FCC Gets Tough on CLEC Tariff Filings

By: Andrew Regitsky

Ever since price cap regulation of ILEC access rates was implemented decades ago, the approval of new access tariffs has become almost a formality.  CLEC tariff filings are included since their access rates are benchmarked to the rates of the ILEC in their territory and are usually easy to check.  However, the new Commission may have a different approach if the tariff changes recently filed by two CLECs are not outliers.

On April 23, 2021, Teliax a CLEC based in Colorado, proposed revising its interstate Tariff No. 1 to enable IXCs to connect with its tandem using a Session Initiated Protocol (SIP)] connection and to use that interconnection point to exchange traffic with end offices in one or more areas called LATAs.

These services include the “functional equivalent” of a number of incumbent local exchange carrier elements with rates assessed on a “minute-of-use equivalent” basis.  The proposed tariff revisions also assess charges for these services irrespective of whether the traffic is exchanged in Time-Division Multiplexing (TDM) or SIP format. (WCB Pricing File No. 21-01, Order, released May 7, 2021, at para. 4).

On April 30, 2021, CenturyLink and Level 3, as well as AT&T, and Bandwidth, filed petitions to reject, or in the alternative, to suspend and investigate the Teliax tariff filing.The Petitioners contend that the proposed revisions are unlawful for several reasons, including that they tariff services and functions that are not regulated switched access services, violate the competitive LEC benchmark rule and applicable rate caps, unlawfully increase its rates, and include charges for services that Teliax does not provide.  Teliax responded by calling its changes lawful and claimed the Petitioners can easily avoid many of its proposed charges.

In a May 7, 2021, Order, the FCC noted CenturyLink’s contention that, the proposed tariff revisions include rates that would apply to the exchange of traffic that is purely IP-to-IP and does not touch the Public Switched Telephone Network (PSTN).  Charges for IP traffic that never touch the PSTN may not be tariffed because such traffic falls outside of the regulated intercarrier compensation regime.  According to the Commission:

Charges for IP traffic that falls outside of the Commission’s intercarrier compensation framework cannot be imposed via tariffs and Teliax’s arguments that the Commission meant to allow the tariffing of all-IP services are based on a misreading of the [Universal Service Fund/Inter-carrier Compensation] USF/ICC Transformation Order.  The Commission was clear in the USF/ICC Transformation Order that only IP traffic “exchanged over PSTN facilities” is subject to the intercarrier compensation regime. On its face, the proposed tariff language is not limited to IP traffic meeting the VoIP-PSTN definition.  Because the proposed tariff revisions include charges for “Dedicated Access Services” that may apply to all IP traffic, without explicitly limiting such charges to traffic meeting the VoIP-PSTN definition, the proposed revisions are unlawful.  (Id., at para. 9).

Because the agency rejected the proposed tariff changes on the IP issue alone, it did not consider the other objections by the Petitioners.

The FCC also objected to another CLEC tariff filing. On April 22, 2021, Core Communications (Core) proposed revisions to its interstate switched access service Tariff F.C.C. No. 3 to revise several tariff provisions. The changes were scheduled to become effective on May 7th.  

Among its proposed changes, Core proposes to define when an IXC will be charged for an 8YY database query, and it declares that IXCs will be “assessed a charge for a completed data base query even if the underlying call is not completed (i.e., the call for which the data base query was made).”

AT&T and Verizon filed petitions to suspend and investigate the proposed tariff changes.  They content that the changes would allow Core to continue to profit from its 8YY arbitrage schemes through database query charges even after it has terminated service to a customer for nonpayment and even when neither it nor any other entity completes the underlying 8YY call.

In a May 6th Order, the Commission concluded that because “substantial questions of lawfulness exist regarding Core’s proposed tariff revisions, we suspend the proposed tariff revisions for one day and set for investigation the question of whether the proposed revisions comply with the 8YY Access Charge Reform Order.”

We find worthy of investigation Petitioners’ suggestion that by filing these proposed tariff revisions Core is attempting to “profit from 8YY arbitrage schemes that the Commission has sought to end, while denying IXCs the meaningful ability to challenge those practices and the charges that flow from them.”  We also have significant concerns about whether Core’s proposed tariff revisions contain “clear and explicit explanatory statements regarding the rates and regulations” to “remove all doubt as to their proper application. (Order, Docket 21-191, filed May 6, 2021, at para. 7).

As more tariff proposals implementing the 8YY changes are filed by ILECs and CLECs, expect more to be challenged and come under increased scrutiny by the Commission.