Powell Rips FCC Delay on Connection Fee Reform

WASHINGTON — Federal Communications Commission (FCC) Chairman Michael
Powell warned his fellow commissioners today that they would eventually
regret Thursday’s FCC decision to further study intercarrier compensation

After reviewing the issue for the last four years, the FCC is now seeking
comment on seven reform proposals submitted to the agency by various telecom
industry groups and alliances. Given the FCC’s rulemaking procedures, any
final decision made on the proposals is probably months away at best.

Powell and Commissioner Kathleen Abernathy bluntly said the time had come
for action, not more study.

“Today, we act as timidly as ever in the name of dialogue and process,” said Powell, who
announced his resignation last month. “If you’re looking for bold action, you’re certainly not going to
find it here.”

The emergence of IP-based communications over the last three years, most
notably Voice over IP , has put the FCC in a quandary over how
to fit 21st-century technologies into a 70-year-old structure originally
designed to regulate the then publicly owned telephone system.

The current system relies on per-minute connection fees that distinguish
between different types of carriers and services. The distinctions roughly
fall between local and long distance and wireline and wireless. According to
the FCC these distinctions “often have no bearing on the cost of delivering

VoIP and the increasingly popular bundled, flat-rate communications packages
offered by the incumbent Bells and cable companies further complicate the
intercarrier compensation issue since they do not fit neatly into any
regulatory regime.

“The problem is that technology is moving forward, and we are rapidly
becoming, I think, irrelevant,” Abernathy said. “It seems to me we are
making absolutely no headway after four years and simply asking questions
again is not the right approach for this commission.”

Abernathy added, “If we do nothing we will find ourselves and our rules
irrelevant because the new digital technology, combined with the power of
the Internet, will continue to deliver lower cost, innovative ways to
provide voice, video and data.”

Commissioner Michael Copps, one of two Democrats on the five-person panel,
took exception to Powell and Abernathy’s comments.

“I don’t agree with the assertion that we haven’t made headway here,” he
said. “I think the dialogues that have been going on have made progress,
have come up with new ideas, have brought people into the progress. So much
of this is about process. Putting this proposal out in a neutral and open
fashion is the way to do it.”

Powell said by voting for further study, the FCC was “staying parked in
neutral. I do believe we’ll regret [this decision] because I believe
technology is flooding into the room so quickly that I’m fearful that the
compensation regime will be a result of chaos as opposed to judgment and

The new FCC request for further comment on compensation reform centers on
four themes: the development of efficient competition, preserving universal
service support, retaining technological neutrality and minimal
regulations and enforcement.

“I wish we were moving forward today, but we’re actually not doing a whole
lot more than we did in 2001,” Abernathy said. “This issue has been on our
plate for a number of years. We have grappled with the complexity associated
with intercarrier compensation. In 2001, we developed an extensive record
and now we’re asking [for more comments] again.”

Powell called the intercarrier compensation issue the “most critical
proceeding sitting in this commission. It involves a complicated set of
compensation relationships that broke long ago. There is near universal
consent among the industry and policy makers that this system is broken, has
been broken and continues to be torn apart by the arrival of advanced and
exciting new technology.”

He was especially critical of those who want further study.

“I find it is fascinating that every time we are forced to deal with a new
technology issue, we hear animated and pointed rhetoric … that we should
proceed on a unified compensation regime and how we need bold and effective
action and we need it now,” Powell said.

Powell also said he was disappointed the FCC decided not to act on two
petitions involving rate disputes between local and long
distance carriers.

“This commission bears an important responsibility to provide regulatory
clarity to parties who have waited for years in intractable intercarrier
disputes,” he said. “I urge my colleagues to reconsider their positions and
act upon the pending petitions … expeditiously. These problems are not going
to get any easier over time.”

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