Customs Duty

U.S. Appeals Court, D.C., seemed more concerned Wed. about procedural questions than merits as it heard arguments in Qwest challenge to FCC’s pricing rules for traffic that travels between ILECs and paging companies. Issue, outgrowth of reciprocal compensation regime, arose as result of dispute between Qwest and TSR Wireless, one-way paging company in Ariz. Qwest had billed TRS for dedicated facilities needed to pass paging calls to TSR customers. FCC sided with paging company and said charges weren’t legal.

FCC Wireless Bureau clarified Mon. where line is to be drawn for allocating costs of Enhanced 911 Phase 1 network and database components. Bureau Chief Thomas Sugrue, in letter to King County, Wash., E911 program, said “proper demarcation point” for funding between wireless carriers and public safety answering points (PSAPs) was input to 911 selective routers that ILECs maintain. Routers receive 911 calls from LEC central offices and forward them to specific PSAP that serves area of emergency caller. FCC sought comment last year on request of King County E911 entity that wanted clarification on whether financing of certain network and database components of Phase 1 and interface of those elements to existing 911 system was duty of wireless carriers or PSAPs. Under E911 rules, wireless carriers bear costs of hardware and software components that precede 911 selective router, including trunk from carrier’s mobile switching center to 911 router and particular elements needed to implement certain signaling methods for delivering E911 Phase 1 information to PSAPs. PSAPs bear costs of maintaining and upgrading E911 components and functions beyond input to 911 Selective Router, Sugrue said. In comments to FCC, most wireless carriers had argued that PSAP was responsible for upgrades needed to deliver Phase 1 information compatible with existing 911 network, so appropriate demarcation point for funding would be carrier’s mobile switching center. But PSAPs contended appropriate line for determining funding was dedicated 911 selective routers of ILECs. Sugrue stressed to county that FCC still favored negotiations between parties as most efficient way to resolve such cost-allocation disputes. He said Bureau was providing guidance in this instance because King County dispute had remained unresolved since county filed request nearly year ago. Interpretation of FCC’s rules must account for existing E911 wireline network, maintained by ILECs and paid for by PSAPs via tariffs, letter said. “For wireless carriers to satisfy their obligation… to provide Phase 1 information to the PSAP, carriers must deliver that information to the equipment that analyzes and distributes,” Sugrue said, referring to 911 selective router. “We thus agree with parties who believe that the appropriate demarcation point for allocating responsibilities and costs between wireless carriers and PSAPs is the input to the 911 selective router.” Letter said that because rates of wireless carriers weren’t regulated, they had option of covering such Phase 1 costs through charges to customers. Letter said decision didn’t place “entire cost burden” for Phase 1 implementation on wireless carriers, but imposed portion on PSAPs. Sugrue also cited “concerns” of Bureau whether any carrier would choose technology that couldn’t be used by PSAPs in particular area or couldn’t be used to meet upcoming Phase 2 obligations in order to shift costs to PSAPs.

FCC granted complaints by AT&T and WorldCom Fri., ruling that U S West calling service -- 1-800-4USWest -- violated Sec. 271 of Telecom Act because it permitted long distance calling by U S West’s local customers. Complaints were filed 3 years ago, before Qwest acquired U S West. Commission said case was similar to one last year in which FCC found Ameritech’s calling platform in violation of Telecom Act. “The evidence… demonstrates that U S West’s service is, in all material respects, the same as Ameritech’s unlawful service,” FCC Enforcement Bureau said in order. Among problems, agency said: (1) Calling plan was designed as combined service offering long distance component. (2) U S West relied on its brand name to market combined offering. (3) It used bill inserts and other mailings to promote service to its subscriber base. (4) It “maintained control and ownership of the customer relationship in connection with the combined services offering.” (5) It had “exclusive control” over marketing service. (6) It selected long distance provider that would carry interLATA calls and dictated certain terms. AT&T said case offered “clear- cut violation of Congress’s mandate that a Bell company not enjoy the benefits of being in the long distance business without first complying with the requirement that it open its local markets to competitors.” AT&T said case had been pending for several years and it hoped action “signals a resolve by the new FCC to act promptly to rule on complaints that Bell companies are violating their duties under the Act and the FCC’s rules.”

Two Mo. state lawmakers called for legislature to oust Mo. PSC Chmn. Sheila Lumpe and Comrs. Connie Murray and Dianne Drainer, accusing regulators of incompetence and dereliction of duty for failing to protect utility ratepayers from “devastating” rate increases. Outcry was result of PSC’s 3-2 vote Wed. to approve 44% gas rate increase requested by state’s 2nd largest gas company, Mo. Gas Energy, for 492,000 customers in Kansas City area. State Rep. Dennis Bonner (D-Independence) and state Sen. Ronnie DePasco (D-Kansas City) said they expected PSC also would approve pending 38% gas boost for Laclede Energy, which could go into effect next week for 633,000 customers in St. Louis and southeastern Mo. State law allows legislature to remove PSC members from office on 2/3 vote in each chamber. Commissioners said they had little choice but to approve 44% increase because company had open-and-shut case that soaring wholesale gas prices justified significant retail boost and persuasive evidence supporting claim that it would lose $20 million each month without requested rate increase. PSC “can’t force the companies to sell gas to the consumer at less than they have to pay for the commodity,” and has no jurisdiction over wholesale gas prices, Murray said. Dissenting Comrs. Robert Schemenauer and Kelvin Simmons wanted more investigation of utility’s loss projections and phase-in of any rate increase over several months instead of single big jump. PSC majority also voted to review agency’s processes for handling cost-based energy rate increases because of predictions of even more volatility in wholesale energy markets.

U.S. Appeals Court, D.C., handed important victory to Assn. of Communications Enterprises (ASCENT) late Tues., vacating FCC order on one of conditions imposed on SBC-Ameritech merger in 1999. Court vacated order that covered tradeoff FCC made with SBC in which company was permitted to provide advanced services free of interconnection requirements if it created separate affiliate to provide those services. Decision focused on arguments by challenger ASCENT that FCC essentially was forbearing from regulating when it decided to bypass interconnection requirements of Telecom Act’s Sec. 251 because SBC would be providing advanced, not basic, service through separate subsidiary.