Customs Duty

LAS VEGAS -- CLEC executives at the Incompas Show mixed optimism and hope that the FCC won't grant a USTelecom bid for ILEC relief from wholesale duties to share networks with rivals. They told show attendees that competitor ability to lease access to discounted copper unbundled network elements (UNEs) of large incumbents encourages both sides to deploy fiber. Some cited the importance of maintaining "avoided-cost resale" requirements also targeted by a USTelecom forbearance petition.

Public Knowledge and the FCC traded words over whether telecom deregulation is hampering service restoration efforts after Hurricane Michael. PK said FCC Chairman Ajit Pai and Florida Gov. Rick Scott (R) failed to "take responsibility for how their radical deregulation of telephone service has contributed to this unfortunate situation." The FCC said it's "disappointing but not surprising that a left-wing special-interest group is making cheap and false political attacks while people in the Florida Panhandle are suffering." Pai plans to visit the area Friday. Verizon Wireless said it continues to make progress restoring service.

Telcos opposed a request to redo an FCC order further easing telecom discontinuance duties and related regulatory processes (see 1806070021). Comments were posted Friday in docket 17-84 on Public Knowledge's Aug. 8 petition for reconsideration and motion to hold the June order in abeyance due to 9th U.S. Circuit Court of Appeals litigation on a December order. PK's claims that the FCC "ignored the record" and "the Order eliminated consumer protections are unfounded, and its suggestion that the rules adopted in this Order could compromise critical federal agency missions is reckless and is equally unsupported," said USTelecom: "The Order reflects a careful balancing of the needs of consumers with the important goal of removing regulatory barriers that cause unnecessary costs or delay when carriers seek to transition from legacy services to next-generation broadband services." Verizon said PK "inaccurately describes" FCC "decisions and reasoning, and mischaracterizes the views" of NTIA, which "supports the Commission’s streamlining efforts." NTIA did note continuing concern about the impact on federal entities of some copper retirements and telecom service discontinuances (see 1807200057). PK "also seeks what it calls abeyance, but is actually a stay of the ... Order, by asking the Commission to keep its decision from becoming effective," Verizon said: "The Commission’s rules prohibit combining a motion for stay with any other requested relief," and it's "also substantively deficient." CenturyLink opposed PK's request to eliminate an "alternative options test." The test "permits a carrier to discontinue legacy voice service on a streamlined basis as part of a technology transition, after notifying affected customers, if the carrier shows that those customers will have access to at least two substitute voice services: stand-alone interconnected VoIP service from the discontinuing carrier itself and stand-alone facilities-based voice service from another provider," CenturyLink said. It knocked PK's claim that NTIA's concern "requires the Commission to reconsider" its test: "NTIA simply noted its continuing concern about the potential impact on government customers of legacy services being discontinued in remote or less populated areas and outside the scope of U.S. General Services Administration-negotiated contracts."

Alcatel-Lucent Enterprise through year-end will “absorb” the “significant” cost increases of tariffs on Chinese imports of networking equipment and components that took effect Sept. 24, ALE said Wednesday. The Trump administration removed imports of Bluetooth headphones, smartwatches and fitness trackers under the 817.62.00 line item but let 10 percent duties stand on networking equipment imported under the classification (see 1809170052). The tariffs will rise to 25 percent after Jan. 1. “Many vendors have chosen to pass the cost through to channel partners and customers by immediately increasing prices,” but ALE “will absorb the current 10 percent increase and give partners the opportunity to place orders before a potential need to adjust pricing in the new year,” it said. Most U.S. customers “locked in 2018 budgets long ago and are already in planning cycles for next year,” said ALE. “We recognize an unexpected price increase could aggravate a budgeting process that is often already complex.” It vowed three months’ notice of any 2019 price increases.

Tariffs took effect on $200 billion worth of Chinese imports, including duties the tech industry fought unsuccessfully (see 1809120049). China retaliated later Monday with tariffs on $60 billion in imports from the U.S. President Donald Trump has threated to “immediately pursue” a fourth installment of tariffs on $267 billion worth of additional Chinese imports as a countermeasure. Micron and Voxx (see 1809210002) are among those accepting tariffs as a fact of life and increasingly turning their sights toward mitigation strategies. “Product-specific” exclusion requests are another option, emailed David Cohen, customs law expert with Sandler Travis. The Office of the U.S. Trade Representative had sought exclusions on the first two rounds of tariffs that took effect July 6 and Aug. 23. “No decisions have been made on the thousands of requests,” Cohen said.

Judges questioned a Sandwich Isles Communications attorney's assertions the FCC backed the carrier's Hawaiian Island undersea cable project before reducing its related access charge revenue. A three-judge panel of the U.S. Court of Appeals for the D.C. Circuit also questioned FCC and AT&T attorneys extensively in oral argument Monday. SIC is challenging a 2016 FCC order that prospectively disallowed all but $1.9 million of its annual access collections from a National Exchange Carrier Association rural telco pooling mechanism (see 1612060032).

TPx Communications pressed the FCC to deny USTelecom's forbearance petition for ILEC relief from wholesale network sharing duties under the Communications Act. "TPx explained the continued importance of unbundled network elements ('UNEs') and resale to competitive markets and the adverse impact forbearance from Section 251(c) obligations would have on its customers," said a filing by U.S. TelePacific, Mpower Communications and Arrival Communications (all "TPx") posted Friday in docket 18-141 on meetings with aides to Chairman Ajit Pai and Commissioners Brendan Carr and Jessica Rosenworcel. They also met an aide to Commissioner Mike O'Rielly (here) and Wireline Bureau staff (here). "TPx has made substantial investments in collocations and equipment to provide broadband, voice, plain old telephone service ('POTS') and bundled services to its customers using UNEs," it said. The Computer & Communications Industry Association voiced concern "that, pursuant to [a Further] NPRM on modernizing the Commission’s Form 477 data collection ... the Commission would eliminate its ability to assess the level of competition in the marketplace for Business Data Services," said a filing in docket 11-10 on meetings with aides to Rosenworcel and Carr. "If the Commission were to 'eliminate the separate reporting of available contractual or guaranteed data throughput rates for business/enterprise/government services', it could no longer assess whether competition has developed under its new scheme, and, at worst, it would have to conduct another data collection like the massive undertaking that precipitated the Tariff Investigation Order and FNPRM."

Rural telco groups asked the FCC to postpone and redo broadband testing duties for RLECs and other smaller providers of fixed service receiving high-cost Connect America Fund support. WTA and NTCA made the requests in applications for review by commissioners of a July 6 staff order (see 1807060031). Petitions for reconsideration (and in some cases clarification) were filed jointly by USTelecom, ITTA and the Wireless ISP Association, and individually by ViaSat, Hughes Network Systems and Micronesian Telecommunications. Filings were posted Wednesday and Thursday in docket 10-90.

That U.S. tariffs on $200 billion worth of Chinese imports take effect Monday gives potential challengers, including from the tech and telecom industry, little time to weigh a court challenge blocking the duties before they take effect. The quick turnaround, published in a notice U.S. Trade Representative Robert Lighthizer released Monday (see 1809170053), bore out CTA member companies’ worries the Trump administration would release its order imposing the tariffs soon after the comment period expired Sept. 6. The new tariffs "run afoul of the carefully tailored provisions” of the 1974 Trade Act, “which require any action to be within the scope [an] investigation," said CTA President Gary Shapiro Monday.

Tech and telecom interests are ratcheting up opposition to U.S. tariffs on Chinese products being imposed over intellectual property disagreements between the countries. CTA, the Information Technology Industry Council, Internet Association, Telecommunications Industry Association and some 80 others wrote congressional leaders of their concerns and began Americans for Free Trade. It's a “major campaign against tariffs,” said the group Wednesday. Industry also continues telling the U.S. Trade Representative of concerns (see 1809110044), with tech heavy hitters teaming up after IBM earlier expressed concerns.