TRIENNIAL ORDER FOCUS IS COMPETITION, THEN DEREGULATION, FCC'S MARTIN SAYS

DENVER -- FCC Comr. Martin told state regulators here that the underlying premise of the soon-to-be-released Triennial UNE Review order would be that competition came first, then deregulation. Speaking at the NARUC summer meeting, he didn’t provide any details of the order but said it would try to strike a balance between encouraging investment and promoting local competition. He acknowledged the order had taken longer than expected to produce, but said the Commission was working diligently to ensure it had specific guidance and criteria for the states. He said the federal-state partnership on the Triennial Review would be critical to its success.

Martin said the main focus recently had been on the Triennial Review, but that wasn’t the only issue before the FCC. He said the planned review of total element long run incremental costing (TELRIC) as the basis for telecom pricing was among the biggest tasks facing the FCC over the coming year. It will clarify accelerated depreciation and capital cost matters in the TELRIC model, he said, as well as ensure that forward-looking UNE prices based on TELRIC accurately reflect the real-world network’s attributes.

Other areas the FCC is watching include numbering reform, where Martin said the agency was addressing ways to give states increased flexibility in addressing area code relief, such as the recent decision allowing Conn. to implement a technology-specific code overlay. He said the Commission also was watching broadband. He said 81% of homes had access to some sort of broadband service and 53% had access to both cable modem and DSL. He said DSL in recent months had been fighting back against cable’s dominance of the residential broadband marketplace. Martin said the universal service contribution structure also was under discussion. He said he personally believed the FCC should consider shifting to a contribution system based on phone numbers. He said the agency had unquestioned authority over numbering so there wouldn’t be the jurisdictional issues that could affect other connection-based approaches, and a number- based system would be easier to administer. He said that while that system would shift universal service contribution burdens from interexchange carriers toward the incumbent telcos, it also would capture traffic migrations away from traditional wireline telephone service to alternate telecom technologies such as wireless and Internet telephony.

Later, FCC Wireline Bureau Chief William Maher outlined some other issues facing the Commission. He said one of the biggest would be maintaining safeguards that protected local competition after all the Bell companies had completed the Sec. 271 process and were providing interLATA long distance service. He said Bell long distance had been authorized in 43 states and D.C., and applications for several of the remaining states were pending before the FCC now. He said the FCC had a pending notice of proposed rulemaking addressing what competition safeguards should take over when the Sec. 272 separate affiliate requirements sunsetted. That requirement sunsets for a particular state 3 years after the Bell company wins long distance approval. It already has sunset for SBC in Tex. and Verizon in N.Y., he noted. He said LATA boundaries might not mean much after fulfillment of 271 and the sunset of separate affiliates.

The FCC has petitions pending on voice-over-Internet protocol (VoIP) telephony asking that VoIP be declared an information service and that it be exempt from access charges. Another regulatory issue relating to new technologies, he said, was whether broadband carriers should contribute to the universal service fund.

Meanwhile, NARUC policy committees adopted resolutions addressing emergency telecom service restoration priorities, wireless carrier billing practices and Lifeline service, while the group’s Consumer Affairs Committee approved resolutions on best service practices for wireless carriers and customer service center improvements for all carriers. Additional resolutions were pending.

The Telecom panel adopted a resolution urging states to review the telecom service priority (TSP) tariffs of their carriers to ensure the rates and terms were fair, reasonable and affordable to the public safety and disaster relief organizations that purchased those services. TSP tariffs ensure that the entities engaged in national security and emergency preparedness activities get top priority for telecom service restorations following natural or man-made disasters. The resolution said reasonable rates and terms were critical to keep those entities in the TSP program, but said many tariffed TSP rates now in place still could incorporate implementation costs that no longer were relevant.

Another resolution adopted by the Telecom Committee encourages states to examine billing practices of wireless carriers to ensure that the companies differentiate between special purpose charges imposed at the carrier’s discretion and those that are imposed or mandated by law. The resolution addresses special charges for federally mandated programs such as universal service, wireless E911 implementation, number portability and pooling. The resolution said carriers should collect no more than the cost of the mandates and should account for the revenue generated by the special charges.

The resolution said wireless carriers shouldn’t add those charges to existing fixed-price term contracts unless customers had been notified and given an opportunity to cancel the contract without penalty. The resolution also urged the FCC to determine whether existing truth-in-billing rules needed to be revised to address wireless billing practices. It raised questions from some states over whether it would put state commissions in a position of trying to regulate wireless rates, which is banned by federal law and by the laws of 11 states. The language was amended to specify “appropriate state authorities” rather than state utility commissions.

Another resolution the Telecom panel passed expressed support for the Lifeline/Link Up program recommendations of the Federal-State Joint Board on Universal Service for expanding program eligibility. The resolution encourages states to adopt federal income eligibility and verification standards as long as states have the option of retaining their current income verification procedures. The Telecom Committee was to address proposed resolutions on TELRIC pricing of UNEs and number pooling policy in the nation’s largest telecom markets.

The NARUC Consumer Affairs Committee adopted a resolution urging wireless carriers to approve an attached list of 24 “best practices” for improving wireless contracts, customer service, quality of service and billing. Recommended practices include a 30-day cancellation period on new contracts, a ban on adding surcharges to contracts without advance customer consent and taking initiatives for disposal of used wireless phones. Another adopted Consumer Affairs resolution urged states to consider applying to all their regulated utilities the model call center guidelines developed last winter by a NARUC Consumer Affairs work group, including standards specifying that 90% of incoming customer service calls be answered within 90 sec., that customers be presented with the option of transferring to a live representative within 20 sec. of answering, and suggested procedures for dealing with violations of the guidelines.