Authorizing NASUCA to Respond to the FCC’s Proposed
Unified Intercarrier Compensation Scheme
That Would Shift Additional Access Charges to Consumers

WHEREAS, on April 27, 2001, the Federal Communications Commission released a Notice of Proposed Rulemaking (NPRM) concerning a proposed Unified Intercarrier Compensation Regime (Regime);

WHEREAS, carriers that use other carriers’ facilities to complete calls for their own customers have generally paid for the costs of originating and terminating their traffic on the networks of those other carriers;

WHEREAS, the NPRM proposed to increase the charges paid directly by consumers and eliminate the charges that each carrier pays to originate and terminate the call on other carriers’ facilities;

WHEREAS, the current regime includes access charges, which interexchange carriers (“IXCs”) and commercial mobile radio service (“CMRS”) providers pay to local exchange carriers (“LECs”) to originate and terminate long distance calls, as well as reciprocal compensation, which LECs pay other LECs for terminating local calls on the other LECs’ networks;

WHEREAS, the predominant form of inter-carrier compensation requires the calling party’s carrier, whether LEC, IXC or CMRS, to compensate the called party’s carrier to terminate the call;

WHEREAS, the FCC has exempted Internet Service Providers from paying originating and terminating access charges and is concerned that consumers may use internet telephony and carriers will lose access charge revenue as a result;

WHEREAS, because the FCC intends to exempt interconnecting networks from paying terminating access charges, and in order to protect the incumbent local exchange providers from revenue losses, terminating access charges may be charged directly to consumers receiving calls which originated on a network different from their own;

WHEREAS, the local carriers with the highest originating and terminating access charges are generally rural carriers operating in high cost areas;

WHEREAS, eliminating the requirement that other carriers pay originating and terminating access charges to local carriers would generally raise the rates of all consumers – particularly rural consumers;

WHEREAS, raising the rates for basic local service will impede the ability of consumers to obtain the benefits of universal service;

WHEREAS, charging consumers for receiving telephone calls from other carriers and placing telephone calls to customers of other carriers will discourage consumers from switching to and taking calls from another carrier;

WHEREAS, the Telecommunications Act of 1996 (Act) requires incumbent local exchange carriers to negotiate with other local carriers to establish reciprocal compensation arrangements and also requires that the Universal Service Joint Board, FCC, and state commissions preserve and advance universal service at just, reasonable, and affordable rates;

WHEREAS, the NPRM has solicited comments as to whether the FCC has the authority to establish this Regime for intrastate access terminating charges;

WHEREAS, the NPRM now claims that this proposal to increase local service rates will achieve greater “efficiency” and encourage local competition but, in reality, this proposal will threaten universal service, place more of a burden of supporting the network on those who use the network least and inhibit the development of competition;

WHEREAS, such local rate increases are contrary to the goal of the Act concerning universal service;

WHEREAS, because the Act requires that any reciprocal termination charge for local traffic must be negotiated between interconnecting carriers, allows the use of bill and keep as a means of avoiding the payment of reciprocal termination charges, but does not allow interconnecting carriers to resolve reciprocal compensation issues by each carrier billing their local consumers for these charges, the Regime violates the Act;

WHEREAS, the FCC does not possess the legal authority to raise local rates concerning originating and terminating access charges for reciprocal compensation and intrastate access;

WHEREAS, before shifting a carrier’s origination and termination access revenues to a carrier’s consumers the FCC should also consider the effect of eliminating the carrier’s origination and termination access payments that the same carrier would no longer be required to pay.

WHEREAS, the problems identified by the FCC with the existing interconnection regime do not require such drastic changes to carriers’ interconnection compensation;

THEREFORE BE IT RESOVLED that NASUCA is authorized to file comments with the FCC in order to oppose the Regime proposed in the NPRM;

BE IT FURTHER RESOLVED that NASUCA should recommend that the consideration of the Regime should be referred to the Universal Service Joint Board; and

BE IT FURTHER RESOLVED that NASUCA should recommend that the FCC should not consider shifting origination and termination charges to consumers until the FCC determines whether those charges are in excess of cost and whether the carriers receiving such revenues would be recovering excessive returns on such charges; and

BE IT FURTHER RESOLVED that there is so little effective local competition that it will be difficult for consumers to avoid such shifting of access charges to local rates; and

BE IT FURTHER RESOLVED that forcing consumers to pay terminating access charges, but exempting local carriers from paying for this same functionality is bad economic policy, anti-competitive and not reflective of how true competitive markets operate; and

BE IT FURTHER RESOLVED, that the Executive Committee of NASUCA is authorized to take all steps consistent with this Resolution in order to secure its implementation.

Approved by NASUCA: Submitted by:

Santa Fe, New Mexico NASUCA Telecommunications

July 17, 2001