SEPARATE STATEMENT OF CHAIRMAN MICHAEL K. POWELL

I am immensely proud of the Commission and our staff for initiating this proceeding, in which we will explore whether and how we can rationalize the disparate compensation arrangements between carriers and other companies for traffic that traverses the public switched telephone network.

Since I arrived at the Commission, I have been known to talk about the public switched telephone network as the hub of a wheel, the spokes being the many companies (e.g., paging companies, wireless carriers, ISPs, long distance carriers) that interconnect with and pass traffic to and from the wireline telephone network. As all regulators and businesses know, however, the rates for interconnecting with the phone network vary depending on the type of company that is doing the interconnecting. In a competitive environment, this leads to arbitrage and inefficient entry incentives, as companies try to interconnect at the most attractive rates. I support this Notice because it seeks comment on how we can make these varied intercarrier compensation regimes more consistent with each other and, thus, with competition.

In endorsing this Notice regarding intercarrier compensation, I should underscore that I consider this action to be part and parcel with two other items: first, the Order on remand that the Commission adopted last night regarding reciprocal compensation for Internet-bound traffic; and second, the soon-to-be-adopted Order regarding how much CLECs can tariff and charge long distance companies in access charges. In all three of these proceedings, the Commission has demonstrated its willingness to tackle complex and often intractable pricing-related issues while, when appropriate, giving carriers a transition period to adjust to new compensation regimes.

I (and much of the CLEC industry) would have preferred that we adopt all three of these items at the same time, since they are inter-related. But because of the intricacies of both the issues and our internal deliberations, we have a few loose ends to tie up regarding CLEC access charges. With the cooperation of my colleagues, however, I am very hopeful that we can finish those deliberations quickly, such that all three items can be finalized and released in the next few days.

In closing, I would note that these actions, which are the products of intense and long discussions and which will take years to implement, are hardly precipitous. They are, nonetheless, critical to the continued development of economically efficient and sustainable competition in telecommunications. Thus, I applaud my colleagues and our able staff for their courage and hard work in addressing these issues in a meaningful, albeit gradual, manner.