If you work with the FCC for even a short time, you realize that major decisions occur at a glacial pace.  This is at least partially due to the process that was set up by Congress. When changing its rules, by law, the Commission must always open (or continue) a docket and hold a formal proceeding.  All interested parties are permitted to file written comments and reply comments with the further opportunity to lobby their positions through ex parte meetings or filings with the Commission. In addition, once the Commission issues an order, parties have the ability to challenge it by filing either a petition for reconsideration or review. If they are still unhappy, they can always appeal the decision to the federal courts. Thus, to avoid litigation, the Commission seeks as much industry consensus as possible and must ensure that it can successfully defend its decisions from litigation initiated from parties that cannot be appeased. Naturally, this entire process is very time consuming.   

Further complicating the Commission’s mission is the fact that since three of the commissioners are Democrats and two are Republicans, they often have different views of the role regulation should play in the industry. 

Finally, the Commission must deal with the fact that commissioners only serve a relatively short time, and no one can deny that it takes a significant amount of time for new commissioners to come up to speed on the complex issues involved in the telecom industry. 

And yet, while cognizant of the many problems that seem to face every Commission, the view here is that there is something different this year.

The issues the Commission is facing this year are clear. 

It must develop the rules of the road to successfully guide the industry through the transition to the Internet Protocol (IP) network; 

In light of the DC Circuit Court’s rejection of its Net Neutrality Order, it must decide how the Internet should be regulated in the future;

The Commission must determine how ILECs will be permitted to regulate special access rates going forward even while it continues to wait for the Office of Budget Management to give it the go-ahead to initiate its massive special access data request; 

Finally, the Commission must have some type of back-up plan for inter-carrier compensation, if its 2011 Order transitioning the industry to bill-and-keep is rejected by the 10^th Circuit Court.  Oral argument was held in November of 2013 and a decision could come at any time.  What will the Commission do if the Court concludes that states and not the FCC have jurisdiction over interstate access charges?

The concern with this version of the FCC is that even while confronting these important issues, the Commission has not made any policy decisions to provide guidance to the wholesale carriers in the industry. And without such regulatory guidance, the free market will hold sway, advantaging larger carriers with more resources.

For example, while issuing general platitudes about how carriers transitioning to IP must continue to provide things such as universal access and universal service, the Commission continues to be noticeably silent on how IP interconnection will be regulated. The Commission has also failed to address what if any wholesale IP services will be available to CLECs once services such as switched and special access and unbundled network elements (UNEs) are phased out. Moreover, no one has any idea what the prices, terms and conditions for any new IP wholesale services will look like.  It is next to impossible for carriers to plan for a transition, when they have no idea what comes next.

The issue of future special access pricing is similar. The Commission has made it clear that it is unhappy with the current pricing flexibility rules. Therefore, it will conduct a market analysis to determine how ILECs will be permitted to price special access services going forward. That is all well and good in theory.  However, we have no idea exactly what the Commission will find is a “fair” special access price. For example, should the ILECs be permitted no more than an 11.25 percent rate of return (ROR) on special access services, or should earnings be unlimited if there is competition?  And how will the Commission handle multi-year contracts with large termination penalties? These are just a few of the so many unanswered special access questions and without Commission guidance ILECs continue to take advantage of their current special access market power. It is doubtful that the market study will provide sufficient relief when we have no idea what the Commission considers to be a fair and vital special access market.

It will probably be 2015 or later for many of the issues discussed here to be decided. However, because the Commission refuses to address so many of the key policy issues affecting the industry now, smaller carriers are being damaged. It would behoove the Commission to start addressing their concerns now.