Reply Comments of Texaltel to Petition of At&T Services, Inc

Before the FEDERAL COMMUNICATIONS COMMISSION Washington, DC 20554

In the Matter of ) ) Petition of AT&T Services, Inc. For ) WC Docket No. 16-363 Forebearance Under 47 U.S.C. § 160(c) From ) Enforcement Of Certain Rules For Switched ) Access Services And Toll Free Database Dip ) Charges

REPLY COMMENTS OF TEXALTEL TO PETITION OF AT&T SERVICES, INC. FOR FOREBEARANCE UNDER § 47 U.S.C. 160(c)

TEXALTEL

Charles D. Land, P.E. Executive Director 500 N. Capital of Texas Highway Building 8, Suite 250 Austin, Texas 78746 (512) 320-0430

December 12, 2016 TABLE OF CONTENTS

INTRODUCTION AND SUMMARY...... 4

BACKGROUND ,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, 4

PARITY FOR PARITY’S SAKE AND BURDON OF PROOF …………………………….. 5

DISCUSSION ...... 6

CONCLUSION...... 9

2 Before the FEDERAL COMMUNICATIONS COMMISSION Washington, DC 20554

In the Matter of ) ) Petition of AT&T Services, Inc. For ) Forebearance Under 47 U.S.C. § 160(c) From ) WC Docket No. Enforcement Of Certain Rules For Switched ) Access Services And Toll Free Database Dip ) Charges

REPLY COMMENTS OF TEXALTEL ON THE PETITION OF AT&T SERVICES, INC. FOR FOREBEARANCE UNDER 47 U.S.C. § 160(c)

TEXALTEL is a trade association that represents competitive telecommunications carriers1 that operate in Texas. Many members provide service regionally and/or throughout the country. TEXALTEL members provide a varying array of services to their customers including basic local telephone service, prepaid services, and high speed data services, including cable and

Voice over Internet Protocol services (“VOIP”). TEXALTEL members have a vested interest in ensuring an orderly and organized regulatory process to assure that substantive changes of regulatory rules and requirements that affect competitive landscape are made based on a complete, accurate, and fully considered record.

TEXALTEL appreciates the Commission providing the opportunity to provide comment in this proceeding.

1TEXALTEL’s members include: Alpheus, Bestline Communications, Global Capacity Communications, Grande Communications, Logix Communications, Meriplex Communications, TelePacific Telecommunications and West Telecommunications (fka Hypercube).

3 INTRODUCTION AND SUMMARY

TEXALTEL files these reply comments in response to the request for comment within the Notice of the above captioned petition and the comments file by other parties. For the reasons stated herein, TEXALTEL strongly opposes the relief sought in that petition.

Traditionally, the forbearance process was used primarily to allow minor regulations to be waived when they would not be effective in a particular application with a particular company. This process does not provide appropriate vetting on complicated proposals, or proposals that have consequences far beyond those disclosed by the proponent.

AT&T makes proposals that will change the competitive marketplace for certain segments of the industry. AT&T does not give any information as to the magnitude of the competitive injustices it alleges, and proposes a simple solution to a complex and multifaceted issue that will have many consequences.

TEXALTEL urges that the Forebearance process is the wrong process to consider the complex issues involved with AT&T’s proposal.

BACKGROUND

The reason for the success of retail competition is the meticulous and ongoing regulation of the wholesale marketplace, to assure that incumbents, who have market power at the least, and monopoly power in some market segments, do not abuse that power in order to re-monopolize the retail marketplace. TEXALTEL observes that deregulation of the telecommunications marketplace was approached by Congress in a very different manner than deregulation of the electric power industry, wherein companies were required to divest the transmission and

4 distribution assets (the last mile) into companies that remained fully regulated in order to deregulate generation and retail sales. The approach taken for telecommunications allowed incumbent LECs to retain ownership and control of all facilities, including the “last mile” for which only minimal competition exists and thus requires regulatory oversight to assure that use of these facilities is available to competitors on terms that promote competition.

Forbearance pursuant to Section 10 of the Act2 is required when it is determined that: (1) enforcement of the regulation is not necessary to ensure that the telecommunications carrier’s charges, practices, classifications, or regulation are just, reasonable, and not unjustly or unreasonably discriminatory; (2) enforcement of the regulation is not necessary to protect consumers; and (3) forbearance from applying such provision or regulation is consistent with the public interest.3 Moreover, as part of the public interest test, the Commission also must consider whether forbearance from enforcing the provision or regulation will promote competitive market conditions.”4 AT&T’s petition fails all three tests.

PARITY FOR PARITY’S SAKE AND BURDON OF PROOF

2 47 U.S.C. § 151 et seq. (the “FTA” or the “Act”). 3 47 U.S.C. § 160(a). 4 47 U.S.C. § 160(b).

5 In the Qwest Phoenix Order, the Commission concluded that “regulatory parity” just for the sake of “regulatory parity” is not good policy. Instead, reasonable wholesale obligations on at least one party remain necessary if there is insufficient competition to maintain a robust, competitive environment without continuing those obligations. Finally, the Qwest Phoenix

Order properly puts the burden of proof on the party seeking forbearance, i.e. the party that is seeking an exemption from the Commission’s rules. Previously, the practical effect was to indirectly place that burden on the parties opposing forbearance/supporting the Commission rules because it became the difficult job of such respondents to disprove “what if” assertions of the ILEC seeking the exemption. It is much harder to oppose a petition when it is based on

“predictions of the future” and not facts on the ground.

DISCUSSION

AT&T chides the Commission for not transitioning all switched access rate elements to zero. As stated by West Telecom and Consolidated in their comments, the Commission had good reasons for only transitioning certain elements, and has re-asserted its reasons in other proceedings. Those elements that remain are the originating switched access, tandem switching and transport when the tandem is not owned by the terminating LEC, and “Dip” charges for routing of toll free calls. What AT&T conveniently fails to address are the consequences of these proposed changes.

Originating switched access charges are applied to calls to toll free numbers when the originating LEC is not the toll free service provider. These charges have been subject to rate caps to avoid gouging. AT&T has not provided any information showing that present charges are unreasonable or that these charges disserve the public interest.

6 After the current phase downs are completed, Tandem charges will continue to apply when the tandem is not operated by the terminating LEC (whose end user is receiving the call).

AT&T suggests transitioning tandem and transport rates to zero to “allow competition to discipline intercarrier compensation.” We assume the result would be that IXCs such as AT&T would no longer pay any per minute charges to third party tandem operators. Third party tandem operators would have to recover lost revenues by charging the LECs that choose to use their third party tandem to route their incoming traffic. Many small LECs that today find it more economical to outsource terminating access tandem functions would suddenly find it more economical to establish their own tandems. The likely result would be a dramatic increase in small tandems that IXCs would be obligated to connect to, and may generate legal battles if

IXCs such as AT&T tried to refuse such connections or attempted to demand unreasonable charges. Nor has AT&T stated any commitment on its part to provide terminating tandem switching for other LECs should they wish to use AT&T’s access tandem switches in lieu of the their party tandem operators that they use today, or if they wished to abandon their own tandem functions that may exist today.

Third party tandem providers offer many services today. Much of their business comes from services and functionalities that ILECs refuse to provide, such as IP interconnection, SIP to

TDM media conversion, nationwide termination services and connectivity to many other CLECs,

VOIP providers and wireless providers in other regions. If a change in regulation takes away a significant portion of their business and threatens the viability of this industry segment, there will be consequences that will harm competition and the public interest. Providers who rely on third party tandem providers for media conversion may be required to install expensive IP/TDM

7 gateways if third party tandem providers exit the market.

Also at issue may be AT&T’s “out of area” services. These are tandem services that

AT&T provides to connect local calls between to non-AT&T end users when both LECs connect to AT&T’s local tandem. AT&T has not stated whether it considers such services to be within the realm of services that it believes should transition to zero. If the Commission wishes to give serious consideration to AT&T’s proposals, TEXALTEL urges that this issue be kept on the table. It seems that AT&T is focused on access charges it pays, and is silent on access charges it collects.

AT&T also proposes that the Commission, through forebearance, set the rate for toll free data base queries (DIP charges) to zero. While this sounds like a simple issue, it is not, and the change AT&T suggests will have many consequences that AT&T fails to mention. TEXALTEL suggests, at the start of this comment, that forebearance is the wrong procedural approach to this subject, due to its complexities and many consequences.

The Line Information Data Base (LIDB) query process was developed after divestiture to allow many IXCs to compete for toll free (8XX) business. This process enabled portability of toll free numbers so that a customer could shop for the best 800 provider and “port” its toll free number to that provider. IXCs load their information on one of a few data base providers. Some data base providers have been rumored to pay IXCs for their toll free data so that they can profit by charging LECs for queries. When a toll free call is originated, there must be a query of the data bases to determine which IXC to route the call to for completion and, in some cases, for the terminating POTS number. A LEC has two choices. It can do the data base queries and route toll free calls to the appropriate IXC, or it can hand off the toll free calls “undipped” to another

8 entity (usually a third party tandem provider) that will do the “dipping” and routing. Entities that do data base queries incur costs to do so. If they are prohibited from assessing charges, they will no doubt seek ways to avoid incurring the query costs. They may attempt to hand off such calls to AT&T or any other carrier that can find to send them to “undipped”. This hot potato cannot be good for the industry or for the public. The Commission has already had to face angry consumers in rural call completion issues when certain traffic segments (rural call completion) were inordinately expensive and unprofitable. Great care should be taken before proceeding down the path suggested by AT&T for toll free calling. If there is concern about DIP charges, the Commission should look at underlying cost factors and require that there not be charges by data base providers for DIPs. If the Commission were to seriously consider AT&T’s request to eliminate LIDB “dip” charges by LECs to IXCs, it should also require that IXCs who provide toll free services, such as AT&T and Verizon, would then begin paying data base providers to load their toll free customer data instead of being paid by them. Again, AT&T is not focusing on the whole issue – and is just focused on charges it pays and conveniently neglects to change charges it collects.

9 CONCLUSION

TEXALTEL urges the Commission to deny the requests for forebearance. As stated by other parties, the Commission already has the Inter Carrier Compensation proceeding open to examine the issues raised by AT&T.

Thank you for your consideration of these comments.

Respectfully Submitted,

TEXALTEL

By: /s/ Charles D. Land______

Charles D. Land, P.E. Executive Director