The continuing saga of the FCC's Step 6 switched access transition - Level 3 v. AT&T
Level 3 came up short again in its recent, and presumably final, effort to change the implementation of the FCC’s step 6 switched access transition. The short story is AT&T (and generally the other price cap LECs as well) did not reduce switched access rates for traffic destined to its CLEC, wireless, and VoIP affiliates -- and Level 3 believes it should have.
As I’ve indicated in previous posts, step 6 has been controversial. The controversy is about Transport rates – and by “Transport” I mean Tandem Switching, Transport (fixed and per-mile), and Common Transport Multiplexing. Step 6 divided terminating transport rates into two very different categories: 1) rates that would stay where they are for the foreseeable future and 2) rates that would go down to $0.0007 and then down to zero in mid-2018. Who gets which rates (or non-rates) for what kind of traffic is a major issue no matter what kind of carrier/provider you are.
The specific issue all along has been about interpreting 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.
After the ILECs made their step 6 filings – without reductions for affiliate, but non-price cap LEC termination -- CenturyLink opposed the AT&T and Verizon filings, Level 3 opposed the AT&T filing, and Sprint opposed the CenturyLink, AT&T, Cincinnati Bell, and Verizon filings. These efforts resulted in no action by the FCC to change what had been filed.
Level 3 decided to give it one more try by using the formal complaint process. Although we did not expect the FCC to change course on this issue, Level 3’s effort is understandable. The FCC had declined to act on the opposition petitions only because the tariffs were not “so patently unlawful as to require rejection,” so they did not exactly seem to slam the door on the issue. The mechanism of opposing tariff filings simply does not require the FCC to indicate how strongly it feels about an issue when it decides to act or not.
On February 12th, that changed. I wouldn’t say they slammed the door exactly, but they carefully pulled it shut tightly enough to hear the latch click. The FCC clarified that “the $0.0007 per minute rate in Section 51.907(g)(2) [and zero after July 1, 2018] applies only to tandem switching and transport traffic that terminates to a price cap carrier end office.” This issue has been settled. (I do wonder exactly when it was settled. Has this been the intent since the Transformation Order was released back in 2011, or did it only get settled as the price cap LECs began seeking informal guidance in early 2017?)
For those hoping this decision would answer more questions about the ultimate Transport transition for all parties and traffic types, this significant -- but narrow -- clarification may have been a letdown. While it touches on some of the big policy issues of “third-party” Transport, the industry will just have to wait for this ongoing intercarrier compensation proceeding to develop further before those issues will be settled.
Better yet, interested parties should continue to make their voices heard as the FCC attempts to craft a solution that will best serve this important market in the long term. #Step6Transition
