| FEDERAL REPORT
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| RE: FEDERAL REGULATORY REPORT DATE: AUGUST 25, 1999 ______________________________________________________________________________ Set forth below is the Federal Regulatory Report for the August 26, 1999, meeting of the Board of Directors of the Telecommunications Resellers Association: Major Occurrences: • Regulatory Relief: The FCC has established a framework which will afford price cap incumbent local exchange carriers progressively greater flexibility in setting interstate access rates upon achievement of Phase I and Phase II “competitive triggers.” In Phase I, incumbent LECs will be allowed to offer access services through contract tariffs and apply volume and term discounts, while in Phase II, incumbent LECs will be able to offer access services free of rate structure and price cap restraints, as well as to file associated tariffs on a single day’s notice. Unfortunately, the competitive triggers adopted by the FCC virtually ensure that incumbent LECs will be granted significant pricing flexibility before they face meaningful competition. Triggers for dedicated transport and most special access services will require only that competitors have collocated, and are making use of competitive transport, in 15% (Phase I) or 50% (Phase II) of wire centers in a given metropolitan area or in wire centers in that metropolitan area accounting for 30% (Phase I) or 65% (Phase II) of dedicated transport and special access revenues. For channel terminations – i.e., facilities carrying traffic from end offices to customer premises – the collocation and revenue percentages are somewhat higher: collocation – 50% (Phase I) or 65% (Phase II); revenues – 65% (Phase I) or 85% (Phase II). For traffic sensitive and common line services, the Phase I trigger requires a showing that competitors are offering service over their own facilities to 15 % of customer locations in a given metropolitan area. Phase II triggers for traffic sensitive and common line services will be developed in a subsequent proceeding. • Access Charges: The Coalition for Affordable Local and Long Distance Services has filed with the FCC what is being touted as an “IXC-ILEC Compromise Access Charge Plan.” AT&T and Sprint, however, are the only interexchange carriers in the Coalition; smaller IXCs were not invited to participate in the negotiations and their views were not solicited. Bell Atlantic, BellSouth, SBC and GTE are the incumbent local exchange carrier Coalition participants. Thus, the “IXC-ILEC Compromise” actually represents only an agreement among the largest IXCs and the largest incumbent LECs. Its terms, accordingly, reflect a clear large carrier bias. Thus, while the Coalition proposal has a number of positive elements, it fails to address several critical small carrier concerns. For example, while the Coalition proposal would combine the residential and single-line business PICC with the subscriber line charge, relieving IXCs of the obligation to recover PICCs from their residential and single-line business subscribers, it would require IXCs to continue to pay, and hence, to pass through to their customers, the multi-line business PICC. In a similar vein, the Coalition proposal would prompt reductions in local switching charges, but would not provide necessary relief with respect to tandem switched transport. The Coalition proposal would, however, generate more than $5 billion in access charge reductions over a five year period, potentially decreasing switched access charges to $0.005 per minute. Because the Coalition proposal merely alters the manner in which, and from whom, incumbent LECs would recover access costs, incumbent LEC access revenues would not be commensurately reduced. Indeed, the proposal does not include any increase in the price cap productivity factor -- the price cap mechanism which is generally relied upon to drive access charges lower -- and may result in increased universal service assessments. • Universal Service: In a key victory for the FCC, the U.S. Court of Appeals for the Fifth Circuit turned back most challenges to the Commission’s implementation of the universal service provisions of the Telecommunications Act of 1996. The FCC’s victory, however, was not complete, as the Court reversed a number of Commission rulings, several on jurisdictional grounds. Critically, the Court upheld the Commission’s use of forward- looking cost-of-service models to compute levels of universal service support available to local exchange carriers. This finding is particularly important in light of pending challenges in the U.S. Court of Appeals for the Eighth Circuit to the Commission’s use of “total element long-run incremental cost” methodology in establishing guidelines for pricing unbundled network elements. From the FCC’s perspective, perhaps the most important element of the Court’s decision was its endorsement of its E-rate discounts to schools and libraries for Internet access and the internal wiring needed to connect classrooms to the Internet. The Court, however, faulted the FCC for the manner in which it opted to assess universal service funding obligations on carriers, holding that the Commission exceeded its jurisdictional authority in calculating carrier contributions based on combined intrastate and interstate revenues, and remanding for further consideration the Commission’s decision to assess contributions on both international and interstate revenues. The Court also reversed, among other things, the FCC’s mandate that incumbent LECs recover universal service contributions from their access charges. • CPNI Safeguards: Shortly after the FCC adopted an order reconsidering key elements of its decision implementing the carrier and customer confidentiality protections afforded by the Telecommunications Act of 1996, the U.S. Court of Appeals for the Tenth Circuit rejected the safeguards originally adopted by the Commission. The FCC, which had strictly implemented the statutory safeguards afforded customers, including, for the first time, resale carriers, against abuse by carriers of their confidential and proprietary information, bowed to intense pressure from both large local exchange and interexchange carriers and relaxed its rules to allow, for example, unauthorized carrier use of customer data to “win-back” customers lost to competitors and to market other services and equipment to existing customers. The Commission had also relaxed various “flagging” and audit requirements designed to guard against and reveal abuses of customer confidential and proprietary data. The Tenth Circuit decision, however, rendered these actions a nullity by holding that the FCC’s safeguards intruded on constitutionally-protected commercial speech. The Court faulted the Commission for “fail[ing] to adequately consider the constitutional ramifications of [its] regulations” and for failing to “narrowly tailor” its rules so as to protect customer privacy and promote competition without unnecessarily restricting commercial speech. The Tenth Circuit decision was a 2 to 1 ruling, accompanied by a sharp dissent, which will likely prompt the FCC to seek a rehearing by the full court or review by the U.S. Supreme Court. Over the last month, TRA made the following filings with the Federal Communications Commission: • Comments, filed with the FCC on August 23, 1999, in which TRA urged the Commission to impose resale, network unbundling and other open access requirements on its grant of AT&T Corp.’s application for authority to acquire MediaOne Group, Inc., MediaOne Group, Inc., Transferor, and AT&T Corp., Transferee, for Consent to Transfer Control of Corporations Holding Commission Licenses and Authorizations, CS Docket No. 99-251. • Ex Parte Letter, filed with the FCC on August 10, 1999, in which TRA memorialized a meeting with Deputy Chief of the Common Carrier Bureau to discuss TRA’s views regarding the proposed merger of SBC Corporation, Inc. and Ameritech Corporation, Ameritech Corporation, Transferor, and SBC Communications Inc., Transferee, for Consent to Transfer Control of Corporations Holding Commission Licenses and Authorizations Pursuant to Sections 214 and 310(d) of the Communications Act and Parts 5, 22, 24 25, 63, 90, 95, and 101 of the Commission’s Rules, CC Docket No. 98-141. • Reply Comments, filed with the FCC on July 22, 1999, in which TRA countered objections raised by incumbent local exchange carriers to a petition seeking to clarify and enhance expanded collocation rights afforded competitive local exchange carriers, Deployment of Wireline Services Offering Advanced Telecommunications Capability, CC Docket No. 98-147. Over the last month, TRA made the following filings with the Federal Appellate Courts: • Joint Reply Brief, filed with the U.S. Court of Appeals for the District of Columbia Circuit on August 23, 1999, 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). • Joint Reply Brief of Intervenors, filed with the U.S. Court of Appeals for the District of Columbia Circuit on August 19, 1999, in the consolidated appeals of the FCC’s classification of switched “dial-up” calls to Internet service providers as jurisdictionally interstate, Bell Atlantic v. FCC, Case No. 99-1094 (and consolidated cases). • Joint Brief of Intervenors, filed with the U.S. Court of Appeals for the Eight Circuit on August 16, 1999, in support of the FCC in the Court’s further review of the FCC’s local competition rules following the U.S. Supreme Court’s decision in AT&T Corp., et al. v. Iowa Utilities Board, Iowa Utilities Board, et al., v. FCC, Case No. 96-3321 (and consolidated cases). • Joint Intervenors Brief, filed with the U.S. Court of Appeals for the District of Columbia Circuit on August 9, 1999, in support of the FCC in the multiple payphone service provider appeals of the Commission decision revisiting payphone compensation levels, American Public Utilities Council v. FCC, Case No. 99-1114 (and consolidated cases). • Joint Brief for Intervenors, filed with the U.S. Court of Appeals for the District of Columbia Circuit on August 5, 1999, in support of the FCC in the consolidated appeals of the Commission’s classification of switched “dial-up” calls to Internet service providers as jurisdictionally interstate, Bell Atlantic v. FCC, Case No. 99-1094 (and consolidated cases). • Opposition of Intervenors to the Motion of Local Exchange Carriers Regarding Proceedings on Remand, filed with the U.S. Court of Appeals for the Eighth Circuit on July 26, 1999, in which TRA joined with other intervenors in opposing an incumbent local exchange carrier motion to vacate the FCC’s Shared Transport Order, Southwestern Bell Telephone Company, et al., v. FCC, Case No. 97-3389 (and consolidated cases). Upcoming (in August/September) TRA Filings with the Federal Communications Commission: • Comments, to be filed with the FCC on August 27, 1999, in which TRA will address Commission proposals to ensure reasonable, nondiscriminatory access to rights-of-way, buildings, rooftops, and facilities for multiple tenant environments, Promotion of Competitive Networks in Local Telecommunications Markets, WT Docket No. 99-217, CC Docket No. 96-98. • Reply Comments, to be filed with the FCC on August 30, 1999, in which TRA will respond to comments of other parties addressing a report by the North American Numbering Plan Administrator dealing with conservation measures necessary to avoid NXX and area code exhaustion, North American Numbering Council Recommendation Concerning Replacement of Central Office Code Utilization Survey, CC Docket No. 99-200. • Ex Parte Letter, to be filed with the FCC on August 30, 1999, memorializing a meeting with Dorothy Atwood, Legal Advisor to Chairman William Kennard, in which TRA will urge the Commission to require incumbent local exchange carriers to make advanced services available at wholesale rates for resale, Deployment of Wireline Services Offering Advanced Telecommunications Capability, CC Docket No. 98-147. • Ex Parte Letter, to be filed with the FCC in late August, 1999, in which TRA will address the legality of the use of separate subsidiaries to relieve the merged SBC/Ameritech of its Section 251(c) resale and network unbundling obligations, Deployment of Wireline Services offering Advanced Telecommunications Capability, CC Docket No. 98-147. • Ex Parte Letter, to be filed with the FCC in early September, 1999, in which TRA will address an integrated package of interstate access charge reforms jointly proposed by AT&T, Sprint and a number of incumbent local exchange carriers, Access Charge Reform, CC Docket No. 96-262. • Comments, to be filed on September 3, 1999, in which TRA will address various petitions for waiver, stay, and/or clarification of the Commission’s “truth-in-billing” requirements and guidelines, Truth-in-Billing and Billing Format, CC Docket No. 98-170. • Reply Comments, to be filed with the FCC on September 9, 1999, in which TRA will respond to comments of other parties addressing Commission proposals to eliminate or streamline accounting and reporting requirements on incumbent local exchange carriers, Comprehensive Review of the Accounting Requirements and ARMIS Reporting Requirements for Incumbent Local Exchange Carriers, CC Docket No. 99-253. • Reply Comments, to be filed on September 10, 1999, in which TRA will address comments of other parties responding to various petitions for waiver, stay, and/or clarification of the Commission’s “truth-in-billing” requirements and guidelines, Truth- in-Billing and Billing Format, CC Docket No. 98-170. • Comments, to be filed with the FCC in mid-September, 1999, in which TRA will address various petitions for reconsideration of the Commission’s “truth-in-billing” requirements and guidelines, Truth-in-Billing and Billing Format, CC Docket No. 98-170. • Reply Comments, to be filed with the FCC on September 17, 1999, in which TRA will respond to comments of other parties addressing the proposed merger of AT&T Corp. and MediaOne Group, Inc., MediaOne Group, Inc., Transferor, and AT&T Corp., Transferee, for Consent to Transfer Control of Corporations Holding Commission Licenses and Authorizations, CS Docket No. 99-251. • Joint Request for Expedited Rulemaking, to be filed with the FCC in mid-September, in which TRA will join with other members of the interexchange community in urging the Commission to endorse, and require participation in, an industry-funded and directed third party administrator to serve as a clearinghouse for the receipt and adjudication of slamming complaints, Implementation of the Subscriber Carrier Selection Changes Provisions of the Telecommunications Act of 1996, Policies and Rules Concerning Unauthorized Changes of Consumers’ Long Distance Carriers, CC Docket No.94-129. • Comments, to be filed with the FCC on September 20, 1999, in which TRA will address a Commission Notice of Inquiry involving the impact of flat charges on low-volume users of interstate long-distance service, Low-Volume Long-Distance Users, CC Docket No. 99-249. • Reply Comments, to be filed with the FCC on September 27, 1999, in which TRA will respond to comments of other parties addressing Commission proposals to ensure reasonable, nondiscriminatory access to rights-of-way, buildings, rooftops, and facilities for multiple tenant environments, Promotion of Competitive Networks in Local Telecommunications Markets, WT Docket No. 99-217, CC Docket No. 96-98. • Comments, to be filed with the FCC in late-September, 1999, in which TRA will address, on remand from the U.S. Court of Appeals for the District of Columbia Circuit, the appropriate classification of advanced services under the Telecommunications Act of 1996, Deployment of Wireline Services Offering Advanced Telecommunications Capability, CC Docket No. 98-147. • Opposition, to be filed with the FCC in late-September, 1999, in which TRA will oppose Bell Atlantic’s petition for in-region, interLATA authority for the State of New York. • Reply Comments, to be filed with the FCC in late-September, 1999, in which TRA will respond to comments of other parties on various petitions for reconsideration of the Commission’s “truth-in-billing” requirements and guidelines, Truth-in-Billing and Billing Format, CC Docket No. 98-170. Upcoming (in August/September) TRA Federal Appellate Courts: • Joint Appendix, to be filed with the U.S. Court of Appeals for the District of Columbia Circuit on August 26, 1999, in the consolidated appeals of the FCC’s classification of switched “dial-up” calls to Internet service providers as jurisdictionally interstate, Bell Atlantic v. FCC, Case No. 99-1094 (and consolidated cases). • Joint Appendix, to be filed with the U.S. Court of Appeals for the District of Columbia Circuit on August 30, 1999, in the consolidated appeals of the FCC decision revisiting payphone compensation levels, American Public Utilities Council v. FCC, Case No. 99-1114 (and consolidated cases). • Final Briefs, to be filed with the U.S. Court of Appeals for the District of Columbia Circuit on September 2, 1999, in the consolidated appeals of the FCC’s classification of switched “dial-up” calls to Internet service providers as jurisdictionally interstate, Bell Atlantic v. FCC, Case No. 99-1094 (and consolidated cases). • Final Briefs, to be filed with the U.S. Court of Appeals for the District of Columbia Circuit on September 7, 1999, in the consolidated appeals of the FCC decision revisiting payphone compensation levels, American Public Utilities Council v. FCC, Case No. 99-1114 (and consolidated cases). * * * * * * * * * Please feel free to call if you have any questions or would like to discuss any of the above-referenced matters. |