NTIA Ex Parte Letter Regarding the Coalition for Affordable Local and Long-Distance Service Proposal for Reform of Interstate Access Charges
The Honorable William Kennard
Federal Communications Commission
445 12th Street, S.W.
Washington, D.C. 20554
Re: Ex Parte -- Coalition for Affordable Local and Long-Distance Service Proposal
for Reform of Interstate Access Charges, CC Docket No. 96-45, FCC 99-235
Dear Chairman Kennard:
The Commission has before it a proposal by the Coalition for Affordable Local and Long-Distance Service (CALLS) to reform further the Commission's rules and policies concerning interstate access charges.(1) The National Telecommunications and Information Administration (NTIA) recognizes that access charge reform can produce important competitive benefits and, indeed, may be necessary to ensure that the interstate access regime is compatible with the competitive environment spawned by the Telecommunications Act of 1996. We emphasize, however, that such reform will further the public interest only if it also produces clear benefits for consumers.
The CALLS proposal was negotiated by the local exchange carrier and interexchange carrier members of the coalition as a comprehensive solution to their access charge, universal service, and price cap concerns.(2) The plan has three basic elements: First, it would combine existing carrier and subscriber charges into one flat-rated subscriber line charge (SLC), and would provide for limited deaveraging of those charges under specific conditions. Second, the plan would establish a portable universal service fund that provides explicit support to replace support currently implicit in interstate access charges.
Third, the proposal would target all annual rate reductions mandated by the Commission's existing price cap plan towards reducing each LEC's per-minute traffic sensitive charges to its predesignated Target Rate.(3) The rates for all other interstate access rate elements (e.g., the SLC) would remain unchanged from present levels. Once a LEC reaches its Target Rate, the productivity factor in the Commission's price cap formula (currently 6.5 percent) would be set equal to the inflation factor, meaning that there would be no further reductions in that LEC's interstate access rates for the remaining duration of the CALLS proposal.(4)
NTIA believes that the CALLS plan contains provisions that merit serious consideration, though perhaps not unqualified acceptance.(5) As noted, however, the Commission must ensure that any changes to the current access charge structure produce clear and demonstrable consumer benefits. To that end, NTIA recommends that any access charge order adopted by the Commission should include the following elements:
• If the Commission adopts the CALLS proposal to combine the SLC and the presubscribed interexchange carrier charge (PICC), the Commission must ensure that consumers are informed as to the nature of that charge and the reasons for its imposition. Further, as CALLS contemplates, the Commission should increase Lifeline support to protect low-income subscribers from increases in the SLC.
• The Commission should guarantee that all consumers continue to receive the benefits of the productivity gains realized by price cap-regulated carriers. In this regard, NTIA does not understand why all productivity gains should be targeted towards reducing a single rate element (i.e., traffic sensitive charges), or why the productivity factor should be reduced arbitrarily (until January 1, 2005) once the relevant Target Rate has been reached.
• The benefits of any access charge reductions resulting from implementation of the CALLS plan should accrue to the benefit of all interexchange service customers. With every access rate reduction under the CALLS plan, the Commission should require all regulated interexchange carriers to file new tariffs reflecting changes in their access and other underlying costs.
• The Commission should promote affordable long-distance service for those low-income, low-volume consumers who rely upon interexchange service as their lifeline to the rest of the world.
• The Commission must take care that any access charge reform is consistent with requirements of the Telecommunications Act of 1996 to preserve and advance universal service, to assure that universal service funds are being used for their intended purposes, to ensure that interexchange rates in rural and high-cost areas are comparable to those charged in urban areas, and to guarantee affordable long distance rates for all Americans.(6)
Thank you for your consideration of these views.
Gregory L. Rohde
cc: Commissioner Susan Ness
Commissioner Harold Furchtgott-Roth
Commissioner Michael Powell
Commissioner Gloria Tristani
Lawrence E. Strickling, Chief, Common Carrier Bureau
1. Access Charge Reform; Price Cap Performance Review for Local Exchange Carriers; Low-Volume Long Distance Users; Federal-State Joint Board on Universal Service, Notice of Proposed Rulemaking, 14 FCC Rcd 16872 (1999) (CALLS Rulemaking).
5. A group of consumer groups and business organizations has criticized the CALLS plan and has submitted a counterproposal to the Commission. NTIA urges the Commission to consider that alternative plan carefully before taking any action on the CALLS proposal.