Regulatory Workshop Reviews Changing Rules

There is no shortage of regulatory developments this year as government officials formulate telecommunications rules affecting Internet phone service, wholesale access to the biggest local phone networks and intercarrier compensation, among other issues.

On Wednesday morning, Kelley, Drye & Warren LLP will present a workshop exploring changes in the rules. Speakers will include experts ranging from a consultant to a Washington, D.C., attorney to an AT&T Corp. executive.

With the demise of network unbundling rules resulting from a federal appeals court decision in March, phone and data providers across the country express deep concern about how new FCC rules will affect their ability to compete in the residential and business markets. The commission released interim regulations and is in the process of writing final rules governing wholesale access to the networks controlled by BellSouth Corp., Qwest Communications International Inc., SBC Communications Inc. and Verizon Communications Inc.

The commission has been writing unbundling rules since 1996, but the regulations have failed to withstand court scrutiny.

Other important regulatory developments also are pending before the commission, not the least of which is intercarrier compensation reform. The commission has been mulling reform for years, but recent developments signal the agency may be closer to issuing rules.

Coalitions this year have begun submitting proposals to the FCC to change the system by which phone companies pay one another to complete calls. One prominent group, the Intercarrier Compensation Forum, released a plan in August that supports abolishing the fees altogether over time. Under the proposal, local phone companies would be permitted to increase the subscriber line charge, helping to offset the cost of originating and terminating calls.

The ICF, represented by AT&T, SBC and Level 3 Communications Inc., among other carriers, has proposed moving to a unified rate structure and drastically reducing the access charges and other fees carriers pay one another to complete calls eradicating the fees altogether in July 2011. The decreases in rates would begin to take effect next summer, and there would be reductions over the next seven years.

The proposal also would change how contributions are made to the Universal Service Fund, the multibillion-dollar fund used to subsidize telecom services across the country. End users would pay a flat fee every month to support the fund based on every phone number and high-speed Internet connection they have. That means cable companies and DSL providers also would charge high-speed Internet customers a fee.

The latter developments are among some of the regulatory issues panelists are expected to explore. The panel will be led by moderator Robert Aamoth, a partner and chairman of the telecommunications practice group with Kelley, Drye & Warren LLP.

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