At its July 14, 2016 meeting, the FCC adopted a Declaratory Ruling in Docket 13-3, finding that ILEC interstate mass market and enterprise switched access services are no longer dominant services. The Ruling came in response to a 2012 USTelecom Petition followed by industry comments filed earlier this year to refresh the public record. Since the text of the Ruling has not yet been made public, we have scant details so far. In its April 14, 2016, News Release, the Commission stated only:

A Declaratory Ruling section of the item grants a petition by the United States Telecom Association that reduces regulatory burdens for traditional local voice providers by finding that they are no longer dominant in the market for connecting local callers to long-distance networks. The increasing popularity of mobile wireless, cable Voiceover IP services and regulatory changes combined to erode the dominant position of local carriers in the market for interstate switched access.

In the Petition, USTelecom argued that since ILECs are continually losing wireline access lines to wireless, VoIP and cable services, ILECs should be permitted to file switched access rates that would be completely free from price cap or rate-of-return regulation, free from extensive cost support and free from all tariffing obligations.

However, it is extremely unlikely that the Commission would eliminate the tariffing requirement completely since there remains a clear need for switched access customers to have knowledge of the usage-based access charges they are paying. 

Moreover, there is no more efficient way for ILECs to transmit access changes to customers other than through tariff transmittals.  Thus, it is more likely that instead of eliminating tariffs, most ILECs tariff changes would be permitted to be made on one days notice with no cost support and automatically assumed to be lawful. Thatwould apparently include the required changes made each year on July 1 as part of  the ILEC Annual Access Charge Filings, which until now always required voluminous cost support.

Of course if no cost support is required, it is likely that that price cap constraints on terminating  access rates would be eliminated, meaning that maximum terminating access charges would be limited only by the ongoing inter-carrier compensation transition to bill- and-keep. 

Since originating access charges are not impacted by that transition, until we see the Ruling, their fate remains an open question.  It is also ironic that at the same time the Commission appears to be relaxing the price cap rules for ILEC  switched access services, it is proposing to reinstate them for ILEC special access services as part of the Business Data Services proceeding.

Since we are speculating here, we will have more actual details about this Declaratory Ruling once the text is released. 

In the July meeting, the Commission also took action to facilitate the industry’s technology transition to Internet protocol (IP) and wireless services. Specifically, the Commission established voluntary new rules that would  automatically grant a company’s application to discontinue legacy Time Division Multiplexed (TDM) voice service in 30 days if the applicant meets a clear, objective, three-pronged test.  In a July 14, 2016 News Release, the Commission noted that the test expedites transitions in which:

• Network performance, reliability and coverage is substantially unchanged for customers; 

1. Access to 911, cyber security and access for people with disabilities meets current rules and standards; and,

1. Compatibility with a defined list of legacy services still popular with consumers and small businesses, including home security systems, medical monitoring devices, credit card readers and fax machines, subject to sunset in 2025, is assured.

The Commission further stated that:

While the test sets clear, achievable benchmarks, it also provides flexibility by recognizing that a shift from traditional networks to new technologies will never be a purely apples-to-apples comparison. The test is voluntary for carriers. Requests for discontinuance can also bereviewed through the FCC’s normal adjudicatory channels.

For the last year, ILECs have been lobbying for simplified service discontinuance rules. They should be very happy with the Commission’s actions. Whether they will be happy with the requirements mandated by the new non-dominant status of switched access is currently an open question.

By Andy Regitsky, CCMI