FCC’s Draft ICC/USF Reform Panics Competitors

The telecom industry’s next iteration — one to rival changes forged by the 1984 Ma Bell breakup and the 1996 Telecom Act — could come on Tuesday, Nov. 4. That’s the day FCC Chairman Kevin Martin hopes to pass sweeping intercarrier compensation (ICC) and Universal Service Fund (USF) reform — reform that competitive and rural providers fear will trammel their businesses, and favor RBOCs, if commissioners don’t heed their concerns.

The prospect of ICC and USF reform has been brewing since 2001. And throughout his tenure, Martin has indicated his position on issues such as USF contribution methods. Problem is, when he circulated a proposed order to fellow commissioners the week of Oct. 13, 2008, he did so without putting the entirety of it out for public comment; only the five FCC members know the details. And if those details include a shift in interconnection pricing regulation, as most insiders suspect they do, the repercussions — if the order passes as-is — will be monumental.

“This does threaten regulatory stability,” said John Heitmann, a partner in and founding member of Kelley Drye & Warren LLP’s telecom practice.

Sources say the FCC has not broken any laws by not calling for comment on the entire proposal. But CLEC and RLEC representatives are furious they won’t get to see the minutiae before the Nov. 4 meeting. The question of transparency, in light of the breadth of ICC/USF reform, loomed large.

“You’re considering a whole new pricing methodology, considering a proposed reform plan that you have not shared with the industry,” said Dan Mitchell, vice president of the National Telecommunications Cooperative Association’s (NTCA) legal and industry affairs division. “We don’t think there’s a court in this land that would agree with that.”

Given the financial ramifications this order likely holds for CLECs and other providers, “What’s the most absurd thing to me is we’re having to guess at what its contents are,” said a Southeast CLEC source who asked to speak on background.