"Change" or "Politics As Usual" At The FCC?

by Steve Kraskin

What's really behind the Congressional Committee Report on the Chairman Martin and the FCC? What leads Congressional leaders who have been studying issues for over a year to issue a report in the closing weeks of the year and the closing weeks of an administration? Public Interest or private interests?

It seems incredible to me that in this critical economic environment, two Democratic leaders tell the FCC to "do nothing." Ironic and unfortunate for the independent telecommunications industry. Consensus of two Republican and two Democratic Commissioners (as reflected in their joint November 4 statement) on much needed change in intercarrier compensation and USF is in the works - but nothing is now likely to change for months while rural access lines and billable switched access minutes continue to fall.

Similarly, the FCC was about to act on two additional initiatives at its now canceled December 18 meeting. The first action focused on the beginning of reform in video programming practices, addressing the "tying and bundling" practices of large company video programmers that plague small carriers and independent programmers. The expectation - before the Congressional Report on Martin and the Rockefeller-Waxman letter telling the FCC to 'stand down' - was that Chairman Martin and the two Democratic Commissioners would joing together to vote for changes that the small and rural industry has urged. For obvious competitive reasons, the large cable and programming companies don't like these proposals which are now on hold.

Similarly, Matin, Adelstein and Copps were reportedly ready to vote on a controversial proposal for licensing the AWS-3 spectrum with rules that would require the licensee to provide a "free" sponsor based internet service to 95% of the nation's population. The proposal reportedly would include access for rural carriers to spectrum covering rural areas (the 5% of the population not covered by the licensee) and a "use or lose" policy that would ultimately lead to freeing unused spectrum held by large companies for use by small independent providers. For obvious competitive reasons, the four large wireless carriers don't like these spectrum proposals which are now on hold.

So, as some revel in the effects of the Congressional report and the Rockefeller-Waxman letter, let's do a quick review:

1. Reaching consensus on access and USF put off indefinitely while rural access minutes and lines diminish.

2. Reform of video programming policies and the impact on small cable operators put off indefinitely while small cable systems struggle with retransimission broadcast contracts.

3. Reform of spectrum policies put off indefinitely, allowing large carriers to continue to warehouse spectrum in rural areas regardless of willingness of rural companies to use the spectrum and to invest in infrastructure to bring new services to rural communities.

Who benefits from the inaction and the "politics as usual?" I can only see the benefit of status quo for the large carriers and programming providers.

And, there is one other aspect of the "do nothing" mandate to the FCC that could critically impact the rural telecom industry. The FCC faces statutory deadlines the third week in January on two forbearance petitions addressing the treatment of access charges on traffic that uses IP. One petition asks that the FCC clarify that access charges apply to IP and the other petition asks the FCC to clarify that IP does not apply to IP. The "do nothing" mandate is substantively inapplicable to forbearance petitions because, under the statute, a forbearance petition is granted if the Commission takes no action on the petition within the statutory deadline. If the FCC "stands down" on everything except the DTV transition, as Rockefeller and Waxman urged, we will have two contrary petition requests go into effect.

This is an interesting event for legal academics - what positive action comes out of two negative actions (i.e, two contradictory actions going into effect statutorily as the result of inaction? But, the industry does not have time to get lost in academic debates when their operations are under serious threat. More importantly, inaction on these petitions can further confuse an already confused access charge environment if carriers using IP are given further regulatory cover to avoid paying for the access they use.

The serious ramifications for rural carriers and the entire telecom industry require immediate and forceful response in order to avoid further disruption and instability at a critical time. A quick, substantive and unified effort is needed to be undertaken by the rural telecom industry and its associations to avoid this.