In the FCC’s September 2019 Access Stimulation Order in Docket 18-155, AT&T expressed concern that access stimulators would designate new, remote tandems to force IXCs to pay excessive transport rates to deliver traffic. AT&T recommended to the Commission that it could avoid this danger by requiring stimulators to only utilize tandems that existed on January 1, 2019. However, the agency rejected AT&T’s proposal and called its concern “hypothetical,” since at that time, the new access stimulation rules were not in effect, However, six months after that Order was released, it appears that AT&T’s worries were completely justified. As an example, we have the case of the long-time access stimulator Northern Valley, a CLEC located in South Dakota.

For years, IXCs have delivered traffic to Northern Valley via the South Dakota Network (SDN) tandem switch in Sioux Falls. SDN billed IXCs for tandem switching while Northern Valley billed transport mileage for the 190 miles between the tandem and its end office in Redfield, SD. Moreover, to further inflate the mileage it could charge for, Northern Valley treated its end office as a remote office subtending its host switch in Groton, SD, allowing it to charge transport for two separate routes.

Forced to respond to the Access Stimulation Order which requires access stimulators to pay access charges between an intermediate carrier’s tandem and its end office, Northern Valley filed tariff changes in Transmittal 12 on December 27, 2019. The new tariff language specified that its affiliate James River Cooperative would be its sole intermediate carrier and limited its financial responsibility to transport between the James River access tandem in Groton and its Redfield end office. According to Northern Valley, IXCs would continue to pay for the longer transport mileage between the SDN tandem in Sioux Falls and Groton. However, IXCs claim that this designation of a new tandem in Groton makes it appear that Northern Valley is paying for traffic between the intermediate provider and its end office while continuing to rake in access revenues for the Sioux Falls to Groton route. Thus, the proposed tariff changes were opposed by Verizon and Sprint.

Northern Valley defended its new tandem designation by asserting that the Commission gave permission to CLECs such as itself to stop using the South Dakota network since t was part of the Centralized Equal Access (CEA) monopoly used for years by access stimulators. However, the FCC is clearly troubled. On January 10, 2020, it issued an Order suspending the Northern Valley tariff changes for one day and beginning an investigation into whether the changes are lawful.

On March 11, 2020, the Commission followed up by releasing an Order in Docket 20-11 designating the tariff issues to be investigated. Northern Valley must file its Direct Case supporting its changes by April 1. Oppositions to the Direct Case must be filed by April 15.

In its Direct Case, Northern Valley must make clear how the new access traffic routing would work, and which party would pay for all the transport and tandem charges. Moreover, it must demonstrate how its traffic was routed before the tandem change, how traffic is routed today and how its financial responsibilities have changed as a result of the new traffic pattern.

Northern Valley must provide information about the new James River tandem, including the carriers that were connected to it before the tariff changes. it also must explain why James River was selected as its sole intermediate provider.

Since the Commission is concerned about high call volumes in rural areas caused by access stimulation, Northern Valley must provide information about any dropped or blocked calls to demonstrate that the James River tandem has the capacity to handle high call volumes.

Northern Valley must provide traffic data for the last six months of 2019 and the first six months of 2020 (including estimates). It must provide the legal and economic justification for its new tandem, including cost studies.

With the detailed requirements demanded in the Direct Case, it appears that the FCC believes that Northern Valley’s new tandem is designed to keep the access stimulation revenues flowing. It would be a shock if the CLEC is able to successfully justify its tandem changes.

Moreover, IXCs claim that other LECs are violating the new access stimulation rules. Thus, we should expect to see more complaints filed, more tariff investigations and more self-help remedies in the next few months.