AT&T Sues FCC Over USF Reform

Publish date:

Washington —AT&T is taking the
Federal Communications Commission to
court over its effort to put cable voice-over-
Internet-protocol subsidies on par with
what phone companies receive.

At press time, AT&T and the National
Telecommunications Cooperative Association signaled they
would sue the FCC over its recent Universal Service Fund reform
plan, specifically intercarrier compensation, which are
the payments between networks for handing off traffic.

The FCC countered that it would vigorously defend itself in

AT&T is suing over the intercarrier-compensation reform
portion that makes it explicit that the cable operator’s VoIP
traffic should get equal footing with other phone service when
it comes to compensation for exchanging and terminating
phone calls.

AT&T argues that there is a lot more involved in terminating
circuit-switched service than interconnected VoIP, which
is why the compensation is not, and should not be, the same.
It had branded the FCC’s decision on VoIP as arbitrary and capricious,
which essentially translated to, “See you in court.”

Cable operators, including Comcast, Time Warner Cable
and Cox Communications, argue that the voice-services marketplace
has evolved beyond compensation rules based only
on network architecture and circuit-switched technology used
by incumbent carriers. The FCC said, in proposing intercarrier
compensation reforms, that the current system was “impeding
the transition to all-IP networks and distorting carriers’ incentives
to invest in new, efficient IP equipment.” Cable ops argue
that if incumbents continue to be compensated more for sticking
with traditional service than transitioning to IP-based service,
it creates a “compelling economic incentive” to continue
using what the cable ops called “last-generation technology.”

It will now be up to the court to decide who is right.

The NTCA (not to be confused with the NCTA) has several
issues, including provisions “mandating an ultimate price
of zero for all switched access and reciprocal compensation
services,” retroactive caps on Universal Service Fundsupported
costs, and “and blurring the lines” between regulated
and unregulated operations. It said those “will harm
rural communities, and will not help to advance the availability
and affordability of services for all rural consumers.”

Others, including state public-utility commissions, were
said to be likely to file suit as well.

“These reforms took an outdated, broken system designed
for the telephone era and modernized it for broadband,
our 21st century essential infrastructure,” said an
FCC spokesman in a statement. “In doing so, the Commission
increased certainty — including with respect to intercarrier
compensation — and eliminated waste, enabling
the private sector to invest in expanding broadband to all
Americans by the end of the decade. We are looking forward
to vigorously defending in court the Commission’s unanimous,
balanced universal service and intercarrier-compensation
reforms. “