As I’ve indicated in previous posts, the step 6/step 7 switched access reductions have been controversial. Again, the issue for each switched access provider is what of their remaining terminating switched access billing (Tandem Switching, Tandem-Switched Transport – Termination, Tandem-Switched Transport – Facility, etc. – collectively, “Transport”) should stay priced where it is for the foreseeable future and what, if any, must go down to zero? Terminating switched access rates are now divided into two very different categories -- and it is not obvious to everyone who gets to bill which category for which minutes.
Now back to the rate reductions…
Federal regulations 51.907(g) and 51.907(h) govern steps 6 and 7 access reductions for the Price Cap ILECs (emphasis added):
(Step 6)
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.
(Step 7)
Beginning July 1, 2018, notwithstanding any other provision of the Commission's rules, each Price Cap carrier shall, in accordance with bill-and-keep, as defined in § 51.713, revise and refile its interstate switched access tariffs and any state tariffs to remove any intercarrier charges applicable to terminating tandem-switched access service traversing a tandem switch that the terminating carrier or its affiliate owns.
The ILEC tariff filings (and many of the CLEC filings) implementing these changes included language that many found confusing. They typically refer to Transport rates that are going to zero as “End Office” and to Transport rates that are not going away as “3rd Party”. The bottom line is these ILEC filings meant there would be no switched access reductions in Price Cap LEC transport rates for traffic terminating to non-Price Cap LEC end offices (e.g., CLEC, wireless, or VoIP), whether they are affiliated with the ILEC or not, or for traffic terminating to a Price Cap LEC end office that traverses a non-affiliated tandem.
In February of this year the FCC affirmed (FCC 18-12) the way the Price Cap LECs tariffed and implemented the step 6 (and, by extension, the upcoming step 7) terminating rate step-down. They clarified – repeatedly - that the access reductions apply only to “tandem switching and transport traffic that terminates to a Price Cap carrier end office.”
What is still confusing to some, though, is exactly how this impacts CLECs. The simple, but not entirely self-explanatory, answer is that CLECs are required to benchmark to ILEC rates.
Federal regulation 51.911(c) does, of course, require CLECs to benchmark to ILEC rates:
Beginning July 1, 2013, notwithstanding any other provision of the Commission's rules, all Competitive Local Exchange Carrier Access Reciprocal Compensation rates for switched exchange access services subject to this subpart shall be no higher than the Access Reciprocal Compensation rates charged by the competing incumbent local exchange carrier, in accordance with the same procedures specified in §61.26 of this chapter.
But what does that mean when the ILEC has rates for a service that vary based on the regulatory classification of the end office (e.g., Price Cap ILEC or CLEC) and the relationship of the end office and tandem providers?
Can a CLEC just copy the rates and supporting language from the ILEC access tariffs? Not so fast -- because the ILECs embed their regulatory classification within the tariff wording it’s a bit more complicated than that. For example, when AT&T’s tariff limits the step-down rates to traffic “Terminating to Telephone Company’s own end office”, it actually means “Terminating to the Price Cap LEC’s own end office” -- which, as FCC 18-12 makes clear, has a very specific meaning in the context of the CAF Order rate step-downs. A CLEC needs to be careful that its tariff wording is precise enough to support its intended benchmarking step-down and that it does not unnecessarily forego ongoing transport compensation.
The ILEC step-down tariffs, and the FCC’s Order supporting those filings, provide important insights regarding current and post-step 7 terminating transport compensation. CLECs should carefully look at their tariffs to ensure they are properly benchmarking and not simply eliminating legitimate access billing. In many cases, for example, there is no need for a CLEC tariff to include step-down terminating transport rates at all. Step 7 is the final step-down under the CAF Order for Price Cap LECs and CLECs that benchmark to them. Consequently, next month’s tariff filings could memorialize terminating compensation for years. This is a filing you want to get right.
About the Author, Carey Roesel
LEARN ABOUT OUR STEP 7 SUMMARY!
