On April 26, 2011, the Rural Independent Competitive Alliance (“RICA”) filed a Petition for Declaratory Ruling (“Petition”) with the Federal Communications Commission (“FCC” or “Commission”) seeking a declaratory ruling confirming the lack of a binding legal requirement for rural CLECs that do not charge end users an interstate Subscriber Line Charge (“SLC”) to report a portion of their fixed local exchange services revenues as interstate service revenues. Further, RICA seeks a declaration that charges for the provisioning of telephone exchange service pursuant to rates for services entirely within a single state are intrastate revenues.
The Petition follows several 2010 USAC letters that were sent to various rural CLECs instructing them to reclassify portions of revenues reported for fixed local exchange services as interstate revenues. USAC relied solely on page 25 of the 2010 instructions to FCC Form 499-A which provides “filers without subscriber line charge revenue must identify the interstate portion of fixed local exchange service revenues…” In the Petition, RICA argues that no codified FCC rule or order imposes such a requirement. And, because the instruction creates a substantive obligation upon filers, USAC cannot enforce it like a rule of law as it was not adopted by the Commission, which has exclusive authority to create such a rule. Moreover, this substantive requirement was not subject to the notice and comment requirements of the Administrative Procedure Act (“APA”) and is therefore invalid. Because no Commission rule demands such jurisdictional allocations, RICA members do not perform them, and cannot be required to unless the Commission expressly extends its SLC rules to CLECs for purposes of 499 reporting.
On May 9, 2011, the Wireline Competition Bureau (“WCB”) issued a Public Notice seeking comments on the Petition. Grande Communications Networks, LLC (“Grande”) filed comments supporting RICA’s petition. Grande agrees that FCC rules neither require CLECs to charge and collect an interstate SLC nor to apportion intrastate revenues into interstate and intrastate portions. The United States Telecom Association (“USTelecom”) also filed comments supporting RICA’s argument that the instructions to FCC Form 499-A do not carry the weight of law. Summit Broadband, Inc. (“Summit”) filed reply comments consistent with Grande and USTelecom’s initial comments. Specifically, Summit agrees that the Form 499-A instructions do not constitute binding legal rules and that CLECs are not required to collect interstate SLCs or apportion intrastate revenues into interstate and intrastate segments.
Clients with questions about this Advisory should contact the attorney assigned to their accounts.
Links to the Petition and Comments are provided below:
To learn more about the broken Universal Service system, we invite you to read the recently published law review article which details a variety of alleged abuses of authority by USAC over the past decade:
THE MIS-ADMINISTRATION AND MISADVENTURES OF THE UNIVERSAL SERVICE FUND: A STUDY IN THE IMPORTANCE OF THE ADMINISTRATIVE PROCEDURE ACT TO GOVERNMENT AGENCY RULEMAKING – CommLaw Conspectus, Vol. 19 (2011)