Posted by Michael Yokay on Fri, Aug 19, 2011
INTRASTATE ACCESS CHARGE PROCEEDINGS
NEW THIS WEEK
The North Carolina Utilities Commission (NCUC) this week rejected a motion of the Competitive Carriers of the South and the North Carolina Cable Telecommunications Association to hold in abeyance its investigation into North Carolina ILEC intrastate access rates until the FCC takes action in its ongoing access reform proceeding. The NCUC rejected the motion because of the uncertainty of when the FCC will act, and the likelihood that any attempt by the FCC to preempt state control over access charges will be greeted with years of legal challenges. In addition, the NCUC moved the due date for the filing of direct testimony in this proceeding from August 10 to August 18. The NCUC’s investigation will determine whether ILECs in North Carolina should be required to reduce their intrastate access charges to interstate levels. Specifically, the NC Commission intends to get answers to the following questions:
- What are the existing intrastate switched access charges imposed by local service providers?
- Should intrastate switched access charges of local carriers be reduced? If so to what level? Which entities should be required to reduce access charges? When should the mandated reductions occur?
- Identify any legal impediments to mandated intrastate switched access charge reductions for any local service provider.
- Should other forms of inter-carrier compensation be reduced simultaneously to the same rates of any reduced intrastate switched access charges, such as charges for calls within the expanded local area and also calls when the intraLATA toll area?
- What tangible benefits would flow to North Carolina consumers as a result of access charge reform?
- Is there a demonstrable link between the rates currently established for intrastate switched access and support for universal service?
- What effect, if any, would access reform have on carrier of last resort (COLR) obligations, universal service and affordable local rates?
- What are the economic effects of mandating intrastate switched access charge reductions on local service providers?
- Assuming the adoption of mandated intrastate switched charge reductions, should the Commission assure that companies may recover lost revenues?
- Assuming the adoption of mandated intrastate switched charge reductions, is it necessary and in the public interest for the Commission to mitigate the effects of lost revenues by adoption of a formal funding mechanism such as a universal service fund?
- Identify any impediments to the Commission’s establishment of a fund to defray access charge reductions.
- Would implementation of a universal service fund replace other state support programs?
- What existing or proposed FCC policies and orders bear on the issue of intrastate switched access charge reform?
We will summarize the direct testimonies in our next update.
FCC – The FCC has rejected petitions to delay the due date for the filing of industry comments in its Further Inquiry in its inter-carrier compensation and universal service reform proceeding. Parties had requested that comments be delayed from August 24 to September 12 to give the industry more time to study the various carrier proposals for reform. Those proposals include the ABC Plan by the six largest carriers, the state plan presented by the National Association of Regulatory Commissioners (NARUC) and a proposal made by rural ILECs. The Commission gave no reason for rejected these “extension of time” requests. However, the fact that it did so, suggests that a decision in this proceeding will come this fall. We will summarize the comments on the proposals next time.
Vacation- There will be no update next week. Our next update will be on September 3.
PROCEEDINGS/RULES REQUIRING SCHEDULED INTRASTATE ACCESS CHANGES
A provider of toll access services (i.e., CLECs) shall set their rates for intrastate switched toll access services at rates that do not exceed the rates allowed for the same interstate services by the federal government and shall use the access rate elements for intrastate switched toll access services that are in effect for that provider and are allowed for the same interstate services by the federal government. CLECs shall not charge intrastate toll access rates in excess of those rates in effect as of July 1, 2009 and shall reduce the differential, if any, between interstate and intrastate switched toll access service rates in effect as of July 1, 2009 in no more than 5 steps of at least 20% each of the differential on the following dates:, January 1, 2011; January 1, 2012; January 1, 2013, January 1, 2014; and January 1, 2015. Providers may agree to a rate that is less than the rate allowed by the federal government.
CLECs are required to reduce their intrastate access rates to mirror their interstate access rates in a 36-month transition. The interstate rates will then become a cap on intrastate rates going forward. For CLECs, beginning February 9, 2010, CLEC rates may not exceed the composite per minute intrastate rate charge by the ILEC in whose territory switched access calls are originated or terminated.
In addition, beginning January 20, 2011:
Embarq must reduce its intrastate switched access rates by 1/3 of the difference between its intrastate access rates and its interstate access rates.
Verizon must reduce its MSLC rate of $0.735 by an amount equivalent to 1/3 of the existing difference between total intrastate switched access revenues and the amount that would be generated if Verizon’s intrastate switched access rates were set at its interstate rates
Warwick Valley Telephone shall reduce its CCLC by ½.
CLEC rates must be reduced to not exceed the composite per minute intrastate rate charge by the ILEC in whose territory switched access calls are originated or terminated.
Beginning May 23, 2010, CLECs must phase in switched access rates that do not exceed the interstate rates charged by the competing ILEC in the same service area, absent a determination by the Commission that a specific CLEC has demonstrated its actual costs require a higher rate that that charged by the benchmark ILEC. Access reductions to the ILEC rate will occur in a 30 month period. In Phase 1 (May 23, 2010), CLECs must reduce their rates one-third of the difference between their rate and the competing ILEC’s rates. On May 23, 2011, the remaining differential must be reduced by one-half. Finally, on May 23, 2012, CLEC rates must be equal to the competing ILEC’s rates.
Beginning January 1, 2011, switched access rates of all telecommunications carriers must be reduced to levels no higher than their interstate switched access rates. On January 1, 2010, each carrier must reduce its switched access rates by an amount equal to 50% of the difference between its then current intrastate switched access and its then current interstate switched access rates. Further reductions are scheduled to occur on January 1, 2012 and July 1, 2012. At that time, intrastate access rates must mirror interstate access rates. These rules do not apply to ILECs serving 35,000 or fewer access lines. Carriers are also permitted to set their intrastate switched access rates below their interstate rates.
Beginning March 1, 2011, for a period of three years, each ILEC must decrease its composite intrastate switched access rates annually by six percent of the difference between its composite interstate switched access rates and intrastate switched access rates, except that this provision does not apply to small ILECs individually serving fewer than 25,000 lines as of January 1, 2010. The provision also does not apply to rural alternative local exchange telecommunications companies.
Rural alternative local exchange telecommunications companies are those carriers which as of December 31, 2009:
(1) Have a certificate of service to provide local exchange services;
(2) Have approved tariffs on file;
(3) Provide local exchange service to at least 60 percent of their local subscribers over distribution facilities connecting end use customers to the central office which are owned by the alternative local exchange telecommunications company.
(4) Have more than 90 percent of their total Missouri basic local telecommunications service customers located in counties of the third classification above.
Other than the rural alternative local exchange companies, other CLEC access rates must also be reduced. Since CLEC access rates are capped at the competing ILEC level. See, Missouri PSC Case No. TO-99-596, Report and Order, released June 1, 2000.
Subsequent access reductions of 6 percent of the difference between interstate and intrastate access rates will occur on March 1, 2012 and March 12, 2013.
The law will prohibit any public utility or telephone cooperative from imposing intrastate access charges that exceed its interstate access charges. Carriers will also be required to utilize the same rate structure for both interstate and intrastate access charges. Carriers that must reduce their intrastate access rates to comply with this bill must follow this new revised calendar schedule:
A) By April 1, 2012, carriers must establish an intrastate rate structure that is the same as its interstate rate structure, and reduce intrastate access charges by at least 20 percent of the difference between the average per minute intrastate switched access rate in effect on the effective date of this bill and the average per minute interstate access rate in effect on the effective date of this bill;
B) By April 1, 2013, carriers must implement a reduction of their per minute intrastate switched access rates of at least 40 percent of the difference between the average per minute intrastate switched access rate in effect on the effective date of this bill and the average per minute interstate access rate in effect on the effective date of this bill;
C) By April 1, 2014, carriers must implement a reduction of their per minute intrastate switched access rates of at least 60 percent of the difference between the average per minute intrastate switched access rate in effect on the effective date of this bill and the average per minute interstate access rate in effect on the effective date of this bill;
D) By April 1, 2015, carriers must implement a reduction of their per minute intrastate switched access rates of at least 80 percent of the difference between the average per minute intrastate switched access rate in effect on the effective date of this bill and the average per minute interstate access rate in effect on the effective date of this bill;
E) By April 1, 2016, carriers must implement intrastate switched access rates that do not exceed their interstate switched access rates.
The bill permits LECs to include in their intrastate switched access rates a separate charge for Tennessee Relay Service. This charge will be eliminated once the State determines how to handle future funding for this service.
Finally, this bill provides CLECs may demonstrate through their tariffs that their intrastate access charges are the same as the competing ILEC for the same service area and have their intrastate access rates deemed in compliance with this bill.
Wisconsin – Telecommunications Modernization Law – http://legis.wisconsin.gov/2011/data/acts/11Act22.pdf
Beginning May 12, 2013 LECs must begin a transition to reduce their intrastate access charges to interstate levels. Here are the details of the new law:
Large ILECs – Defined as those ILECS with more than 150,000 access lines in Wisconsin. As of January 1, 2010, Large ILECS must reduce their intrastate access rates as follows:
No later than two years after the bill’s effective date, a large ILEC must reduce its intrastate switched access rates by an amount equal to 25 percent of the difference between its interstate and intrastate switched access rates.
No later than three years after the bill’s effective date, a large ILEC must further reduce its intrastate switched access rates by an amount equal to 33 percent of the remaining difference between its interstate and intrastate switched access rates.
No later than four years after the bill’s effective date, a large ILEC must further reduce its intrastate switched access rates by an amount equal to 50 percent of the remaining difference between its interstate and intrastate switched access rates.
No later than five years after the bill’s effective date, a large ILEC must further reduce its intrastate switched access rates to mirror its interstate switched access rates. In addition, beginning on that date Large ILECS cannot charge intrastate switched access rates that are higher than its interstate access rates.
New Non-incumbents – Defined as a telecommunications carrier that is not an ILEC and was certified on or after January 1, 2011. Within 30 days after the bill’s effective date, a new non-incumbent is prohibited from charging intrastate access rates higher than its interstate access rates.
Large Non-Incumbents - Defined as a telecommunications provider, other than an ILEC, that had 10,000 or more access lines in the state as of January 1, 2010. The bill prohibits a large non-incumbent from charging intrastate switched access rates that are higher than the rates it charged on January 1, 2011, except for increases that result in mirroring interstate switched access rates. In addition:
No later than four years after the bill’s effective date, a large non-incumbent must reduce its intrastate switched access rates by an amount equal to 33 percent of the difference between its interstate and intrastate switched access rates.
No later than five years after the bill’s effective date, a large non-incumbent must further reduce its intrastate switched access rates by an amount equal to 50 percent of the remaining difference between its interstate and intrastate switched access rates.
No later than six years after the bill’s effective date, a large non-incumbent must further reduce its intrastate switched access rates to mirror its interstate switched access rates. In addition, beginning on that date large non-incumbent cannot charge intrastate switched access rates that are higher than its interstate access rates.
Other Requirements – Other than to enforce the above requirements, the Commission may not investigate, review, or set intrastate switched access rates for large ILECs, new non-incumbents, or large non-incumbents.
Small Carriers – During a four year period beginning on the bill’s effective date, the Commission is prohibited from investigating, reviewing, or setting the intrastate access rates of ILEC’s with less than 150,000 Wisconsin access lines as of January 1, 2010. In addition, during a three year period beginning on the bill’s effective date, the Commission is prohibited from investigating, reviewing or setting the intrastate access rates for non-incumbents with less than 10,000 Wisconsin access lines as of January 1, 2010.
Interconnected VoIP Providers – For VoIP providers that connect calls to the public switched network, unless otherwise provided under federal law, such providers must pay intrastate access charges. In addition, if such a carrier provides intrastate access service in connection with the interconnected VoIP service, the entity is allowed to charge intrastate access charges
Alaska – Case – 08-003/09-003 – http://rca.alaska.gov/RCAWeb/Filings/EDocList.aspx?id=93afb95f-a982-4a4c-8c6e-ba09430b705d
A 2008 proceeding to reform the Alaska intrastate access system finally concluded this month when the Regulatory Commission of Alaska (RCA) issued an Order noting that the Alaska Lieutenant Governor had filed (accepted) the proposed new access rules developed by the RCA. The new rules will now become effective on July 31, 2011. Under the new rules, interexchange carriers (IXCs) will no longer pay a carrier common line (CCL) charge on their intrastate switched access traffic. Instead, the CCL access charge rate element will be paid through a new Alaska Universal Service Fund program called CCL Support and through a phased in increase to the Network Access Fee (NAF).
The CCL is a legacy access charge that incumbent LECs have traditionally assessed on IXCs to recover the cost of the local loop provided to end user customers. The charge has been virtually eliminated in the interstate access arena as most interstate loop costs are recovered through the residential, multi-line and business interstate subscriber line charges (SLCs). However, in some states for some incumbent LECs, the CCL is still a significant source of intrastate access revenue. In Alaska, the RCA was concerned that CCL revenues could not be maintained as traffic moved to the Internet and competitive LECs and ILEC access revenues declined.
The NAF which will provide a source of revenue to pay for ILEC loop costs is the Alaska version of a SLC. It is a flat fee paid by residential and business customers. The current $3.00 monthly cap will eventually increase to $5.75 per month; reducing the level of CCL funding that will need to be recovered from the Universal Service Fund.
As a result of having their CCL charges eliminated, the two largest IXCs in Alaska – AT&T and GCI - will be required to reduce their intrastate long distance charges, with the goal of reaching parity with interstate long distance rates. Although, the RCA makes it clear that dollar for dollar long distance reductions are not required to match the CCL reductions.
Pennsylvania Docket No. 1-00040105, Docket C-2009-2098380
http://www.puc.state.pa.us//pcdocs/1070169.pdf
In a June 30, 2011 decision, the Pennsylvania Public Utility Commission (PPUC) ordered rural LECs in the state to reduce their intrastate traffic sensitive access rates to mirror their interstate traffic sensitive access rates. The reductions will take place over four years with carriers permitted to rebalance their local residential and business rates to recoup their lost access revenues. In addition, the PPUC will begin a rulemaking proceeding to evaluate whether changes need to be made to the state’s Universal Service Fund to ensure that rural carriers are able to maintain their carrier of last resort capabilities.
South Dakota – Docket No. RM05-002, released April 27, 2011.
http://puc.sd.gov/commission/dockets/rulemaking/2005/rm05-002/finalrules042711.pdf
After determining in May of 2010 that CLEC switched access rates should be price regulated, the South Dakota Public Utilities Commission issued an Order on April 27, 2011 requiring competitive local exchange carriers (CLECs) to charge intrastate access charges that do not exceed the intrastate switched access rate of the Regional Bell Operating Company (RBOC) operating in the state. The new rates became effective on May 30, 2011.
If a CLEC believes that a higher switched access rate is justified under price regulation the carrier may file a cost study to determine its fully allocated cost of providing switched access services.
Please note that with the short schedule between the April 27th Order and the May 30th effective date, CLECs have been filing new switched access rates throughout the month of June. These new rates are back-dated to become effective on May 30, 2011.
ONGOING PROCEEDINGS THAT MAY AFFECT INTRASTATE ACCESS CHARGES
Ohio – Case No. 10-2387-TP-COI, released November 3, 2010. http://dis.puc.state.oh.us/CaseRecord.aspx?CaseNo=10-2387
The Public Utility Commission of Ohio (PUCO) has been conducting an investigation into whether Windstream Ohio, Windstream Western Reserve and CenturyTel, as well as small Ohio ILECs should be required to reduce their intrastate access charges to interstate levels. Large ILECs in Ohio have had their intrastate rates capped at interstate levels since 2001. The proceeding has been moving relatively quickly, with Supplemental Comments recently filed. The PUCO’s final decision is expected this fall.
Almost all the parties in the proceeding support capping the intrastate access rates of these medium and small ILECs at interstate levels. In fact, the only party in opposition is the Office of Ohio Consumers’ Counsel (OCC). The OCC favors a company specific cost-based approach to setting access rates and believes using interstate rates as access benchmarks is inappropriate. However, the OCC’s approach is unrealistic since smaller ILECs simply do not have the resources to develop their own costs. Therefore, as has occurred in other states, the PUCO is expected to reject this type of proposal.
The only real question left in the Ohio proceeding is whether the medium and small ILECs will be permitted to recover their lost access revenues through rebalancing their retail local rates, or will other carriers be required to contribute to an Access Restructuring Fund (ARF), to ensure the effected carriers are made whole. If other states are a guide, we should look for both to occur. Carriers will be permitted to raise their local rates to a certain level, and ILECs needing additional revenues to be made whole will recover them through the ARF. Expect for an order along these lines coming this fall.
Kentucky – Administrative Case No. 2010-00398, released November 5, 2010. http://psc.ky.gov/order_vault/orders_2010/201000398_11052010.pdf
The Kentucky Public Service Commission’s (KPSC) investigation into the intrastate switched access rates of Kentucky telecommunications carriers has been moving quickly since it began in November of 2010. The investigation was initiated in response to a petition from AT&T which argued that Kentucky ILEC intrastate access rates were too high, and each ILEC should be required to mirror its interstate access rates. On March 10, 2011, the KPSC issued a procedural schedule that required Direct Testimony to be filed by all parties on July 8, 2011 and Rebuttal Testimony to be due on September 19, 2011. Hearings will take place soon after, with a KPSC Order expected before the end of the year.
As has been seen in other states grappling with this issue, access customers generally argue that either each ILEC’s intrastate access rates should mirror its interstate rates or should mirror the switched access rates of the largest ILEC in the state. Moreover, they contend there should be only a short transition period allowed to move to the new rates. On the other hand, rural ILECs argue that while intrastate access issues must eventually be dealt with, the KPSC must ensure that their overall revenues remains constant. This revenue should come from a variety of sources, including a state universal service fund to protect their end user customers from massive rate shocks. They also advocate for local rate ceilings or benchmarks to limit any local rate increase. If these measures are not enough, they strongly support new sources of revenue. Of course they don’t mention that this support would have to come from other carriers in the state who would be forced to raise rates for their own end user customers. Finally, rural ILECs seek as long a transition as possible to the new rates, even up to 10 years. Recent rural ILEC attempts to claim that the KPSC should take no action on intrastate access rates until the FCC’s inter-carrier compensation reform proceeding is concluded, was rejected by the KPSC in a July 20, 2011 Order. We will continue to monitor this proceeding until its conclusion.
FCC - http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-11-13A1.pdf
On February 11, 2011 the FCC released a Notice of Proposed Rulemaking and Further Notice of Proposed Rulemaking (FNPRM) in WC Docket 10-90 to (1) make broadband a service eligible for universal service funds; (2) eliminate the high-cost fund which primarily supports voice services and move the money in that fund to the new Connect America Fund (CAF) where both voice and broadband services will be supported; (3) determine if VoIP services that utilize the public switched network should pay access charges; and, (4) fix the inter-carrier compensation system to remove arbitrage opportunities. In the short run, the Commission intends to eliminate phantom traffic, and access stimulation (traffic pumping). In the longer run, the Commission intends to eliminate all per-minute interstate and intrastate access charges through a multi-year transition. After those charges are eliminated, carriers who need subsidies to support their services will receive them from the CAF.
On July 29, 2011 came the release of the long rumored “Industry Plan” in the ongoing universal service and inter-carrier compensation reform proceeding (Docket 10-90).
http://fjallfoss.fcc.gov/ecfs/document/view?id=7021698692
Then, in response to concerns of state commissioners fearful that they would not have the chance to comment on the “Industry” proposal, on August 3rd, the FCC issued a Further Inquiry seeking comments on the various proposals made in this proceeding. Those proposals include the new one by the six largest carriers, along with earlier proposals made by the states through the National Association of Regulatory Commissioners (NARUC) and a similar proposal made by rural ILECs. Public comments on the Further Inquiry are due on August 24. Reply comments are due on August 31.
http://hraunfoss.fcc.gov/edocs_public/attachmatch/DA-11-1348A1.pdf
The biggest difference among the proposals is that the large carriers seek a universal termination rate of $0.0007, while NARUC and rural ILECs argue for individual rates by company. Under their plans, each carrier would have a unique termination rate for all services (i.e., access, and reciprocal compensation), but carriers would have unique rates. Under contentious issue concerns the large carriers request that the FCC control the states in terms of requiring access reductions to the new $0.0007 rate. Conversely, states argue to for maintaining control over intrastate access, while seeking incentives from the FCC to reduce rates. Unless some compromise is reached, there could be long court battles. In the meantime, here is a summary of the large carrier plan:
America’s Broadband Connectivity (ABC) Plan
The ABC Plan is supported by the largest telecommunications carriers including, Verizon, AT&T, CenturyLink, Frontier, Windstream and FairPoint. The Plan purports to make broadband available to all consumers within five years while also requiring a 5-year transition to a $0.0007 terminating rate for all minute of use switched traffic. Here are more details:
I. Modernizing the Universal Service Fund to Support Broadband
The ABC Plan proposes two new universal service programs – a Connect America Fund (CAF) and an Advanced Mobility/Satellite Fund (AMF) – to support the provision of broadband service to unserved homes and continued broadband service where it already exists.
The plans phases out universal service support from the legacy USF programs beginning July 12, 2012 and ending July 1, 2016, when the two new universal service programs would be fully funded. The cost of the new programs would be $4.5 billion per year, which is the approximate cost of today’s programs.
The CAF is targeted to distribute $2.2 billion per year to support the provision of broadband service in high-cost areas served by price cap ILECs. CAF support is available only in those high-cost areas in which there is no private sector business case to offer broadband. Voice service is not supported by CAF
The AMF supports the provision of mobile broadband service in which planned commercial broadband service will not be offered and to support broadband satellite customers in the highest cost areas.
II. Reforming Inter-Carrier Compensation to Support Broadband
In conjunction with the new universal service funds, terminating per-minute rates for all price cap carriers will transition to a rate of $0.0007 under the following schedule:
July 1, 2012 – Each carrier reduces its reciprocal compensation rate and intrastate terminating access rate for transport and switching if above the carrier’s interstate access rate, by 50 percent of the difference between the rate and the carrier’s interstate access rate:
July 1, 2013 - Each carrier reduces its reciprocal compensation rate and intrastate terminating access rate for transport and switching if above the carrier’s interstate access rate, to parity with the carrier’s interstate access rate:
July 1, 2014 – Each carrier reduces its terminating end office rates by 1/3 of the differential between its end office rates and $0.0007. Transport rates remain unchanged.
July 1, 2015 – Each carrier reduces its terminating end office access rates by an additional 1/3 of the differential between its end office rates and $0.0007. Transport rates remain unchanged.
July 1, 2016 – Each carrier reduces its terminating end office rates to $0.0007. Transport rates remain unchanged.
July 1, 2017 – Each carrier unifies all terminating traffic to $0.0007.
During the first two steps of the transition, both originating and terminating intrastate dedicated transport rates are transitioned to interstate levels
Under the Plan, Price Cap ILECs have the opportunity to make up for lost inter-carrier compensation revenue through a Transitional Access Replacement Mechanism (described below) and increased subscriber line charges (SLCs):
A. If a price cap ILEC elects to receive support from the transitional access replacement mechanism, the cumulative increase in the SLC may not exceed $0.50 effective July 1, 2012; $1.00 effective July 1, 2013; $1.50 effective July 1, 2014; $2.00 effective July 1, 2015; and $2.50 effective July 1, 2016.
B. If a price cap ILEC chooses not to use the transitional access replacement mechanism, the cumulative increase in the SLC may not exceed $0.75 effective July 1, 2012; $1.50 effective July 1, 2013; $2.25 effective July 1, 2014; $3.00 effective July 1, 2015; and $3.75 effective July 1, 2016.
C. In addition, any SLC increase may not cause the sum of the local residential rate, federal SLC, state SLC, mandatory Extended Area Service and per-line contribution to the state’s high cost fund to exceed a benchmark of $30 per month, based on rates effective July 1, 2012.
The transitional access replacement recovery mechanism is for price cap ILECs that experience exceptionally large reductions in inter-carrier compensation revenue. These ILECs who’s revenues lost exceed revenues gained either under the maximum SLC increases permitted in (A) above, or the $30 benchmark, are permitted to recover 90 percent of any revenue reduction greater than the imputed SLC increase. This recovery is transitional and will decline by 1/3 per year beginning on July 1, 2017.
III. Interim Rules
Beginning July 1, 2012, VoIP traffic exchanged between LECs and other carriers will be charged interstate access rates if the call detail indicates an “access” call, or will be charged reciprocal compensation rates if the call detail indicates a “non-access” call. All toll traffic that originates in IP or terminates in IP will be subject to current interstate access rates regardless of whether it is interstate or intrastate. All IP traffic is incorporated into the transition plan to the $0.0007 terminating rate.
The Commission should adopt rules addressing phantom traffic and access pumping no later than July 1, 2012.
As the FCC moves closer to inter-carrier compensation and universal service reform, it is important to note that there are several important areas of agreement between large carriers and rural rate-of-return (ROR) ILECs.
http://fjallfoss.fcc.gov/ecfs/document/view?id=7021699004
These agreements are rare because rural ILECs obtain a comparatively larger share of their overall revenues from inter-carrier compensation charges than larger carriers and are usually loathe to willingly give up any of those revenues unless they are guaranteed to recover them elsewhere. That is why the joint letter sent to the FCC on July 29 by the largest carriers and three associations representing rural carriers (NTCA, OPASTCO and Western Telecommunications Alliance) is so important. All the carriers apparently agree on the following:
VoIP Traffic - Rural carriers agree that beginning with the date of the FCC’s Order in this proceeding, traffic exchanged over public switched telecommunications network (PSTN) facilities that originates or terminates in IP format will be subject to access charges at interstate rates if interexchange, or reciprocal compensation if local.
Per-Minute Terminating Access Reductions – Rural carriers also agree to reduce terminating per minute access and reciprocal compensation rates to $0.0007 per minute. However, ROR carriers will have a longer transition – 8 years – to the new rates, and rates will only be reduced if sufficient universal service funds exist to ensure these lost revenues will be replaced. ROR carriers will utilize the following transition schedule for their rate reductions:
Interstate originating and terminating switched access rates will be capped at the start of the first year, with any shortfall between revenue requirements and revenues collected through such capped rates recovered through an inter-carrier compensation restructure mechanism.
Terminating intrastate access reduced to interstate access rates and structured in two equal steps (each step equals one year).
Terminating end office rates to $0.005 per minute over three additional steps.
Transport and tandem switching rates remain unchanged from previous step (they remain at interstate levels for access traffic).
At step 5, FCC proceeding determines if continued transition should be slower or faster.
Unless otherwise determined by the FCC, terminating end office rates to $0.0007 in three additional steps. Unless otherwise determined by the FCC, transport and tandem switching rates remain unchanged from previous step (they remain at interstate levels for access traffic).
As part of the transition, the FCC will be expected to provide an inter-carrier compensation restructure mechanism for ROR carriers. The residential rate benchmark for ROR carriers will be $25 per month ($30 for larger price cap carriers). Subscriber Line Charge caps would increase by $0.75 per line, per year for six years.