AT&T, Verizon Oppose CenturyLink VoIP Access Fee Request; Rural BDS Price Cap Option Backed

CenturyLink petitioned the FCC for a new declaratory ruling on its 2011 VoIP symmetry rule after the U.S. Court of Appeals for the D.C. Circuit in 2016 sided with AT&T, overturning the commission's 2015 ruling allowing local phone competitors to collect the end-office switching charges for routing over-the-top long-distance calls to local customers (see 1611180063). A LEC partnering with a VoIP provider should be able "to collect end office local switching access reciprocal compensation when the LEC and/or its VoIP partner perform certain critical call initiation or termination processes ... irrespective of whether the VoIP provider also controls last-mile facilities," said the petition. CenturyLink, which took over Level 3, noted it's on both sides of the divide as a CLEC partnering with VoIP providers and an interexchange carrier (IXC) that pays access charges.

AT&T said the petition defies legal precedent and the access tariff terms of CenturyLink and other ILECs, which "uniformly provide that the core and distinguishing function of an end office switch is the interconnection of calls on trunks to and from last-mile customer loop facilities." CenturyLink's interpretation of LEC partnerships with over-the-top VoIP providers -- "which, by definition, do not provide interconnection that places calls onto last-mile loop facilities" -- can't be sustained, commented AT&T. "There is simply no reasonable reading of the Commission’s 2011 rules ... that would allow LECs partnering with [OTT] VoIP providers to assess end office access charges." It urged the FCC to confirm the 2011 rules have always barred end-office switching charges on OTT VoIP calls. Verizon also said the FCC should deny the petition, "consistent with its longstanding prohibition against LECs collecting access charges for functions they do not provide," and confirm "that physical interconnection is a critical component of end office switching."

Others supported CenturyLink's petition. O1 Communications and Peerless Network said the DC Circuit ruling led to district court disputes between LECs and IXCs, "primarily AT&T and Verizon." The IXCs argue OTT VoIP traffic should be assessed lower tandem switching charges, "contrary" to the FCC's 2011 USF and intercarrier compensation (ICC) overhaul, said O1 and Peerless. Teliax, another litigant, said CenturyLink "clearly explained how AT&T's argument to the court about 'loops' and 'trunks' results in a definition of 'end office switching' that is both incorrect and entirely circular." The VoIP symmetry rule and its 2015 application to OTT VoIP traffic were part of a broad compromise to get to bill-and-keep, Teliax said.

Meanwhile, RLECs backed letting "model-based" rate-of-return (RoR) carriers opt into BDS price-cap regulation, as proposed by ITTA and USTelecom. NTCA endorsed the path for RLECs receiving USF support through an Alternative Connect America Cost Model (A-CAM) or an Alaska Plan as long as it's voluntary and "continues to have no effect on the support or settlements received by other providers." WTA said those carriers should be able "to elect substantially the same regulation" that governs price-cap telco BDS -- minus 2 percent productivity factor rate cuts -- "so long as [an] 'all or nothing' rule [preventing carriers from mixing rate-of-return and price-cap regulation] is waived to limit the price cap treatment to BDS and as long as electing RoR companies remain on their existing terminating switch access and [USF]-ICC transition path." TDS Telecom "largely supports" the NPRM proposals, "with modest adjustments." ITTA and USTelecom said the costs of legacy regulations for model-based RLECs "far outweigh the benefits."

Sprint said rural BDS incentive regulation could work, subject to certain actions, including price caps be set at or driven down to a 9.75 percent RoR target. Focus on shifting all ILECs to incentive regulation, rather than conducting a competition test for RLECs, given a lack of data, and don't eliminate ex-ante regulation of packet-based BDS and TDM BDS with more than DS3 circuit speed (45 Mbps), advised Sprint. AT&T also urged price caps based on a 9.75 percent RoR, but backed relief for packet-based and higher-speed TDM BDS (above DS3s), called for a competition test specific to A-CAM carriers, and opposed waiving the all-or-nothing rule, which "prevents the skewing of incentives" under mixed regulation.