At FCC, Reform Lobbying Revolving Around .0007 Rate

Commissioners Set to Vote on ICC/USF Overhaul Dec. 18

Despite a lame duck presidential administration, plenty of interest groups are lobbying the FCC in advance of its Dec. 18 meeting. FCC Chairman Kevin Martin has made it clear he won’t spend his last weeks in office doing nothing, as evidenced by his leaning on the cable industry and his intent to again try to address an intercarrier compensation/Universal Service Fund (ICC/USF) overhaul. In response, much of the lobbying happening last week centered around the proposed .0007 termination rate.

ICC/USF reform is one of the biggest, if not the biggest, issues the FCC has before it. If Martin can push through reform before he resigns — provided he does resign, as is customary — then he’ll have claimed the legacy of being the chairman who tackled the $7 billion problem that’s plagued the telecom industry for years. Martin already tried to push through an overhaul. However, he couldn’t get his fellow commissioners to support him. Each felt that not enough time or transparency had been allowed.

The lack of transparency has remained one of the competitive and rural industry’s core complaints in the reform process. Martin drew up an order, yet only he and his commissioners were privy to the details. Lawyers and groups said that after seven years of providing comments and ideas for change, they should be able to read the proposed changes and comment on them before the FCC votes. Everyone agrees an overhaul needs to happen but these groups want to make sure they know how any proposed order will affect them. Yet, Martin refused to allow that with the past order, and many sources speculated that was because the order favored the Bells.

So, once Martin failed to get his four commissioners on board for a Nov. 5 vote, the matter was tabled. It is set to be addressed again on Dec. 18, a deadline industry analyst Andy Regitsky called “aggressively optimistic.”

There’s little time left to lobby — Thanksgiving falls in the intervening weeks and the FCC ends lobbying a week before it’s expected to vote. Still, associations, carriers, law firms and others have been holding phone and in-person meetings with the FCC, trying to press their arguments for needed change. Perhaps the most contentious matter is the proposal to charge a flat intercarrier compensation rate. Several industry players, Bells included, have said the price they pay one another should amount to .0007. The FCC would take10 years to transition to that rate. Rural rate-of-return providers and some CLECs don’t like that number because they would lose money. If the termination rate goes that low, they probably will hike subscriber line charges and other consumer fees to make up the difference. Interest groups now are spending their time presenting their cases for and against the rate structure.

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