VON: Reform slow in coming, says panel

BOSTON--Despite the fact that there are now two telecom reform measures in front of Congress--one in the House and one in the Senate--a panel of regulatory insiders agreed Monday at the VON conference in Boston that chances are slim that telecom reform will pass this year, much less key issues such as intercarrier compensation and the future of the Universal Service Fund.

The primary problem with both of those matters is that there are simply no easy answers--and much to be lost by getting it wrong, the panelists said.

“There is a great deal at stake here,” said Larry Landis, commissioner with the Indiana Utility Regulatory Commission. “Intercarrier compensation is a $50 billion issue. And the issues around it are enormously complex. It’s not easily addressed with simple solutions.”

Two previous efforts--the InterCarrier Compensation Forum and a National Association of Regulatory and Utility Commissioners task force have taken on the issues, as has the Federal Communications Commission, without reaching a final verdict.

“It’s a Gordian knot,” said Susan Kennedy, commissioner with the California Public Utilities Commission. “You can’t solve one problem without creating another problem.”

The VoIP community is concerned with how these issues are resolved because of the prospect that VoIP providers will be required to pay into the Universal Service Fund that supports high-cost telephone networks and the USF and Intercarrier Compensation are tightly linked issues.

The FCC may need direction from Congress on telecom issues and it’s not clear Congress will address anything telecom-related right now.

“I don’t see [the FCC] getting out in front of Congress right now,” said Carol Mattey, director of the Technology, Media & Telecommunications Regulatory Consulting Practice at Deloitte & Touche.

“The focus of this Congress has shifted dramatically away from hurricane reform to the hurricane recovery, Supreme Court nominations and budget issues,” said Drew Petersen, director of legislative affairs for TDS Telecom. The recent staff draft measure released by House Energy and Commerce Chairman Joe Barton (R-Texas) addresses intercarrier compensation but does so in a way that doesn’t make Congressional intentions clear, said Jason Oxman, senior vice president, legal affairs, CompTel.

“The bill says the FCC should adopt a uniform rate [of compensation] that can be bill and keep,” he said.

Bill and keep means service providers don’t provide any compensation to other carriers for terminating their calls--instead each carrier bills its own customers and keeps the revenue. That approach benefits VoIP providers and other larger carriers but disadvantages smaller telcos who won’t collect revenue for calls they terminate, and bill to a smaller base of customers.

The FCC can begin to move on smaller issues, Oxman said, rather than trying to tackle the many differing facets of reform all at one time.

The panelists agreed that one key issue that either the FCC or Congress could tackle would be to define what the USF should be going forward, including what services it should cover and how money should be collected and spent.

Peterson surprised some panelists when he said that the USF should not be expanded to cover new services, but should be held to greater accountability on the spending side.

“The distribution side has problems,” he said.

Companies who receive USF money aren’t being required to build a stronger infrastructure or open up their networks to new applications, he said. New requirements and more careful administration will make the USF more credible.