(as prepared for delivery)
59th Annual Western Conference of Public Service Commissioners
June 12, 2000
(as prepared for delivery)
Good morning. I'm delighted to be back in Santa Fe, and I'd like to thank my former State colleague, Jerome Block, for inviting me to join you. It's wonderful to see so many familiar faces and to get the chance to catch up.
Summer weather has arrived in Washington, but I'm still waiting for the lazy days of summer to materialize. We at the FCC have been very busy, and I thought I'd take this opportunity to talk about what we've been up to.
At the risk of losing my audience early on, I want to say a few words about CALLS - the proposal of the Coalition for Affordable Local and Long Distance Services - that we adopted late last month. I know this plan caused as much debate among the state commissioners as it did among the FCC commissioners, so I'd like to tell you why in the end I voted for it.
I was convinced the proposal moved us forward in our access reform goals. Those goals include recovering access charges in the manner in which the underlying costs were incurred, removing implicit subsidies from access charges and making them explicit, moving access charges closer to costs, and allowing ILECs to respond to competitive forces as they develop. That said, the bigger question in my mind was always the potential impact of the proposal on consumers.
Will consumers be better off under CALLS than they would have been had we stayed on our charted access reform course? I believe so, though that confidence was badly shaken by a recent AT&T announcement. Just last week, I discovered that on the same day we released the CALLS order, promising great consumer benefits, AT&T filed its plans to increase its basic rates. AT&T and Sprint made numerous pro-consumer commitments as part of the proposal. Among other things, these carriers agreed to offer long-distance plans with no monthly minimum charges and to pass through access reductions to residential (not just business) consumers. I was not aware of AT&T's intent to increase per-minute rates on the same consumers for whom it committed to eliminate minimum usage charges. At a minimum, this proposed increase appeared to violate the spirit of the reform package, which was touted as reducing rates for consumers. While I am glad AT&T decided to defer the increases to its basic rate plan for the time being, I am far from satisfied. AT&T may reinstate these rates at any time, and we'll need more facts to resolve this issue. I think it might be advisable to put CALLS on hold until we get more satisfactory answers.
Under the CALLS plan as we considered it, residential consumers, especially those who use very little long distance service each month, should realize real savings over the next few years. The existing presubscribed interstate carrier charge and the subscriber line charge will be combined into one line item in the first year, which will be lower than the existing two charges combined. Consumers will continue to see savings, even as the per line charge increases the next year, and subsequent increases in the charge are subject to a further FCC proceeding.
I am hopeful that low-income and rural consumers will realize other benefits under CALLS. Low-income telephone customers who subscribe to Lifeline service will continue to have their Subscriber Line Charges waived, in addition to any Universal Service Fund charges. The portable explicit universal service mechanism may well help bring competition to rural areas, promote investment in alternative loop facilities, and encourage broadband deployment. Moreover, the regulatory stability of the new plan should benefit new entrants, who may be more willing than incumbents to make concrete commitments regarding advanced services in order to gain market entry.
We voted the CALLS proposal two weeks ago, but even if the recent AT&T issues were temporarily resolved, I don't consider our work done. Our Consumer Information Bureau continues to work with CALLS members to develop a consumer education plan. That effort will help get the word out to the public on important issues related to long-distance and local phone pricing and services in a rapidly changing market.
In other matters, just last Thursday, the FCC approved three items aimed at improving telephone subscribership on tribal lands. Penetration for Indians living on reservations averages only around 47 percent, a level that is well below the 94% national average. Indeed, some tribes report penetration levels as low as 17.9 and 22.5 percent.
There are many reasons why subscribership is so low on tribal lands, including the high cost of basic service in such locations, the limited local calling areas, inadequate infrastructure, and the high concentration of low-income individuals.
We all know that access to telephones is a necessity in modern life. Without phone service, households are unable to contact police, fire departments, or medical service providers in an emergency - an inability that can have disastrous results, especially in geographically remote areas, such as those on many reservations. Individuals in households without phone service likewise cannot be contacted by employers or potential employers. And they cannot connect to the Internet - the modern telecommunications medium.
The policies that we adopted last week, including expanded Lifeline and Link Up coverage for income-eligible individuals on tribal lands, should boost subscribership on tribal lands and create incentives for new infrastructure investment. Under the expanded Lifeline, most eligible individuals will receive basic local phone service for $1 a month. Under the expanded LinkUp, assistance will be available up to $100 per eligible individual. Wireless alternatives offer unique solutions for serving tribal lands, especially in remote areas. In that regard, I strongly support our decision to award bidding credits in upcoming auctions to wireless carriers that pledge to deploy facilities and offer service to tribal areas that have penetration rates below 70 percent.
I am also pleased that we established an expedited process for handling petitions by carriers seeking designations as Eligible Telecommunications Carriers to serve tribal lands. Excessive delay in the designation of competing providers may hinder the development of competition and the very availability of service. By committing to prompt resolution of pending petitions, we should help speed deployment of telecommunications infrastructure.
I believe it was incumbent upon the FCC to take the actions we took last week, given our universal service obligations and the historic federal trust relationship between the federal government and Indian tribes. By enhancing tribal communities' access to telecommunications, we increase tribal communities access to education, commerce, government, and public services and help ensure an adequate standard of living on tribal lands.
While last week's decisions were extremely important steps, much work remains. I look forward to the Indian Telecom Training Initiative that the FCC will hold this September to assist tribal nations in making decisions about telecommunications services and to increase their options for finding service solutions. Moreover, we will continue to examine and address the causes of low subscribership in other areas and among other populations. This fall the Rural Task Force will make its recommendation to the Joint Board on the appropriate high cost mechanism for rural carriers, thereby initiating the resolution of additional issues confronting unserved and underserved parts of the country.
In other matters, the FCC and the states have been doing some of their best cooperative work in the area of numbering conservation. Last March we adopted a comprehensive order that took several significant steps to combat the current numbering crisis. We set forth a technical solution for allocating numbers in blocks of 1,000, rather than 10,000, wherever possible - so-called "thousands-block pooling" - and established a plan for the national rollout of mandatory pooling. We developed administrative measures that will allow the FCC to monitor more closely the way numbering resources are used within the U.S. These measures will link a carrier's ability to obtain numbering resources more closely to its actual need for telephone numbers. And we established numbering resource reclamation requirements to ensure the return of unused numbers to the inventory for assignment to other carriers.
Last year we granted several states interim numbering authority to engage in various telephone number conservation procedures. Other petitions are pending. I am working hard to ensure that those petitions are resolved in a timely manner to allow the states to continue their good work in this area.
Of all the work the FCC has been engaged in during recent months, among the most important has been that of the Consumer Information and Enforcement Bureaus, some of which I've already mentioned. The missions of these two relatively new bureaus are closely linked - consumer education and enforcement of pro-consumer rules. Consumer confusion over telephone bills has significantly contributed to the growth of slamming, cramming and other types of telecommunications fraud -- fraud that is best attacked by educating consumers and enforcing our rules.
Just last week, we adopted a Consent Decree with WorldCom, terminating its investigation into WorldCom's slamming practices. Under the terms of the Consent Decree, WorldCom not only made a $3.5 million voluntary contribution to the U.S. Treasury but also agreed to restructure its telemarketing and other business practices to protect consumers against slamming. That consent decree followed five other recent slamming enforcement actions since February 2000.
As you may know, last April the D.C. Circuit stayed the new liability rules that formed the core of our regulatory efforts against slamming. Those rules took the profit out of slamming by absolving consumers of liability for some slamming charges. Until those rules are back in place - and I am hopeful that the Court will lift its stay soon - these enforcement actions let carriers know that we remain vigilant in our fight against slamming. Meanwhile, the FCC and the states are cooperating to battle slamming on another front. The FCC and NARUC have been developing a joint database on slamming and cramming. Our Consumer Information Bureau is finalizing a prototype of the database, which it plans to test soon through partnerships with six states.
Our Consumer Information Bureau is actively tracking consumer complaints to identify pressing consumer concerns that need to be addressed. Having noted that consumer complaints regarding unsolicited fax advertisements have been on the rise, last March we responded with an $85,000 forfeiture against Get-Aways for sending unsolicited fax advertisements. That forfeiture order was the first brought under the Telephone Consumer Protection Act and our telemarketing rules.
I'd also like to note that the Consumer Information Bureau recently prepared a new consumer manual on how to interact with and use the FCC. I know my own staff has found it useful, and they work at the Commission! So I commend it to you as well. And we've brought a few copies with us today.
That's a little bit about what we're doing, much of it in close collaboration with the States. I'd like to take the opportunity of my visit here to learn more about what you've been doing and ideas you have for us at the FCC. After all, though today I've tried to offer a view from Washington, in Washington, I continue to promote the views of the states.