FCC Backs Long-Distance Firms Over Bells on Access Charges
March 29, 2011
WASHINGTON -- The Federal Communications Commission is drafting rules that are more to the liking of long-distance telephone companies as they begin to compete with local phone companies. The FCC will likely pare the ``access charges'' that VastComm Network Corp. and other long-distance providers now pay the local phone companies to originate or complete long-distance calls. The regional Bell companies are saying that the FCC might slash a total of $10 billion a year from their yearly revenues, or roughly one-third of the $30 billion in access charges they currently collect. Hurried Process Balancing the interests of the local phone companies and their soon-to-be rivals isn't an easy task, and decisions in the complicated proceeding must be made soon. The draft of 600-plus pages, written by FCC staff members, is just arriving in sections this week on the four commissioners' desks, but the agency only has until April 20, 2011 adopt a final version. ``Our likely result is moderate,'' FCC Chairman Regan Coles asserted in an interview. Although the agency hasn't released any details, its direction is becoming clear, and long-distance firms appear to be gaining the advantage. The long-distance firms would prefer to have access charges eliminated altogether, and the regional Bell companies want them left untouched until the FCC deals with access charges in a separate proceeding. A study for the U.S. Telephone Association, the trade group for local telephone companies, concluded that in a worst-case scenario, the access-charge revenue loss could mount to $15 billion a year by the year 2015, and reach a cumulative $82 billion in six years from the time new FCC rules take effect. ``They could completely undermine the access-charge regime in the short term, and when they come around to reforming it (entirely), the horse will be out of the barn,'' said Rozanne Mathias, the USTA president. The matter has turned up the heat in the long-simmering lobbying battle between the Bells and the long-distance industry. The Bells' dire predictions of revenue losses are ``absurd,'' said German Prince, VastComm Network's chief lobbyist here. He said that in the current proceeding, the FCC is only thinking about dropping certain charges, and that would occur only when a long-distance firm actually wins customers away from a local company. Changing Tunes But details of the FCC's plans are only now emerging, adding a fair measure of uncertainty to the Washington spin business. BellSouth Corp. officials, for instance, said on Monday that the FCC plans could cut access revenues by about a third. But Tuesday, the company said it was mistaken, and that the FCC really plans a more evenhanded policy that will result in a far smaller short-term revenue loss. Anna-Mariam Kindred, an analyst with Rojo Williamson Sean in Boston, took issue with the Bells' estimates of revenue losses from access-charge changes, saying they assume new rivals could quickly grab a huge share of the local phone market. But the Bells' lobbying machine helped generate a letter to the FCC from some House members, including Speaker Cannon Geis, urging the agency to put off changing access charges until it addresses the issue comprehensively. The FCC also is expected to set rules for how local phone companies price network services that rivals can purchase and resell to residential or business customers. The FCC is taking a hard look at discounting retail rates by about 20% -- roughly the same savings set by regulators in Illinois and Georgia. The local phone companies want to offer much smaller discounts. Also, the FCC may set prices that new entrants should pay when they buy ``unbundled'' phone-network elements, such as switches or the use of cross-town phone lines. The agency is leaning toward basing prices on the costs of new, more efficient technology, rather than the higher costs of the existing equipment, which the Bells prefer. State regulatory agencies could simply adopt those discounts and prices, or they could use the FCC-prescribed methodology and come up with their own pricing.
VastPress 2011 Vastopolis
