| FEDERAL REPORT
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| RE: FEDERAL REGULATORY REPORT DATE: JUNE 22, 1999 ______________________________________________________________________________ Set forth below is the Federal Regulatory Report for the June 24, 1999, meeting of the Board of Directors of the Telecommunications Resellers Association: Major Occurrences: • Access Charges: Incumbent local exchange carrier access charge reductions have fallen well short of anticipated amounts. Indeed, by some estimates, the reductions came up $1 billion short, although the full extent of the shortfall remains unknown because SBC has not yet announced the amount of its proposed reductions. Among the major incumbent LECs, Bell Atlantic led the way with annual reductions of $235 million. BellSouth and U S WEST each proposed annual reductions in excess of $100, with the two carriers, respectively showing reductions of $150 million and $109 million. Ameritech and GTE trailed behind with reductions of $88 million and 45 million, respectively. Offsetting these reductions are substantial increases in presubscribed interexchange carrier charges which, although a subject of some debate at the FCC, now appear certain to go into effect on July 1, 1999. This means that primary residential line and single line business PICCs will rise to $1.03, second and additional residential line PICCs will increase to $2.50, and the multi-line business PICC will hit $4.25. Adding insult to injury, the Commission announced that its universal service contribution factor for schools, libraries and rural health care support, which applies to total intrastate, interstate and international end- user telecommunications billings, will nearly double for third quarter 1999, increasing from 0.57 percent to 0.99 percent. Fortunately, the the factor for high cost area and low income support, which applies to total interstate and international end-user telecommunications billings, will fall slightly to 2.94 percent (from 3.05 percent). On the bright side, there are rumblings that the FCC may finally be ready to revisit its access charge reforms in early Fall, which could produce potentially substantial, additional decreases in access charges. • Local Competition: Following a lengthy, seemingly inexplicable delay, the U.S. Court of Appeals for the Eighth Circuit has issued a series of orders implementing the U.S. Supreme Court decision reinstating the bulk of the FCC’s local competition rules, rejecting in so doing (as advocated by TRA) invitations by incumbent local exchange carriers to ignore through inaction the mandate of the Supreme Court. Critically, the Eighth Circuit also set a schedule for briefing and oral argument on several key issues it had not reached in its earlier review of the FCC’s local competition order. Thus, for example, while the Eighth Circuit reinstated the FCC’s pricing guidelines for interconnection and unbundled access to incumbent LEC networks, as well as for incumbent LEC wholesale services, it left open for further consideration the merits of incumbent LEC objections to both the FCC’s “total element long run incremental cost” and the Commission’s “reasonably avoidable” pricing methodology, which the Court had not addressed in its initial decision because of its general ruling that the Commission lacked jurisdiction to promulgate pricing rules. The Eighth Circuit also reinstated the FCC prohibition against disassembly by incumbent LECs of existing combinations of unbundled network elements prior to their delivery to competitive LECs, while at the same time calling for briefing on the further Commission mandate requiring incumbent LECs to assemble for competitors UNEs which had not already been combined in the incumbents’ networks. Among other FCC local competition rules reinstated by the Eighth Circuit were the “pick and chose” option and the intraLATA dialing parity requirements. The Court also recalled its mandate prohibiting the Commission from considering pricing of network interconnection, network unbundling and wholesale services in evaluating Bell Operating Company applications for authority to provide in-region, interLATA service. In a related matter, the FCC will apparently attempt to conclude its UNE-remand proceeding by September. The U.S. Supreme Court has added to this proceeding “shared transport” by vacating a decision of the U.S. Court of Appeals for the Eighth Circuit upholding the Commission’s requirement that shared transport, and associated routing tables, must be made available by incumbent local exchange carriers on an unbundled basis. • In-region, InterLATA: The U.S. Court of Appeals for the District of Columbia Circuit has upheld the FCC’s rejection of “teaming arrangements” pursuant to which U S WEST and Ameritech sought backdoor entry into the in-region, interLATA market through Qwest Communications. Pursuant to the “teaming arrangements,” both U S WEST and Ameritech would not only have marketed Qwest’s interexchange service within their respective local service areas under their own brand names, but would have been the sole sources of customer contact, performing all billing and customer service functions as well. The Court agreed with the FCC that “[b]y offering one-stop shopping for local and long distance under their own brand name and with their own customer care, . . . U S WEST and Ameritech could build up goodwill as full-service providers, positioning themselves in these markets before § 271 allows them actually to enter.” “If the BOCs could secure this advantage without opening their local service markets,” the Court continued, “the blunting of the intended incentive would be considerable -- or so the Commission could reasonably find.” • Cable Open Access: The FCC, reacting with surprising, albeit delayed, vehemence to a ruling by a Federal District Court Judge that municipal authorities have the authority to require cable television providers to provide Internet service providers with open access to cable modem platforms, appears poised to enter the cable open access fray on the side of the cable television industry. Raising the specter of 30,000 local franchising authorities setting disparate technical standards, Chairman Kennard has called for adoption of national standards, although he has suggested that the Commission will be “watching,” anticipating “responsible behavior” by CATV system operators. Commission Powell has been somewhat blunter in his assessment, referring at one point to the Court action as “crazy.” Representatives of Commissioners Furchtgott-Roth and Tristani have echoed these sentiments, calling for a hands-off deregulatory approach to cable modem service. FCC General Counsel Wright has gone so far as to suggest vehicles CATV providers could use to prompt Commission preemption of the municipal open access requirements. • Advanced Telecommunications Services: TRA has now participated in two FCC- sponsored debates regarding the availability of advanced telecommunications services for resale at wholesale rates. At the first debate, TRA squared off against Bell Atlantic, BellSouth, America Online and Northpoint before a dozen representatives of the Common Carrier Bureau, including the Chief, Deputy Chief, and the heads of several divisions, the Chief Technologist and representatives of the Offices of Plans and Policy and Engineering and Technology, as well as legal advisors to the Chairman and Commissioner Ness. The second debate was convened by Commissioner Tristani and pitted TRA against Bell Atlantic and Northpoint. TRA has since had discussions on this issue with Commissioner Furchtgott- Roth and Commissioner Powell’s legal advisor on common carrier matters. In the interim, TRA persuaded the Commission to suspend and investigate that portion of Bell Atlantic’s Infospeed DSL volume and term offerings which purported to exempt these offerings from statutory wholesale discount requirements. On the less positive side, the Clinton administration, in the form of NTIA, has weighed in against TRA’s position, joining in its opposition, a number of highly placed Republicans on Capitol Hill. • Slamming: Proposals to use an independent third party administrator approach to centralize receipt and resolution of slamming complaints are not yet dead. In its anger at the interexchange industry for securing a Court-ordered stay of its newly-adopted anti- slamming safeguards, the FCC declined for a while to participate in further discussions regarding the TPA. The new head of the Enforcement Division, however, has called for a meeting of interexchange carriers, incumbent local exchange carriers and state regulators to iron out differences. A proposal to lessen the political heat on the FCC is being floated with the Chairman’s office at the same time. If all goes well, not only will the process be resurrected, but it will be moved into a rulemaking proceeding, which it now appears is the only way to ensure cooperation by the incumbent LECs. In the meantime, anti-slamming bills on Capitol Hill continue to proliferate. Over the last month, TRA made the following filings with the FCC: • Opposition, filed with the FCC on May 17, 1999, in which TRA opposed a petition seeking to impose on non-facilities-based carriers with carrier identification codes 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. • Opposition, filed with the FCC on May 17, 1999, in which TRA opposed a request for a declaratory ruling that incumbent local exchange carriers need not permit competitors to “opt in” to provisions in existing interconnection agreements providing for payment of reciprocal compensation for traffic delivered to Internet service providers and for purportedly non-cost-based switching arrangements, GTE Service Corporation Request for a Declaratory Ruling Regarding the Use of Section 252(i) to Opt into Provisions Containing Non-Cost-Based Rates, CC Docket No. 99-143. • Ex Parte Letter, filed with the FCC on May 20, 1999, in which TRA memorialized a debate between TRA and Bell Atlantic, America Online, BellSouth, and NorthPoint before Legal Advisors to Chairman Kennard and Commissioner Ness, the Chief, Deputy Chief and other representatives of the Common Carrier Bureau, the Chief, Deputy Chief, Assistant Chief and other representatives of the Program and Policy Division, the Chief of the Competitive Pricing Division, the Chief Technologist and other representatives of the Office of Engineering and Technology, and representatives of the Office of Plans and Policy regarding the resale of advanced telecommunications services, Deployment of Wireline Service Offering Advanced Telecommunications Capability, CC Docket No. 98-147. • Comments, filed with the FCC on May 26, 1999, in which TRA advocated retention of the existing minimum national list of seven unbundled network elements and proposed procedures and standards for removing specific elements from that list in given geographic markets, Implementation of the Local Competition Provisions in the Telecommunications Act of 1996, CC Docket No. 96-98. • Opposition, filed with the FCC on May 26, 1999, in which TRA opposed a Bell Atlantic tariff filing which purported to exempt Bell Atlantic’s Infospeed DSL Services from statutory wholesale discounts, The Bell Atlantic Telephone Companies Transmittal No. 1138 to Tariff FCC No. 1 Introducing Volume and Term Discount Plans for Infospeed DSL Services. • Comments, filed with the FCC on June 3, 1999, in which TRA supported a request for a declaratory ruling that incumbent local exchange carrier termination penalties arising out of term commitments entered into prior to the advent of local competition constitute barriers to entry which should be preempted, KMC Telecom, Inc. Petition for Declaratory Ruling Regarding Termination Penalties Imposed by Incumbent Local Exchange Carriers, CC Docket No. 99-142. • Reply Comments, filed with the FCC on June 10, 1999, in which TRA countered arguments by incumbent local exchange carriers that the Commission should delete most, if not all, the elements included on the existing minimum national 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 June 11, 1999,in which TRA memorialized a debate between TRA and Bell Atlantic before Commission Tristani and her Legal Advisor regarding the resale of advanced telecommunications services, Deployment of Wireline Service Offering Advanced Telecommunications Capability, CC Docket No. 98-147. • Ex Parte Letter, filed with the FCC on June 16, 1999, in which TRA memorialized a meeting with Commissioner Furchtgott-Roth and his legal advisors regarding Commission mandated resale at wholesale rates of advanced telecommunications services, Deployment of Wireline Service Offering Advanced Telecommunications Capability, CC Docket No. 98-147. . • Ex Parte Letter, filed with the FCC on June 22, 1999 Ex Parte Letter memorializing a meeting with the legal advisor to Commissioner Powell regarding Commission mandated resale at wholesale rates of advanced telecommunications services, Deployment of Wireline Service Offering Advanced Telecommunications Capability, CC Docket No. 98-147. • Comments, filed with the FCC on June 23, 1999, in which TRA addressed multiple petitions urging the Commission to reconsider its newly-adopted anti-slamming safeguards, Implementation of the Subscriber Carrier Selection Change Provisions of the Telecommunications Act of 1996, CC Docket No. 94-129. Over the last month, TRA made the following filings with the Federal Appellate District Courts: • Statement of Position, filed with the U.S. Court of Appeals for the District of Columbia Circuit on May 17, 1999, in which TRA announced its position in the pending appeal of the FCC’s anti-slamming safeguards, MCI WorldCom Incorporated v. FCC, Case No. 99-1125. • Statement of Position, filed with the U.S. Court of Appeals for the District of Columbia Circuit on May 18, 1999, in which TRA announced its position in the multiple pending appeals of the FCC’s classification of traffic delivered to Internet service providers as jurisdictionally interstate, The Bell Atlantic Telephone Companies, et al. v. FCC, Case No. 99-1094 (and consolidated cases). • Statement of Position, filed with the U.S. Court of Appeals for the District of Columbia Circuit on May 18, 1999, in which TRA announced its position in the multiple pending appeals of the FCC’s reduced payphone compensation levels, American Public Communications Council, Inc. v. FCC, Case No. 99-1114 (and consolidated cases). • Motion to Intervene, filed with the U.S. Court of Appeals for the District of Columbia Circuit on May 24, 1999, in which TRA signaled its intention to participate in the multiple pending appeals of the FCC’s grant of expanded collocation opportunities to competitive local exchange carriers, GTE Service Corp., et al. v. FCC, Case No. 99-1176 (and consolidated cases. • Opening Brief, filed with the U.S. Court of Appeals for the District of Columbia Circuit on June 7, 1999, in which TRA joined with other parties in arguing that the FCC erred in classifying traffic delivered to Internet service providers as jurisdictionally interstate, The Bell Atlantic Telephone Companies, et al. v. FCC, Case No. 99-1094 (and consolidated cases). Upcoming (in June/July) Filings with the FCC: • Comments, to be filed with the FCC on June 30, 1999, in which TRA will oppose multiple payphone service provider petitions urging the Commission to reconsider its 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, to be filed with the FCC on July 2, 1999, in which TRA will address the Commission’s most recent proposals for development of a forward-looking cost model for use in conjunction with its universal service support mechanisms, Federal State Joint Board on Universal Service, CC Docket No. 96-45. • Reply Comments, to be filed with the FCC on July 5, 1999, in which TRA responded to opposition to 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. • Reply Comments, to be filed with the FCC on July 12, 1999, in which TRA responded to comments supporting the multiple payphone service provider petitions urging the Commission to reconsider its 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, to be filed with the FCC on July 13, 1999, in which TRA supported a petition for declaratory ruling that Internet service providers are entitled to leased access to cable facilities, Internet Ventures, Inc. Petition for Declaratory Ruling that Internet Service Providers are Entitled to Leased Access to Cable Facilities Under Section 612 of the Communications Act of 1934, as Amended. • Reply Comments, to be filed with the FCC on July 15, 1999, in which TRA responded to comments of other parties addressing Commission proposals to mandate line sharing for the provision of advanced telecommunications services, Deployment of Wireline Service Offering Advanced Telecommunications Capability, CC Docket No. 98-147. • Reply Comments, to be filed with the FCC on July 16, 1999, in which TRA responded to comments of other parties addressing the Commission’s most recent proposals for development of a forward-looking cost model for use in conjunction with its universal service support mechanisms, Federal State Joint Board on Universal Service, CC Docket No. 96-45. • Reply Comments, to be filed with the FCC on July 28, 1999, in which TRA countered oppositions to a pending petition for declaratory ruling that Internet service providers are entitled to leased access to cable facilities, Internet Ventures, Inc. Petition for Declaratory Ruling that Internet Service Providers are Entitled to Leased Access to Cable Facilities Under Section 612 of the Communications Act of 1934, as Amended. • 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. • Comments addressing multiple petitions seeking reconsideration of the FCC’s grant of expanded collocation opportunities for competitive local exchange carriers, Deployment of Wireline Service Offering Advanced Telecommunications Capability, CC Docket No. 98-147. • Comments addressing multiple petitions seeking reconsideration of the FCC’s reinstatement of its requirement that interexchange carriers make their rates publicly available on the Internet and at a central location, Policy and Rules Concerning the Interstate, Interexchange Marketplace, CC Docket No. 96-61. Upcoming (in June/July) TRA Filings with the Federal Courts of Appeal: • Intervenors Brief, to be filed with the U.S. Court of Appeals for the District of Columbia Circuit on June 24, 1999, in support of petitioners in the multiple interexchange carrier appeals of the FCC decision revisiting payphone compensation levels, American Public Utilities Council v. FCC, Case No. 99-1114 (and consolidated cases). • Intervenors Brief, to be filed with the U.S. Court of Appeals for the District of Columbia Circuit on July 16, 1999, in support of the FCC in the multiple incumbent local exchange carrier appeals of the FCC refusal to forbear from enforcing statutory resale and network unbundling requirements as they relate to advanced telecommunications services, The Bell Atlantic Telephone Companies, et al. v. FCC, Case No. 99-1094 (and consolidated cases). * * * * * * * * * Please feel free to call if you have any questions or would like to discuss any of the above-referenced matters. |