My May 3^rd blog post was entitled “Access Step 6 - Speak Now or Forever Hold Your Peace . ..” Last week demonstrated that was a bit of an overstatement. In this business, one rarely has to forever hold their peace. Parties that had concerns about the tandem/transport portion of the Step 6 tariff filings and rate implementation took the logical next step – oppose the filings during the approval interval. CenturyLink, Level 3, and Sprint all filed petitions to reject or suspend and investigate the Step 6 tariff filings of one or more price cap ILECS. More specifically, CenturyLink opposed the AT&T and Verizon filings (and had opposed AT&T’s June 7 “structure” filing), Level 3 opposed the AT&T filing, and Sprint opposed the CenturyLink, AT&T, Cincinnati Bell, and Verizon filings.                                                                                                                                                           

All of the petitioning parties are concerned about the various interpretations of this portion of FCC Rule 51.907(g):

Each Price Cap Carrier shall establish, for interstate and intrastate terminating traffic traversing a tandem switch that the terminating carrier or its affiliates owns, Tandem-Switched Transport Access Service rates no greater than $0.0007 per minute.

Sprint’s petition claims that, rather than implement the rule as written, “each of these tariffs ignores the express language of the FCC’s Step 6 Rule and will unlawfully impose tandem switching rates higher than $0.0007 for traffic terminated via the ILEC tandem to its affiliates.”

AT&T’s tariff wording, for example, does limit the application of the “affiliate” pricing to tandem-end office routes that just involve the Telephone Company, i.e., the price cap LEC. The tariff is not explicit about the treatment of terminating tandem/transport traffic to the wireless, CLEC, or VoIP affiliates of AT&T:

Access Tandem Switching charges are billed as Originating, Terminating to Telephone Company’s own end office and Terminating to non-Telephone Company 3rd party locations based on call recordings. Non-Telephone Company 3rd party locations are all offices or other locations not owned by the Telephone Company. Examples of 3rd party locations include terminations to other local exchange and wireless carriers.

While oppositions to tariff filings often don’t disrupt the approval process, these Step 6 petitions seem like they would be difficult for the FCC to dismiss. We don’t just have an IXC wanting to realize maximum Step 6 savings or a CLEC perhaps worried about competitive asymmetries – as valid as those concerns are. In this case, we have a price cap ILEC opposing other price cap ILECs. And that price cap ILEC has to defend its own filing against opposition. Add to that the uncertainty many CLECs face as they try to appropriately mirror the price cap LECs’ “affiliation” interpretation, and it looks like the FCC really needs to chime in.

Here are some possible responses by the FCC:

Reject filings. This would be likely if the FCC were certain the transition should apply to traffic destined to all ILEC affiliates such as their VoIP, Wireless, or CLEC affiliates. But their inaction on the CenturyLink petition for limited stay and CenturyLink’s petition opposing AT&T’s June 7 “structure-only” filing make a rejection very unlikely.

Suspend filings. They could do this to effect a “stay” while they figure it out.  Maybe they could also grant the CenturyLink petition, thus staying all the rest of the cascade of tariff filing until they figure it out. Again, however, their recent history on this issue suggests this is also unlikely.

They could suspend all the filings temporarily and then allow the tariffs to go into effect subject to an accounting order in case they are reversed. This usually happens all in one day. This option seems likely only if the FCC believes the tariffs as written will ultimately prevail and the transition will not apply to traffic destined to all affiliates of the ILECs. Unlikely – but possible.

What is the most likely opinion we’ll hear from the FCC?  Crickets. . . . . . . .   The FCC has had more than one opportunity to add clarity to this issue and they have declined. AT&T, Verizon, and the FCC (evidenced by its inaction thus far) think this is a settled issue, so we should expect the ILEC tariffs to go into effect as filed.  To the CLECs that need to file by July 14, you’ll need to be prepared to move forward with just the information that is on the table right now.

UPDATE:

Just in @ 3:30 pm EDT Just in regarding Step 6 ILEC Access Tariffs,  as per FCC Official, "We are not acting on the petitions - so the tariffs go into effect."