As ICORE works for client companies, and analyzes industry events and trends, we are continually amazed at the complete control the FCC exercises over the interstate revenue of RLECs.
From its previous mandates of burdensome reporting requirements, unreasonable rate floors, unfounded expense/RoR limitations, and intrusive USF reviews — among other unfortunate measures — to the more recent introduction of an arbitrary budget mechanism to further limit its statistically modeled ACAM support regime, the Commission now dominates every aspect of the RLEC revenue process.
At one time, in a world that now seems long ago and far away, industry groups negotiated, developed and made recommendations on interstate cost separations procedures, average schedule settlements, interpretation and implementation of USF provisions, and other important areas affecting industry revenues. While the FCC provided guidance and approval, it freely allowed the industry to find its own solutions to often contentious and complicated revenue requirements and distribution problems.
With the advent of divestiture, however, the Commission began increasingly to insert itself into a variety of telecommunications industry issues. Apparently, it saw competition and the break-up of the Bell System as an unparalleled opportunity to reset, revamp, restrict and regulate. And while competition has flourished, with large companies having been allowed to freely maneuver, merge and manage their businesses, small RLECs have not fared nearly as well.
Since 1984, the FCC – through both its NECA and USAC offspring and its own army of economists and lawyers – seems to have done everything possible to depress the interstate revenue of the nation’s small RLECs. The long-standing goals of universal service at reasonable rates – which are currently threatened in rural America by the Commission’s Draconian policies – have constantly taken a back seat to the cause of overreaching and overbearing regulation.
Finally, though, we are seeing signs of change in what has been this long-term, punitive treatment of RLECs. The newly constituted, Ajit Pai-led FCC has begun attempts to gauge the value and efficacy of at least some of its small company reporting requirements, launched a proceeding which will change or eliminate rate floors, and given sympathetic hearing to Congressional and industry efforts to fully fund its initial high cost support offerings for both ACAM and non-ACAM choosing companies.
These are all very positive signs, demonstrating the new Chairman’s philosophy of lightening the Commission’s regulatory touch in many areas. It appears that the old, regulation-crippling FCC may be a thing of the past – at least for the next three and a half years.
The irony, of course, is that we will almost certainly consider the new FCC’s (almost certain) decision to fulfill the old FCC’s original ACAM obligations as a major success. In truth, a fair and unbiased regulatory body would not – in the first place — have broken its promises to small, struggling RLECs.
