ADVERSARIES DEBATE FAIRNESS OF HIGH CLEC ACCESS CHARGES
ORLANDO -- In highly animated panel discussion at CompTel annual conference Tues., representatives of CLECs, long distance companies, Bell companies and FCC debated whether CLECs had right to charge higher than average access rates and whether long distance companies could refuse to pay those rates. FCC Common Carrier Bureau Chief Dorothy Attwood said Commission had teed up issue by asking for comments but hadn’t decided whether it should step in or let industries settle it themselves. She said there seemed to be industry agreement that Commission should require long distance providers to serve CLEC customers if CLEC access charges fell below certain amount. Dispute is over what upper limit should be.
Newsouth Communications Vp Jake Jennings justified high CLEC charges, saying CLECs had higher costs than other companies, while AT&T Vp Robert Quinn said if CLECs were looking to long distance companies for subsidies they should remember that long distance industry wasn’t what it used to be. “I think it’s arbitrage,” BellSouth Vp Robert Blau said. Jennings responded: “We like to think of it as an opportunity.” Blau sat quietly during part of panel, leading CompTel consultant Joseph Gillan to remark that he must enjoy watching competitors AT&T and Newsouth fight it out. Blau responded that if BellSouth were permitted into long distance it would take more active part in debate, causing loud laughter. He said company hoped to enter long distance soon, “by the end of the year in 3 or 4 states.”
Blau, who helped develop industry’s CALLS access charge reform plan, said recovering costs through overly high access charges wasn’t “a sustainable business model” because it “adds risk and regulatory uncertainty.” Issue has come to fore because CLECs, whose interstate access rates aren’t regulated, sometimes charge long distance companies rates that are well above those FCC has approved for regulated ILEC. Some long distance providers, such as AT&T, have told those CLECs they won’t pay the rates and in essence don’t want to purchase access from them. AT&T has threatened to go further and block calls going to some CLECs but Quinn said it wasn’t AT&T’s first choice. “Our position is there is nothing in the [Telecom] Act that requires carriers to purchase other carriers’ services,” Quinn said. Jennings said his company charges 7.7 cents per min. in order to recover costs of providing low-cost phone service. Cost of capital on Wall St. is high, as are prices for unbundled network elements (UNEs) on which Newsouth depends, Jennings said, and “my transport costs are exorbitant.”
Attwood said policymakers have to consider fact that ILECs used access revenue to help build their networks, so concept wasn’t new. On other hand, she said, Quinn “makes a good point, that the long distance market isn’t what it used to be” when it subsidized incumbent local telcos. There’s also question of how much cost should come from other carriers and how much from end users, she said. Many of those questions point to need for broader look at all intercarrier compensation and FCC hopes to issue notice of inquiry (NOI) on that soon, Attwood said. She said there also was question about public policy ramifications of blocking calls by long distance companies. “Wholesale blocking, or more likely some CLECs blocked and others not” would affect seamless nature of public networks, she said. “These are the questions we have to grapple with.” Attwood also noted that transport cost issued raised by Jenkins was becoming bigger issue in Washington. “We don’t want folks to have to reconfigure their networks” in order to connect to ILECs.
Asked after session about FCC’s progress on reciprocal compensation, Attwood said Commission was “very engaged” on issue and predicted that while reciprocal compensation might not come out at same time as NOI on intercarrier compensation, agency saw 2 issues as “naturally linked.”