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AT&T, NTCA to Sue FCC Over USF Reform Plan

At press time, AT&T and the National Telecommunications Cooperative Assocation, signaled they are suing the FCC over its recent USF 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 court.

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

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 into: "See you in court."

Cable ops, including Comcast, Time Warner and Cox, argue that the voice services marketplace is evolved beyond compensation rules based only on network architecture and circuit-switched technology used by incumbent carriers. The FCC said itself 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."

The NTCA has several issues including provisions "mandating an ultimate price of zero for all switched access and reciprocal compensation services," retroactive caps on USF-supported costs and "and blurring the lines" between regulated and nonregulated 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"These reforms took an outdated, broken system designed for the telephone era and modernized it for broadband, our 21st century essential infrastructure," said an FCC spokesman in a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."