Last week we highlighted the fact that the FCC recently adopted a Declaratory Ruling in Docket 13-3, finding that ILEC switched access for mass market andenterprise customers is now a “non-dominant service”.

We speculated whether, as a result of that finding, the Commission would eliminate the current requirement that all ILEC interstate switched access rates,terms and conditions must be tariffed.  We concluded that because of thei mportance of tariffs to switched access customers it was highly unlikely that tariffs would be eliminated. A perusing of the Ruling, which was released on July15, 2016, finds that we were correct and ILECs will continue to file interstate access tariffs for the foreseeable future.

The only significant change that access customers can expect from the Ruling is from now on, some additional ILEC access tariffs may be filed on one-days notice instead of, as in the past, on 7 or 15-days notice.  However, almost all these new tariff changes filed on a single days notice will be for non-rate changes.  We discuss why below: 

As the Commission explained in the Ruling, the requirements for interstate switched access tariffs are included in Parts 51 and 61 of its rules. These rulespermit non dominant carriers to file all tariff changes on one day’s notice. However, both dominant and non dominant carriers that seek to have their tariff changes presumed lawful by the FCC must give seven days’ notice for tariff changes that propose a rate decrease and fifteen days’ notice for all other filings, including filings that propose a rate increase. The Commission details why this is important:

In any event, we expect that most incumbent LEC interstate switched access tariff filings will continue to be filed  on seven or fifteen days’ notice as they are now. Most of these filings are submitted as part of an annual tariff filing process prescribed in the Part 51 rules, under which the seven and fifteen-day notice periods apply.  More generally, both dominant and non-dominant carriers must file on seven or fifteen days’ notice to receive the benefit of “deemed lawful”rates.  Any tariff filed on shorter notice is not presumed to be just and reasonable and may be subject to refund (Declaratory Ruling inDocket 13-3, released July15, 2016, at para. 46).

Moreover, as part of the ongoing requirement that ILEC’s transition their switched access rates to bill-and-keep, the Commission has determined that it must continue to have more than a single days notice to review all switched access rate changes. This is because any rate change could impact how much of their lost access revenues an ILEC is permitted to recover through the Access Recovery Charge (ARC) and Connect America Fund (CAF) the Commission created as part of the multi-year bill-and-keep transition.  As the Commission notes:

Filing on shorter notice also precludes Commission review before atariff filing takes effect. Commission staff carefully review interstate switched access tariff filings from incumbent LECs to ensure that ARCs and Connect America Fund recovery amounts are computed correctly and to guard against waste, fraud and abuse.  Because the public interest demands that we preserve this opportunity for review,we will continue to require incumbent LECs that participate in the recovery mechanism set forth in the Part 51 transitional rules to file interstate switched access tariff filings on as many days’ notice as must be provided today, whether seven or fifteen days.  Retaining this requirement is necessary to ensure a smooth and orderly implementation of the Commission’s intercarrier compensation reforms, a key premise of today’s ruling. This need arises not from the analysis of whether a LEC is dominant or non-dominant, but rather from the fact that the LECs in question receive prescribed recovery amounts, including from the Connect America Fund, inconnection with the transition to bill-and-keep (Id).

It is also important to recognize the significance of the above paragraph for originating switched access rates.  While most terminating access rates are transitioning to bill-and-keep, originating access charges, while capped at current interstate levels are not transitioning downward.  That is because the Commission chose to study the effects of lost terminating access revenues on the operations of ILECs especially rural ones, before dealing with originating switched access rates. 

Nevertheless, in the Ruling, the Commission makes clear that the movement of originating switched access rates to bill-and-keep is still part of its overall plan for inter-carrier compensation reform. Thus, sometime in the next few years it is probable that a multi-year transition to bill-and-keep for originating switched access charges will begin. Since that transition would almost certainly include the partial recovery of lost access revenues through the ARC and CAF, the switched access tariffing requirement will surely be extended for years to come. 

Frankly, this is the best solution for the industry.  It is a difficult job now for access customers to audit their access bills even with tariffs and disputes are plentiful. Without tariffs, it would quickly become an impossible job.

By Andy Regitsky, CCMI