Welcome to 2015, and welcome to yet another industry dispute! This one needlessly caused by the FCC itself. When the Commission issued a Declaratory Ruling on November 25, 2014, in the proceeding in which it addressed the availability of wholesale services during the transition to the Internet protocol (IP) network (Docket 14-174), we knew it was looking for trouble and said so at that time (See our 12-5-14 Blog). 

For some inexplicable reason, the Commission decided that when it reviews an ILEC section 214 application to discontinue a service, it will not define the service proposed to be discontinued based on the ILEC’s tariff definition as it has done historically. Instead, it will take into account the “totality of the circumstances from the prospective community or part of a community,” regarding how the community uses the service. 

For example, if some end users in a geographic area use their copper wireline service to connect to fax machine, presumably it would be difficult or impossible for an ILEC to ever obtain section 214approval to discontinue its wireline voice service in that particular area, since that connection could never occur in a wireless only environment. Thus, an ILEC could be forced to offer copper wireline voice service in perpetuity, since the community it serves could always claim that the current service only and not the replacement service meets its needs. This seems to make no sense and would only serve to slow down network evolution. 

Moreover, we noted previously that the decision of the FCC to base discontinuance of a service on a nebulous “community” standard would force ILECs to seek legal recourse as protection from offering duplicative copper and fiber networks forever. Now the ILECs have taken the first step to protect themselves legally. On December 23, 2014, the United States Telecommunications Association (USTelecom) filed a Petition for Reconsideration of the Declaratory Ruling.

The ILEC association argued that the Declaratory Ruling was issued unlawfully without providing parties the opportunity to comment about the proposed rule change. In addition, it claimed that the community standard that would be used by the FCC is so vague; it would add confusion and uncertainty to any section 214 application filed by ILECs. According to USTelecom:

On November 25, 2014, the Commission issued what purports to be a declaratory ruling that changed the long-standing definition of what constitutes a "discontinuance, reduction, or impairment of a service" for purposes of interpreting section 214. In doing so, the Commission imposed new substantive requirements, or rules, on providers without any notice or opportunity for comment. The new definition is impermissibly vague and, instead of terminating a controversy or removing uncertainty, it creates unnecessary confusion. Specifically, the Commission holds that a "service" may no longer be defined by its provider (in, for example, a tariff or product guide), but instead should now be defined using an amorphous "functional test that takes into account the totality of the circumstances from the perspective of the relevant community or part of a community." Under this new view, providers are unable to gauge what services or aspects of their products or services might require a section 214 filing to discontinue or grandfather. Instead, the new view leaves providers guessing whether particular changes they may make to their services - or changes they may make to their facilities that have ancillary effects on their services - trigger a 214 application process. The resulting uncertainty complicates and will almost certainly impede the process of upgrading consumers to next generation networks and services. The Commission should withdraw its Declaratory Ruling and instead rely on the already established rulemaking process so that all parties may comment on its new interpretation (USTelecom Petition at pp. 1-2).

While the FCC is expected to reject the USTelecom Petition, it seems likely that in the long run, the Commission rule will be overturned.  USTelecom would almost certainly appeal a Commission rejection to the federal courts where it would argue that the FCC’s action was arbitrary and capricious, since it never allowed the industry an opportunity to provide input before making its decision. 

2014 was an extremely difficult year for the FCC. With all the difficult decisions it faces this year, such as net neutrality and the network transition, you have to wonder why it continues to make needless problems for itself and practically invites more litigation and uncertainty for the industry.

By Andrew Regitsky, CCMI

Need a brief recap of 2014?
Check out CCMI's Year in Review Here