As explained below, many non-price cap regulated providers of Special Access services, along with large purchasers of such services, are obligated to prepare and file answers to FCC data requests concerning these services. See Notice of Office of Office of Management and Budget Action, OMB Control No. 3060-1197 (Aug. 15, 2014); see also Special Access for Price Cap Local Exchange Carriers, Report and Order and Further Notice of Proposed Rulemaking, WC Docket No. 05-25 (rel. Dec. 18, 2012). While the submission deadline has not yet been established, based on the scope, breadth and depth of the data requests, we anticipate many in the industry will experience significant costs to comply.
We believe a reasonable argument can be made that, based on FCC precedent, non-price cap regulated entities should have their reasonable compliance costs reimbursed by the price cap LECs that stand to benefit from decisions made in the FCC’s Special Access investigation. The investigation, of course, is dependent, in part, on the data request answers of other parties, so price cap LECs benefit from other’s work.
We recommend affected entities consider working with Marashlian & Donahue, LLC to assemble compliance cost estimates and then prepare, file and advocate for, a unified request for reimbursement. While this approach is certainly not guaranteed to be successful, its chances for success would likely be bolstered by broad participation in a request for relief.
The Special Access Data Request
A number of CLECs, CAPs and other small providers of Special Access (or equivalent services), as well as customers that purchase such services, are being required by the FCC to answer data requests as a part of the Commission’s Special Access Investigation. Special Access for Price Cap Local Exchange Carriers; AT&T Corporation Petition for Rulemaking to Reform Regulation of Incumbent Local Exchange Carrier Rates for Interstate Special Access Services, Report & Order and Further Notice of Proposed Rulemaking, 27 FCC Rcd 16318 (2012). The data gathering requirements were approved, in part, by the Office of Management & Budget (OMB”), Notice of Office of Office of Management and Budget Action, OMB Control No. 3060-1197 (Aug. 15, 2014).
Therefore, according to the FCC, modified reporting instructions will be released by the Wireline Competition Bureau. “Commission Moves Forward with Special Access Data Collection,” Public Notice, WC Docket No. 05-25 & RM-10593, DA 14-1201 (rel. Aug. 18, 2014). The OMB approval will, absent a company-specific waiver, require all affected suppliers and purchasers of Special Access services to expend funds to prepare and file answers to FCC questions. We believe it would be extremely difficult and quite expensive to overturn the OMB approval. The bottom line is: affected companies will be required to answer the FCC’s data requests at their own expense.
Since the Data Requests Do Not Benefit Non-Price Cap LECs, Their Reasonable Compliance Costs Should Be Reimbursed
We believe a good argument can be made for the FCC to mandate the large price cap carriers, most especially AT&T and Verizon, reimburse smaller companies for, at least, part of their compliance costs. There is no advantage for, or benefits to, small providers and affected purchasers of Special Access services to incur the costs for gathering and submitting data. The underlying proceeding is centered on whether the big providers can retain their pricing flexibility. Small providers already have considerable pricing flexibility and may actually be helped in the marketplace were the FCC to increase regulation of large price cap LECs. Similarly, customers would likely benefit with more restrictions on the pricing freedom presently processed by large LECs. More regulation might well mean lower rates for Special Access services provided by the largest LECs.
A good argument can be made that the price cap LECs should reimburse small providers and, especially customers, who that are required to comply with the FCC’s data request. A fairly simple plan can be developed. For example, compliance cost estimates could be made by affected companies and reviewed by the FCC staff. The FCC could adopt reimbursement rates that are fair and just. These amounts could be multiplied by the number of small companies submitting data. The FCC could then develop a fair allocation of the total reimbursement costs among the price cap LECs based on revenues, number of circuits, total circuit capacity or some other reasonable means. Each price cap LEC could be ordered to pay their aliquot share to a central repository, such as NECA, which, in turn, could pay claims for reimbursement, along with NECA’s incremental expenses for administering the fund. This process would go a long way to hold harmless small companies forced to prepare and file data requests.
The FCC would most certainly have authority under Section 4(i) of the Act (ancillary jurisdiction) to order such a plan. Moreover, there is FCC precedent for reimbursing small companies for compliance costs associated with preparing information for the FCC that would not normally be developed and filed in the ordinary course of business. For example, in National Exchange Carrier Ass’n, Inc. (Revisions to Interstate Average Schedules), Memorandum Opinion & Order, 10 FCC Rcd 13252, at ¶22 (1995), the FCC approved a special payment of $2,478 to each average schedule LEC required to prepare and submit a special cost study for Universal Services Fund analysis purpose. Such companies are normally exempt from filing cost studies and; as such, are not normally reimbursed for cost study preparation expenses. Over MCI’s strong objections, reimbursement was ordered from NECA’s access charge revenue pool and, therefore, from interexchange carriers, including AT&T and MCI. Reimbursement in the current situation is equally compelling.
Time for Action
Our Firm believes that if a sufficient number of clients decide to participate in making a request for reimbursement, a Petition could be filed and advocated in a cost-effective manner. As always, the broader the level of participation, the lower the cost, the stronger the political case for LEC reimbursement; therefore, we would not proceed with the proposed plan of action until we achieve an adequate commitment level.
In the event you are interested in learning more about this potential for obtaining cost reimbursement for complying with the Special Access data request obligation, please contact either Robert Jackson, rhj@commlawgroup.com – 703-714-1316 or Michael Donahue, mpd@commlawgroup.com – 703-714-1319.
