WASHINGTON-The Federal Communications Commission’s adoption last week of a sweeping local-competition docket at best opens the door for some wireless carriers to become true head-to-head competitors with local exchange carriers, and at least will help lower prices wireless carriers and subscribers pay for service.
Aug. 1 “marks the end of the pre-competitive era of the telephone. We now are pro-competition instead of pro-competitor,” commented Commissioner James Quello. “To the wireless industry: We’ve heard your concerns, and we’ve reserved federal jurisdiction for you. I will presume that good-faith negotiations will continue.”
Tom Wheeler, president of the Cellular Telecommunications Industry Association, had a more concise response. “Hooray,” he said. “This is a great decision, probably the most significant since the decision to create two cellular carriers in a market.”
The order-which is expected to span some 700 pages, although only 50 deal directly with new rules-“is the first step in moving toward competitive local markets,” said Common Carrier Bureau chief Regina Keeney who, with all other staffers instrumental in crafting the landmark rulemaking, wore a button that read, “CCB: We’re wired and we’re tired.” LECs have until Jan. 1, 1997, to open and unbundle much of their networks on a nondiscriminatory basis to anyone wanting to provide service-including local dial tone.
While the bulk of CC Docket No. 96-98 affects the future of LECs and interexchange carriers, certain tenets will allow cellular, personal communications services and enhanced specialized mobile radio operators to reduce the rates they pay to local phone providers for interconnection to the wireline network; wireless carriers also will be able to access-at prices that are “just, reasonable and nondiscriminatory,”-the following unbundled network elements:
network interface devices,
local loops,
local and tandem switches (including all software features provided by such switches),
interoffice transmission facilities,
signaling and call-related databases,
operations-support systems and information and
operator and directory-assistance facilities.
Although states have been given increased flexibility in how they can implement the strictures of the order-including the adoption and implementation of FCC-mandated, cost-based interconnection fees-wireless carriers will continue to be regulated ultimately by the commission, which will mediate if satisfactory interconnection or other agreements cannot be reached or if other barriers to LEC entry cannot be breached.
For those states that will not be undertaking a cost study for interconnection and unbundled elements in the near future, the order read in part that “the commission establishes a default range of 0.2 cents to 0.4 cents per minute for switching” that states can use either in the interim or as established prices.
And when will prices come down? Karen Brinkmann, Wireless Telecommunications Bureau associate chief, could not provide a definite time or a definite amount-despite FCC guidelines-but she did say wireless carriers “would be paying substantially less than what is being paid now.”
According to the order, all existing LEC-CMRS interconnection agreements must be revisited. In fact, Commissioner Susan Ness went so far as to say, “We must sweep away existing CMRS-LEC policy.” Commercial mobile radio services providers, now classified by the commission as telecommunications carriers, will be eligible to provide interconnection services and for “reciprocal compensation arrangements.” In addition, LECs are prohibited from charging CMRS providers-including radio common carriers-for terminating LEC-originated calls; this could save RCCs millions per year. CMRS providers also will be exempt from toll charges if the call remains within a major trading area.
Bill and keep, a long-established practice between wireline network providers, is in the cards for wireless carriers but they may have to wait until a state determines when a balance of traffic exists between a wireless and a wireline carrier.
“The terminating compensation rights of paging/messaging providers will finally be enforced,” said Jay Kitchen, president of the Personal Communications Industry Association in a written statement. CTIA’s Wheeler agreed, saying, “This will result in a 90-percent decrease in fees. More important is what that enables-what existed previously was an economic model that did not enable local-loop competition because of the costs. We have the incentive now.” While he would not comment on the future plans of specific member carriers, Wheeler did say that many have plans for LEC implementation during the next five years.
Even though the traditional SMR community remained virtually untouched by the order, American Mobile Telecommunications Association President Alan Shark looked to the future, saying, “To remain competitive in today’s wireless industry, SMR operators must consider alternative forms of generating revenue, such as offering interconnection and reselling another carrier’s service.”
While the new rules make it appear that a competitive local marketplace will evolve smoothly, things could change at the state level. One insider told RCR that incumbent LECs “are well-known faces in the hallways of state legislatures and at public service commissions,” and that their input always has been included in state regulatory actions. In fact, BellSouth Corp. accused the FCC of “micromanaging the telecommunications industry,” and that some 15 previously signed interconnection agreements could be in danger because “we are now concerned that the terms and conditions the commission has laid out may impede the process to competitive markets and seriously restrict state commission latitude.”
A statement circulated by the group Telecommunications Carriers for Competition pointed to the “unequal bargaining position of the now-monopoly local phone companies. Monopoly local exchange companies lack the incentive to cooperate with their new rivals. The only exception is that the Bell operating companies will want to do the minimum necessary to convince regulators to let them provide in-region long-distance services. That one-time carrot is key.”
Gerry Salemme, AT&T Corp.’s vice president for regulatory affairs, added, “At least states don’t have to start from scratch. [This rulemaking] will get Bell companies moving on matters that have been at loggerheads. However, there will be a lot of gaming on their part.” Salemme made it clear that if LECs block implementation of the competition docket at the state level, “Arbitrators will be called in.”
