM, it is directly intertwined with the ICC and IP-to-IP interconnection debates. NRIC weighed in on the PSTN-IP transition, arguing that it should be an evolutionary transition and “Efforts to eliminate existing TDM networks of RoR ETCs at a date certain and thereby eliminate cost recovery would create industry chaos and should be rejected.”
The overall theme of the comments by the Rural Associations and NRIC is that ICC is a critical revenue component that helps build and maintain telephone and broadband networks in rural America. RLECs use this revenue to be “rural network builders,” using NRIC’s terminology. RLEC infrastructure in rural areas is Congressionally-mandated and complies with the goals of the FCC and the National Broadband Plan. If the ICC base continues to shrink with no corresponding and equitable recovery mechanism, rural consumers will suffer and large telecom carriers will profit—but will they invest in rural areas, or will the fundamental principles of Universal Service be forsaken?