YOU ARE AT:Archived ArticlesLEC GROUP SAYS BILL AND KEEP WILL STIFLE NETWORK INVESTMENT

LEC GROUP SAYS BILL AND KEEP WILL STIFLE NETWORK INVESTMENT

WASHINGTON-The United States Telephone Association continues to fight against any federally mandated rollback or eradication of interconnection fees that wireless companies must pay to local exchange carriers to terminate wireless calls on LEC networks.

“We are concerned about the possible direction of the process … and of the hysterical rhetoric of our competitors,” said Roy Neel, USTA president and chief executive officer, at his monthly press gathering last week. “We don’t know what this will mean to consumers, and we are concerned about the potential for stifled investment in the network.”

While admitting that the Telecommunications Act of 1996 called for unbundling network services and that USTA members will comply, Neel put the blame for interconnection wrangling between wireline and wireless providers squarely on the Federal Communications Commission. Neel believes the FCC should not be mandating specific prices LECs can charge for unbundled services, and he called the FCC’s proposed cost matrix “artificially low.”

Regarding the possibility of replacing interconnection charges wireless carriers pay today with a bill-and-keep plan, Neel commented, “There has been no complaint to our knowledge [to the FCC] on any interconnection agreements. The FCC has proposed a solution to a problem that doesn’t exist. They want something for nothing. We think its a way for wireless carriers to gain an advantage by doing an end-around.”

More than 50 interconnection agreements have been signed and another 500 are in negotiations, Neel said. “If regulators set arbitrary rates and terms on a national level without considering the differences among local economies, the competitive process will be reversed and the new law will not be realized to its full potential.”

USTA attorney Mary McDermott pointed out that most interconnection agreements are at the state level, and that in many jurisdictions-New York City being one-mutual compensation does exist.

“It is hard to second-guess why the FCC floated the issue. Interconnection negotiations have been going smoothly,” she said. “Bill and keep is a bad solution. Ninety percent of [phone] traffic goes from the wireless network to the wireline network. We take issue that the cost of termination is zero; it does cost something.

“If the FCC mandates bill and keep, a $1 billion revenue stream to the states would stop,” McDermott continued. “We think it should be left to the states.”

“This is not something for nothing,” countered Tom Wheeler, president of the Cellular Telecommunication Industry Association. “FCC policy says wireless operators and LECs have co-carrier status. However, there has never been a [written] policy to complain about. It’s been a take-it-or-leave-it situation.”

Wheeler continued, “We should be paying the same amount the LECs are paying for interconnection-nothing. It’s a simple question of parity, equity and the right price.”

In a May 23 letter to Neel, Pocket Communications Inc. (formerly DCR Communications Inc.) Chairman and Chief Executive Officer Daniel Riker also took the USTA head to task for his views on interconnection. Pocket, a successful C-block personal communications services bidder, plans to build networks in 43 markets and will be subject to interconnection agreements, if they still exist at that time.

“I submit that it is not the wireless carriers who are getting something for nothing,” Riker wrote. “Today, the interconnection cow is being milked solely by the LECs*…*Bill and keep is fair, administratively simple, and it fosters the full usage of the interconnecting networks. You know this better than I, because it is the system nearly all of your members have used for decades when passing telephone traffic between adjacent networks. Instead of fighting bill and keep, your members could be developing services and programs to encourage their customers to place calls to wireless users, thereby using their networks more fully and prosperously.”

Riker believes that the current three-cents-per-minute LEC interconnection charge “is an absolute bar to competing with [LECs].” While saying that some wireless carriers may not be able to compete on the same level with LECs, “the nice thing about competition is that neither you nor a government official should get to decide this for the future. Our company and others like us have and will bet billions on licenses and infrastructure on the premise that PCS will break out of the limited niche market wireless is in today-to compete with the local telephone monopolies. Although we may be wrong, I would prefer to let consumers and the market, not the LECs, decide.”

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