Other rural organizations filed comments this week opposing a Federal Communications Commission (FCC) proposal to change intercarrier compensation rules.
The comments followed a filing by NTCA–The Rural Broadband Association concerning the proposed rural local exchange carrier (RLEC) transition to a bill-and-keep intercarrier compensation (ICC) regime, with groups arguing the proposed conversion is unnecessary and could raise rates for rural consumers.
Bill and keep is a system in which telephone companies do not compensate each other for call terminations between their exchanges. But many rural telcos regulated under a legacy rate-of-return (RoR) regime have opted to continue charging for termination. While the FCC has offered incentives for rural carriers to convert to bill and keep over the years, it has never required conversion.
The Notice of Proposed Rulemaking (NPRM) adopted earlier this year states that some carriers continue to rely on legacy time-division multiplexing (TDM) equipment rather than IP due to incentives built into the ICC regulations. The FCC says it now seeks to “complete the task” by moving all carriers to bill and keep, and encouraging them to replace TDM with internet-based voice service.
WTA–Advocates for Rural Broadband challenged the idea that the current ICC regulations are slowing the IP transition. WTA surveyed its rural telco members and found that 80% have either begun or completed the IP transition, and only 20% have not yet begun. WTA also faulted the FCC for considering the conversion to all bill and keep in isolation from other IP transition items, such as possible changes to the Universal Service High Cost program.
“Actions in other proceedings will impact how and how quickly the transition to IP networks can be completed for all service providers,” WTA said.
A group of 140 RoR carriers submitted comments focusing on the potential harm that removing ICC charges could have on rural consumers. “Absent a replacement recovery mechanism, this shortfall in cost recovery would necessarily be shifted to end users, substantially increasing the rates that they pay for voice service and potentially rendering those rates unaffordable for many rural Americans,” the group said.
Larger local exchange carriers (LECs), however, tended to be less critical of the NPRM. USTelecom–The Broadband Association asked the FCC to move forward with the transition “expeditiously” while “limiting disruption for all providers, including smaller, rural providers.”
Verizon echoed that sentiment, favoring the adoption of bill and keep “to the extent doing so will not delay or impede the transition to IP voice traffic exchange.”
Comments from the National Association of Regulatory Utility Commissioners (NARUC) protested the sections of the NPRM where the FCC claims statutory authority to preempt state regulations concerning ICC. The association noted that many of its member state commissions are currently concentrating on affordability issues. “Given the NPRM’s insistence on rolling all cost recovery into end-user rates, it is difficult to see how, at a minimum in high-cost areas, this push, which necessarily increases residential and commercial rates, will not undermine those state efforts,” NARUC said.
