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RE: FEDERAL REGULATORY REPORT DATE: FEBRUARY 22, 1999 ______________________________________________________________________________ Major Occurrences: • Upcoming FCC Meeting: The FCC has scheduled several controversial matters for consideration at its upcoming February 25 “sunshine” meeting. First and foremost, the FCC will determine the jurisdictional treatment of switched “dial-up” traffic delivered to Internet service providers. This matter is important because of its potential impact on the right of competitive local exchange carriers serving Internet service providers to receive reciprocal compensation. Under the Telecommunications Act of 1996, a LEC which terminates local traffic on another LEC’s network (including networks comprised of unbundled network elements) must compensate the terminating LEC for the use of its network. Thus, if an ISP is a local service customer of a competitive LEC and an end-user customer of an incumbent LEC uses that ISP for Internet access, the competitive LEC would be entitled to reciprocal compensation from the incumbent LEC if the end user’s call to the ISP were deemed to be a local call. Given its jurisdictional analysis of high-speed, dedicated connections between ISPs and end users, the Commission has little choice but to treat switched “dial-up” traffic delivered to ISPs as jurisdictionally interstate. Nonetheless, the Commission, at least for the short-term, will likely classify such traffic as local for reciprocal compensation purposes in order to avoid negatively impacting competitive LECs. Other matters that the FCC has scheduled for consideration at the February 25 meeting include (i) the regulatory treatment of BOC provision of new intraLATA enhanced service offerings; (ii) audits of BOC assets; and (iii) the definition of “primary residential line” and “single line business line” for purposes of applying the presubscribed interexchange carrier charge. • Local Competition: The ink was barely dry on the U.S. Supreme Court decision resurrecting key pro-competitive FCC local rules and policies before the Bell Operating Companies and GTE moved to blunt its impact. First, they seized upon the sole point on which the Supreme Court faulted the FCC -- i.e., the agency’s determination of the standard for ascertaining which network elements are “necessary” for incumbent local exchange carriers to provide to competitors on an unbundled basis and when the failure to do so would “impair” competitors’ ability to offer competitive service -- in claiming that incumbent LECs are no longer required to provide network elements which can be obtained elsewhere. The revolt, however, was short-lived as the FCC extracted a commitment from each of the BOCs and GTE that they would continue to make available the seven UNEs originally identified by the Commission pending completion of a rulemaking proceeding to redefine the “necessary and impair” standard. That rulemaking proceeding should be initiated within the month and should be concluded by mid-Summer. Next, Bell Atlantic unilaterally imposed a one-year limit on the “pick and choose” rights of competitors, seizing upon that element of the FCC’s rule that required incumbent LECs to make interconnection and resale agreements available for this purpose “for a reasonable period of time” to argue that competitors could only select provisions from agreements entered into within the year. And Bell Atlantic, of course, seeks to impose this one-year limit on existing agreements even though the FCC’s “pick and choose” rule was without effect until resurrected by the Supreme Court. This matter has not yet reached the FCC. Finally, not content with their efforts to distort the Supreme Court decision, the BOCs and GTE have asked the Eighth Circuit to block reinstatement of the FCC’s “total element long run incremental cost” pricing methodology for network interconnection and UNEs pending further judicial review. Given its finding that the FCC lacked jurisdiction to establish national pricing guidelines for network interconnection and UNEs, the Eighth Circuit did not reach the merits of the Commission’s pricing methodology. While the BOCs and GTE are hoping that it will once again overrule the FCC, the Eighth Circuit has not only been far more deferential to the Commission of late, but is likely still smarting from the Supreme Court’s wholesale reversal of its earlier determinations. The odds favor the FCC on this one. • Slamming: The FCC decision adopting new anti-slamming safeguards was finally published in the Federal Register on February 16. This means that most of the new rules will become effective on April 29. However, the liability provisions, including the absolution from the obligation to pay for up to 30 days worth of telephone service for consumers who have been, or who allege to have been, the victims of unauthorized carrier changes, will not become effective until May 17. Industry efforts to develop an industry- run dispute resolution mechanism continue with the blessing of the FCC, although now at a more urgent pace. Potential vendors have been contacted and the process of socializing the mechanism with other industry segments, states’ attorneys general and consumer groups has begun. • Advanced Telecommunications: It appears that the FCC will issue an order in the near future addressing certain elements of its regulatory treatment of such advanced telecommunications services as xDSL services. Candidates for quick determination are Commission proposals to (i) require incumbent LECs to resell advanced telecommunications services at wholesale rates, (ii) enhance collocation opportunities, and (iii) improve access to xDSL conditioned loops. Issues such as the availability of DSLAMs and other electronics associated with xDSL services, as well as the imposition of structural separation requirements on incumbent LEC provision of such services, will likely be deferred until the Commission completes its rulemaking addressing the “necessary and impair” standard applicable to the availability of UNEs. • Merger Mania: The FCC approved with limited conditions the merger of AT&T and TCI. The Commission did not require the merged entity to provide open access to its broadband cable plant. Nor did the Commission designate the merged entity as a “comparable carrier” subject to the network unbundling obligations and wholesale discount requirements applicable to incumbent local exchange carriers. Instead, the FCC classified the merged entity as a local exchange carrier, required as such to make its services available for resale, but at no prescribed discount level. In a separate action, the FCC approved the acquisition by GTE of the Puerto Rico Telephone Company. In January and February, TRA made the following filings with the FCC: • Opposition, filed with the FCC on February 18, 1999, in which TRA opposed a U S WEST petition for forbearance from regulation as a dominant carrier for high capacity services in Seattle metropolitan area, Petition of US WEST Communications, Inc. for Forbearance from Regulation as a Dominant Carrier for High Capacity Services in the Seattle, Washington Metropolitan Statistical Area, CC Docket No. 99-1. • Reply Comments, filed with the FCC on February 11, 1999, in which TRA countered incumbent local exchange carrier comments supporting a SBC Communications request to be relieved of dominant carrier regulation in its provision of high capacity services in 14 major metropolitan statistical areas, Petition of SBC Companies from Regulation as a Dominant Carrier for High Capacity Dedicated Transport Services in Specified MSAs, CC Docket No. 98-227. • Reply Comments, filed with the FCC on January 25, 1999, in which TRA countered comments supporting various premature deregulatory initiatives proposed by SBC Communications, 1998 Biennial Review -- Petition for Section 11 Review filed by SBC Communications, Inc., Southwestern Bell Telephone Company, Pacific Bell, and Nevada Bell, CC Docket No. 98-177. • Ex Parte Materials, distributed at a January 22, 1999 meeting with the Chief of the Enforcement Division of the Commission’s Common Carrier Bureau, outlining a proposal for creation of a industry-funded third-party administrator to adjudicate slamming complaints, Implementation of Subscriber Carrier Selection Change Provisions of Telecommunications Act of 1996, CC Docket No. 94-129. • Ex Parte Letter, filed with the FCC on January 21, 1999, by which TRA transmitted materials distributed at a meeting with Commissioner Furchtgott-Roth and his legal advisors which addressed the Commission’s proposal to relieve incumbent local exchange carriers of their resale and network unbundling obligations as they relate to advanced telecommunications services, Deployment of Wireline Service Offering Advanced Telecommunications Capability, CC Docket No. 98-147. • Ex Parte Letters, filed with the FCC on January 21, 1999, in which TRA transmitted to Chairman Kennard and Commissioners Powell and Tristani materials opposing the Commission’s proposal to relieve incumbent local exchange carriers of their resale and network unbundling obligations as they relate to advanced telecommunications services, Deployment of Wireline Service Offering Advanced Telecommunications Capability, CC Docket No. 98-147. • Opposition, filed with the FCC on January 21, 1999, in which TRA opposed a SBC Communications request to be relieved of dominant carrier regulation in its provision of high capacity dedicated transport services in 14 major metropolitan statistical areas, Petition of SBC Companies from Regulation as a Dominant Carrier for High Capacity Dedicated Transport Services in Specified MSAs, CC Docket No. 98-227. • Ex Parte Letter, filed with the FCC on January 21, 1999, by which TRA transmitted materials distributed at a meeting with Commissioner Ness’ legal advisor which addressed the Commission’s proposal to relieve incumbent local exchange carriers of their resale and network unbundling obligations as they relate to advanced telecommunications services, Deployment of Wireline Service Offering Advanced Telecommunications Capability, CC Docket No. 98-147. • Opposition, filed with the FCC on January 11, 1999, in which TRA opposed various premature deregulatory initiatives proposed by SBC Communications, 1998 Biennial Review -- Petition for Section 11 Review filed by SBC Communications, Inc., Southwestern Bell Telephone Company, Pacific Bell, and Nevada Bell, CC Docket No. 98-177. • Comments, filed with the FCC on January 7, 1999, in which TRA urged the Commission to initiate a rulemaking proceeding to treat as incumbent local exchange carriers, and impose network interconnection and unbundling, as well as resale, obligations on, competitive LEC which constitute the only facilities-based providers in geographically identifiable areas not previously served by an incumbent LEC, Idaho Public Utilities Commission, Petition for Declaratory Ruling Concerning Section 251(h)(2) of the Communications Act, Treatment of CTC Telecom, Inc. and Similarly Situated Carriers as Incumbent Local Exchange Carriers under Section 251(h)(2) of the Communications Act, CC Docket No. 98-221. • Comments, filed with the FCC on January 5, 1999, in which TRA urged the Commission to reconsider its holding that digital subscriber line services designed to provide dedicated, high-speed connections between end users and Internet service providers are jurisdictionally interstate in nature, GTE Telephone Operating Cos., GTOC Tariff No. 10, GTOC Transmittal No. 1148, CC Docket No. 98-79. In January and February, TRA made the following filings with Federal Appellate and District Courts: • Letter, filed with the U.S. Court of Appeals for the Fifth Circuit on January 14, 1999, in which TRA responded to a request for information issued by the Court, Alenco Communications, Inc. v. FCC, Case No. 98-60213. • Answer to First Amended Complaint of BellSouth Telecommunications, Inc. and Agreed Order of Dismissal, filed with the United States District Court for the Eastern District of Kentucky, Frankfort Division, on January 8, 1999, in connection with BellSouth's appeal of the rejection of its Statement of Generally Available Terms and Conditions by the Kentucky Public Service Commission, BellSouth Telecommunications, Inc. v. Public Service Commission of Kentucky, et al., Case No. 98-96. Upcoming (in February/March) TRA Filings with the FCC: • Opposition to a Bell Atlantic request to be relieved of dominant carrier regulation in its provision of high capacity services in 10 states and the District of Columbia, Petition of Bell Atlantic for Forbearance from Regulation as a Dominant Carrier in Delaware, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Washington, D.C., Vermont, and Virginia, CC Docket No. 99-24. • Comments on Bell Atlantic’s progress report on its compliance with the conditions imposed on its merger with NYNEX, Report of Bell Atlantic on Compliance with Merger Conditions, File No. AAD 98-24. • Comments on the Federal Trade Commission’s proposed new anti-cramming rules, Review of Trade Regulation Rule Pursuant to the Telephone Disclosure and Dispute Resolution Act of 1992. • Comments on the Internal Revenue Service’s proposed rules for the taxation of prepaid calling cards, Communications Excise Tax; Prepaid Telephone Cards. • Petition for reconsideration of the FCC’s new anti-slamming safeguards, Implementation of Subscriber Carrier Selection Change Provisions of Telecommunications Act of 1996, CC Docket No. 94-129. • Comments on the additional new anti-slamming safeguards proposed by the FCC, Implementation of Subscriber Carrier Selection Change Provisions of Telecommunications Act of 1996, CC Docket No. 94-129. • Opposition to an Ameritech request to be relieved of dominant carrier regulation in its provision of high capacity in the Chicago metropolitan area, Petition of Ameritech for Forbearance from Dominant Carrier Regulation of its Provision of High Capacity Services in the Chicago LATA, CC Docket No. 99-65. • Petition for Reconsideration of the FCC’s new payphone compensation levels, Implementation of the Pay Telephone Reclassification and Compensation Provisions of the Telecommunications Act of 1996, CC Docket No. 96-98. • Petition for Reconsideration of the FCC’s jurisdictional treatment of switched “dial- up” traffic delivered to Internet service providers, Implementation of the Local Competition Provisions in the Telecommunications Act of 1996. • Petition for Reconsideration of the FCC’s regulatory treatment of incumbent LEC provision of advanced telecommunications services, Deployment of Wireline Service Offering Advanced Telecommunications Capability, CC Docket No. 98-147. Upcoming (in February/March) TRA Filings with the Federal Courts of Appeal: • Opposition to the incumbent LEC Motion Regarding Further Proceedings on Remand to be filed with the U.S. Court of Appeals for the Eighth Circuit in Iowa Utilities Board et al. v. FCC, Case No. 96-3321. • Intervenors’ Brief in support of the FCC’s total element long run incremental cost pricing of interconnection and unbundled network elements to be filed with the U.S. Court of Appeals for the Eighth Circuit in Iowa Utilities Board et al. v. FCC, Case No. 96-3321. • Intervenors’ Brief in support of the FCC’s ruling that its lacks the authority to forbear from enforcing statutory network unbundling and resale requirements as they relate to advanced telecommunications services to be filed with the U.S. Court of Appeals for the District of Columbia Circuit in U S WEST Communications, Inc. v. FCC, Case No. 1410. * * * * * * * * * Please feel free to call if you have any questions or would like to discuss any of the above-referenced matters. |