FCC clarifies interconnection obligations of rural carriers and role of state commissions.

Telecommunications carriers are required to interconnect, directly or indirectly, with the facilities and equipment of other telecommunications carriers. Congress said so, in Section 251(a) of the Communications Act. In addition to fostering competition as much as possible, the goal is to assure that our telephone calls are all completed no matter which carrier we use to make the call or which carrier serves the destination number.

A couple of subsections later, though, in Section 251(f)(1) Congress created a limited exemption from some, but not all, interconnection-related obligations. The so-called “rural exemption” is available to rural local exchange carriers (LECs) under certain circumstances. It exempts eligible LECs from, among other things, the obligation (contained in Section 251(c)) for incumbent LECs to negotiate in good faith the terms of interconnection agreements.

But if you aren’t required to negotiate, how can you be expected to reach agreement on interconnection arrangements? If exempt rural LECs don’t have to negotiate interconnection agreements, does that relieve them of the obligation to interconnect at all?

The Commission has recently answered that question in a Declaratory Ruling, and the answer is: No way.

According to the Commission, the rural exemption does not apply to Section 251(a), i.e., the general obligation to interconnect. So exempt rural carriers may not have to negotiate, but that doesn’t mean that they can just shut themselves off from other carriers.  Au contraire, interconnect they must.  The rural exemption also does not apply to the interconnection requirements spelled out in Section 251(b), involving resale of services, number portability, dialing parity, access to rights-of-way, and reciprocal compensation arrangements. In other words, exemption or no, all carriers are subject to basic interconnection obligations.

The need for this Commission clarification arose in part because of another section of the Act – Section 252 – that gives state commissions the authority to mediate, and even arbitrate, interconnection disputes. Some state commissions have read Section 252 to mean that the state officials cannot mediate or arbitrate unless a negotiation between the carriers has already begun. Under that interpretation, since the rural exemption relieves eligible rural incumbent LECs from even having to start the negotiation process, well, then, the state commissions could be shut out of the process.

According to the FCC’s Declaratory Ruling, that’s an incorrect reading of the statute. As the FCC reads Section 252, Congress wanted state commissions to be involved, through compulsory arbitration or voluntary mediation, in all interconnection request situations, including those involving incumbent LECs that might otherwise qualify for the rural exemption. In other words, state commissions’ Section 252 authority applies to requests to incumbent LECs for interconnection made pursuant to sections 251(a) and (b), as well as pursuant to section 251(c). All it takes to invoke state commission arbitration under Section 252 is an interconnection request made to an incumbent LEC, exempt or otherwise – whether or not there have been “negotiations”.

You may think that all carriers would find it in their interest to interconnect with all other carriers, but that is sometimes not the case – especially where a large carrier refuses to pay a small carrier’s charges for terminating traffic or a competitive carrier delivers traffic without complete billing information, leaving a rural carrier without revenue it needs to operate.

What happens if interconnection is just not feasible? That’s unlikely to happen, since indirect interconnection through an intermediate carrier (usually a Bell Operating Company) is in place almost everywhere. And what about those pesky unpaid bills for terminating traffic? Resolution of that problem is likely to await the FCC’s attainment of its so-far elusive goal of reforming the entire intercarrier compensation scheme.