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RE: FEDERAL REGULATORY REPORT DATE: APRIL 21, 1999 ______________________________________________________________________________ Major Occurrences: • Slamming: TRA has joined with other interexchange carriers and associations in petitioning the FCC to waive certain of its new carrier change regulations to allow for the establishment of an independent third party administrator to centralize receipt and resolution of slamming complaints. If authorized, the third party administrator would process consumer complaints submitted directly by the consumers themselves or forwarded by federal and state regulatory authorities, states’ attorneys general, consumer protection agencies and local exchange carriers. Upon receipt of a slamming complaint, the TPA would promptly direct the consumer’s local carrier to switch the consumer back to its original carrier, notify the carrier charged with slamming of the pendency of the complaint, and provide mechanisms for the carrier to demonstrate regulatory compliance and for the consumer to dispute the carrier’s showing. Ultimately, the TPA would resolve the slamming dispute and administer any resultant consumer compensation and carrier-to-carrier liability obligations. Critically, under the TPA proposal, the current carrier obligation to re-rate charges for customers who have been slammed would be replaced by an easily administered proxy system, and incumbent LECs would no longer be allowed to unilaterally issue credits to every consumer who claims to have been slammed. The TPA would be governed by a Board of Directors on which a seat has been reserved for TRA. Initial funding of the TPA would be generated through assessments on carriers with revenues in excess of $100 million in proportion to their respective percentages of industry revenues. Funding ultimately would be derived in substantial part from per-complaint assessments (not to exceed $50.00) on carriers accused of slamming. The FCC has generally reacted positively to the TPA proposal, although it has been less enthusiastic with regard to the associated request that the effective date of its new anti-slamming safeguards be postponed for six months to allow implementation of the proposal. Reactions on Capitol Hill have been mixed. States’ attorneys general and consumer groups have generally been supportive. State regulators have expressed reservations based primarily on their concern that more stringent state slamming protections might be neglected. Among the incumbent LECs, reactions have ranged from the constructive to the obstructionist. The FCC has sought and received public comment on the TRA proposal and is currently endeavoring to broker a settlement among the various stakeholders through a series of face-to-face meetings in which TRA is participating. • Network Unbundling: The FCC has initiated a rulemaking proceeding to address concerns expressed by the U.S. Supreme Court that the Commission failed to properly assess (i) whether “access to such network elements as are proprietary in nature is necessary,” and (ii) whether “the failure to provide access to such network elements would impair the ability of the telecommunications carrier seeking access to provide the services that it seeks to offer.” Unfortunately, the FCC appears to have overreacted to a relatively narrow Supreme Court mandate. In its Notice of Proposed Rulemaking, the Commission has signaled its intent to undertake a de nova review of “the specific elements the Commission should require incumbent LECs to unbundle under Section 251(c)(3).” While the Commission “tentatively concluded that . . . [it] should continue to identify a minimum set of network elements that must be unbundled on a nationwide basis,” it expressed absolute confidence only that local loops would continue to be subject to unbundling requirements, leaving the fate of the remaining network elements in doubt. The Commission has called for comment on the definitions of “proprietary,” “necessary” and “impair” as applied to unbundled network elements, as well as the “factors and criteria . . . [it] should adopt in determining whether access to network elements is necessary and whether failure to provide such access would impair an entrant’s ability to provide service.” Ultimately, the FCC will not only determine which network elements will remain (and potentially be added to) the national list, but how the list could be modified in the future or with respect to specific geographic locations. Among the issues the Commission must resolve are whether the judgment to remove a given element from the national list in a given market should be made by it or the states, who among the incumbent and competitive LECs should bear the burden of proof, how much should be left to negotiations among these parties, and whether unbundling requirements should be “sunsetted” at some future time, either automatically or based on some trigger. • Truth-in-Billing: In promulgating its long-awaited “truth-in-billing” rules, the Commission appears to have heeded TRA’s recommendation that it not “micro-manage” the billing process and instead adopt broad “principles and guidelines.” Consistent with this approach, the Commission apparently has directed carriers and billing entities in billing for telecommunications services only to (i) highlight new service providers, (ii) utilize full and non-misleading service descriptions which clearly identify the service provider, (iii) employ standard labels to identify charges resulting from regulatory action, and (iv) specify which charges may be withheld without risk of losing local service. • Merger Mania: In a courageous move, FCC Chairman Kennard has initiated a procedural process aimed at more fully evaluating public interest objections to the proposed SBC Communications/Ameritech merger, as well as exploring potential pro- competitive conditions that might be imposed on the merged entity. Congressional pressure on the Commission to promptly approve the merger is growing increasingly intense. In a related matter, Bell Atlantic and GTE have withdrawn their request for interim relief to allow them to continue to operate GTE’s Internet backbone following their merger without first securing in-region, intraLATA authority. • International: The FCC has dramatically revamped its international settlements policy, deregulating inter-carrier settlement arrangements between U.S. carriers and foreign non-dominant carriers on competitive routes. The Commission has eliminated the ISP, as well as contract filing requirements, for arrangements with foreign carriers that lack market power - i.e., carriers that have a market share of 50% or less. The Commission has also eliminated the ISP for arrangements with all carriers on routes where the rates to terminate U.S.-originated calls are at least 25% lower than FCC-prescribed benchmarks. And with respect to arrangements with foreign carriers with market power on routes as to which the ISP has been eliminated, the Commission has provided for confidential treatment of inter-carrier agreements. • The Millennium: The FCC has issued a Y2K Communications Sector Report which concludes that nearly half of U.S. small and mid-size telecommunications carriers have no formal plan to address potential Y2K problems. According to the FCC report, small and mid- size local carriers have completed Y2K remediation for only 19% of their switches, 14% of their operations support, and 20% of their auxiliary systems, while only 38% of small and mid-size carriers have undertaken Y2K contingency planning. Subsequent to the last Meeting of the Board, TRA made the following filings with the FCC: • Ex Parte Letter, filed with the FCC on April 20, 1999, memorializing a “working meeting” attended by TRA, the Chief and Deputy Chief of the Enforcement Division of the FCC’s Common Carrier Bureau and various members of the interexchange and incumbent local exchange carrier communities regarding waiver of the Commission’s Rules to allow for the establishment of an independent third party administrator to centralize receipt and resolution of slamming complaints, Implementation of the Subscriber Carrier Selection Change Provisions of the Telecommunications Act of 1996, CC Docket No. 94-129. • Ex Parte Letter, filed with the FCC on April 19, 1999, memorializing meetings with Legal Advisors to Commissioners Powell and Furchtgott-Roth regarding waiver of the Commission’s Rules to allow for the establishment of an independent third party administrator to centralize receipt and resolution of slamming complaints, Implementation of the Subscriber Carrier Selection Change Provisions of the Telecommunications Act of 1996, CC Docket No. 94-129. • Comments, filed with the FCC on April 12, 1999, in which TRA urged the Commission, in developing rules and policies to govern inter-carrier compensation for traffic delivered to Internet service providers, to adopt national pricing and other guidelines to mitigate the gross disparity in bargaining power between incumbent LECs and new entrants, Implementation of the Local Competition Provisions in the Telecommunications Act of 1996, CC Docket No. 96-98. • Ex Parte Letter, filed with the FCC on April 7, 1999, by which TRA transmitted materials distributed at a meeting with Commissioner Ness which address the Commission’s reassessment of the Telecommunications Act of 1996's “necessary” and “impair” standards and their application to the current minimum list of seven unbundled network elements, Implementation of the Local Competition Provisions in the Telecommunications Act of 1996, CC Docket No. 96-98. • Ex Parte Letter, filed with the FCC on April 7, 1999, by which TRA transmitted materials distributed at a meeting with Chairman Kennard’s Legal Advisor which address the Commission’s reassessment of the Telecommunications Act of 1996's “necessary” and “impair” standards and their application to the current minimum list of seven unbundled network elements, Implementation of the Local Competition Provisions in the Telecommunications Act of 1996, CC Docket No. 96-98 . • Ex Parte Letter, filed with the FCC on April 5, 1999, by which TRA transmitted materials distributed at a meeting with Commission Powell which address the Commission’s reassessment of the Telecommunications Act of 1996's “necessary” and “impair” standards and their application to the current minimum list of seven unbundled network elements, Implementation of the Local Competition Provisions in the Telecommunications Act of 1996, CC Docket No. 96-98. • Opposition, filed with the FCC on April 1, 1999, in which TRA opposed an Ameritech request to be relieved of dominant carrier regulation in its provision of high capacity within the Chicago LATA, 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 Waiver, filed with the FCC on March 30, 1999, in which TRA joined with other interexchange carriers in urging the Commission to waive certain of its newly- adopted anti-slamming safeguards to permit establishment of a industry directed and funded third party administrator to act as a clearinghouse and initial adjudicator of slamming complaints, Implementation of the Subscriber Carrier Selection Change Provisions of the Telecommunications Act of 1996, CC Docket No. 94-129. • Petition for Stay, filed with the FCC on March 30, 1999, in which TRA joined with other interexchange carriers in urging the Commission to stay the effectiveness of the FCC’s newly-adopted anti-slamming safeguards to permit establishment of a industry directed and funded third party administrator to act as a clearinghouse and initial adjudicator of slamming complaints, Implementation of the Subscriber Carrier Selection Change Provisions of the Telecommunications Act of 1996, CC Docket No. 94-129. • Ex Parte Letter, filed with the FCC on March 29, 1999, by which TRA transmitted materials distributed at a meeting with Commission Furchtgott-Powell which address the Commission’s reassessment of the Telecommunications Act of 1996's “necessary” and “impair” standards and their application to the current minimum list of seven unbundled network elements, Implementation of the Local Competition Provisions in the Telecommunications Act of 1996, CC Docket No.96-98 Subsequent to the last Meeting of the Board, TRA made the following filings with Federal Appellate District Courts: • Motion to Intervene, filed with the U.S. Court of Appeals for the District of Columbia Circuit on April 9, 1999, in which TRA signaled its intention to participate in the multiple pending appeals of the FCC’s new anti-slamming safeguards, MCI WorldCom Inc. FCC, Case No. 99-1125. • Intervenor’s Response, filed with the U.S. Court of Appeals for the Eight Circuit on April 1, 1999, in which TRA joined with other parties in opposing a petition by U S WEST for a writ of prohibition, People of the State of California, v. FCC, Case No. 96- 3519. Upcoming (in April/May) Filings with the FCC: • Ex Parte Letter urging the FCC to act promptly to mandate the resale at wholesale rates of advanced telecommunications services, such as digital subscriber line service, Deployment of Wireline Service Offering Advanced Telecommunications Capability, CC Docket No. 98-147. • Ex Parte Letter reemphasizing TRA’s opposition to the merger of SBC Communications and Ameritech and recommending pro-competitive conditions that should be imposed on the merged entity if the merger is approved, Application of SBC Communications, Inc. and Ameritech Corporation for Transfer of Control of Ameritech Corporation to SBC Communications, Inc., CC Docket No. 98-184. • Reply Comments in the FCC’s rulemaking addressing inter-carrier compensation for traffic delivered to Internet service providers, Implementation of the Local Competition Provisions in the Telecommunications Act of 1996, CC Docket No. 96-98. • Reply Comments addressing comments of other parties supporting additional mechanisms proposed by the FCC to combat slamming which would have a potentially devastating impact on small carriers, Implementation of the Subscriber Carrier Selection Change Provisions of the Telecommunications Act of 1996, CC Docket No. 94-129. • Comments on petition for declaratory ruling regarding tariff limitations for gross negligence or willful misconduct, Home Owners Long Distance, Inc.’s Petition for a Declaratory Ruling that WorldCom Cannot Limit its Liability for Gross Negligence or Other Willful Misconduct Through its Interstate Tariffs, ENF-99-07. • Opposition to petition for clarification regarding carrier responsibility for payphone compensation tracking and payment, RBOC/GTE/SNET Payphone Coalition Petition for Clarification Regarding Carrier Responsibility for Payphone Compensation Payment, CC Docket No. 96-128. • Comments addressing multiple petitions seeking reconsideration of the FCC’s newly- adopted anti-slamming safeguards, Implementation of the Subscriber Carrier Selection Change Provisions of the Telecommunications Act of 1996, CC Docket No. 94-129. • Comments addressing issues raised in the FCC’s reassessment of unbundled network elements in the wake of the U.S. Supreme Court’s decision questioning the Commission’s interpretation of the statutory “necessary and impair standards,” Implementation of the Local Competition Provisions in the Telecommunications Act of 1996, CC Docket No. 96-98. • Comments addressing multiple petitions seeking reconsideration of the FCC’s reduced payphone compensation levels, Implementation of the Pay Telephone Reclassification and Compensation Provisions in the Telecommunications Act of 1996, CC Docket No. 96-128. • Comments addressing multiple petitions seeking reconsideration of the FCC’s classification of switched dial-up traffic delivered to Internet service providers as jurisdictionally interstate, Implementation of the Local Competition Provisions in the Telecommunications Act of 1996, CC Docket No. 96-98. Upcoming (in March/April) TRA Filings with the Federal Courts of Appeal: • Motion to Intervene in multiple appeals of the enhanced collocation opportunities recently afforded competitive carriers by the FCC. * * * * * * * * * Please feel free to call if you have any questions or would like to discuss any of the above-referenced matters. |