NARUC Principles Provoke Sharp Divide Between Industry and Consumer, Rural Advocates

"The very formation of this current Task Force can be seen as recognition that a fundamental industry transformation is underway and that the regulatory framework proposed as recently as 2005 may no longer be relevant,” said USTelecom’s Robert Mayer, vice president-industry and state affairs, in his comments (http://bit.ly/Zuc5vm). “In fact, the consumer-driven technological shift away from the traditional [public switched telephone network] to alternative providers and services is only accelerating and continues to be the basis for an increasing number of states to adopt deregulatory measures.”

USTelecom and other industry representatives pushed for less state regulation. The principles leave CTIA “concerned” because they “outline a role for states and state regulators that seems more appropriate for a communications marketplace that no longer exists, particularly in the wireless market,” said Matthew Gerst, CTIA director-state regulatory and external affairs (http://bit.ly/15QOAkc). NCTA voiced similar concern and said the “anachronistic” principles don’t “reflect today’s competitive environment nor the limits of state jurisdiction” (http://bit.ly/ZVjSVc). CTIA’s Gerst advocated for states’ “light regulatory touch” and asked regulators to reconsider what he called “state-centric” principles, some “that directly conflict with existing law.” The proper wireless jurisdiction is national “because advances in wireless technology enable new forms of instantaneous communications without regard to state borders,” Gerst said. Industry is best positioned to “ensure customer satisfaction, address public safety and ensure continuous and efficient network operations” in a competitive wireless market, he added (bit.ly/15QOAkc).

Mayer cautioned against bringing old regulation to new technologies, outlining what he called the explosion of communications options in recent years. He argued that “the regulatory structure of yesterday, which remains intact in some states today, makes little sense.” The shift to wireless and IP has involved “no consumer harm.” Mayer sees a continuing but different state role, perhaps not conducted by state utility commissions, to address current implementation of the Communications Act’s Sections 251 and 252, universal service authority under Section 254 and in 911, Lifeline and relay services. “State Attorneys General and consumer protection agencies have a role in enforcing general consumer protection requirements in communications, as in every other industry sector, although there is no need for utility-style consumer protection in a state utility regulatory body,” he added. “USTelecom heartily encourages the Task Force and other state regulators to focus on those particular areas where social policy goals may not be met by the interplay of competitive incentives.”

NARUC has grown more radical, some commenters said. The Advanced Communications Law & Policy Institute at New York Law School agreed with industry that the NARUC task force “has the opportunity to move beyond [plain old telephone service]-era thinking about competition and regulation” and highlighted numerous changes in the field (http://bit.ly/Ywv5qM). NCTA accused the 2013 principles of reversing the positive sentiments of the 2005 ones. The new principles are “endorsing a costly, monopoly era regulatory regime, for both voice and broadband, and insisting that state commissions are in all cases the appropriate regulatory agency to handle any conceivable issue,” it said. The institute said the same of new NARUC principles, calling them “a radical reaction to what has been a natural, expected, and rational erosion of state PUC authority over non-POTS services” that “run afoul of the wildly successful regulatory framework” in existence and could “undermine organic market forces.” NCTA decried NARUC’s unprecedented “radical approach” of encouraging open access broadband networks.

But consumer and rural advocates from NASUCA and NTCA praised the assertion of state power and suggested areas where NARUC may want to add notes on jurisdiction and regulatory authority -- sometimes on contested issues. The principles should “accommodate the dual jurisdiction” under the amended 1934 Communications Act and “promote advanced telecommunications capability including VoIP services,” NASUCA recommended (http://bit.ly/VFfk6k). The FCC should consider broadband and VoIP to be Title II services and set minimum standards for broadband service related to consumer protection, a helpful reassurance in states that have opted for telecom deregulation, the association said. State authorities are closest to citizens as well as their local data and context, NTCA noted in its comments, favoring the states’ role in ensuring consumer protections and universal service as well as proper broadband access and adoption. It criticized lack of appropriate National Broadband Map collaboration and said states “effectively serve as data gathering contractors on availability” for a national effort viewed as authoritative despite errors and dated information. “Should USF support be reduced or eliminated because of an indication of broadband coverage on that map, this could lead to local voice service rates (as overseen by many States) becoming unaffordable or incomparable to rates in urban areas, or possibly even to a discontinuance of voice service altogether in the highest cost areas,” NTCA said.

Some comments pushed for technology-neutral state authority over interconnection agreements. “Interconnection rights and obligations created by Federal and state law are unaffected by underlying network technologies and the utilized communications protocols,” NTCA said of the IP transition. States should require interconnection regardless of whether a company is wireless or cable, NASUCA said. XO Communications “encourages state regulatory review of any managed IP interconnection arrangements provided by the ILECs,” it told NARUC (http://bit.ly/XFEBP1). XO generally supports the principles, it added.

NASUCA also cautioned NARUC to safeguard consumers by urging states and state regulators to watch for dominant providers and “maintain appropriate regulatory oversight of the rates, terms and conditions of service” for purposes of reliability and affordability, it said. In terms of style, NASUCA recommended NARUC be “crisper and hence more persuasive” in listing its goals and policy concerns. It also suggested other consumer issues worth focusing on, such as the virtue of complaints and the ongoing rural call completion concerns. XO worried about neglect and elimination of copper infrastructure, it said. XO recommended state regulators “continue their diligent data collection to tell the real story of competition in their states.”