FCC Requests Comment on ACITC Petition

On February 12, 2009, on behalf of the Ad Hoc Coalition of International Telecommunications Companies ("Coalition"), The CommLaw Group filed a Petition for Declaratory Ruling ("Petition") with the Federal Communications Commission ("FCC" or "Commission"). On May 7, 2009, the FCC placed the Petition on public notice, seeking comments on the Coalition's proposals. Initial comments are due by June 8, 2009, followed by reply comments due by June 22, 2009.

The Coalition is comprised primarily of, but not limited to, prepaid and pre-subscribed international long distance service providers. These providers voluntarily and anonymously joined forces in an effort to remedy certain discriminatory and inequitable issues associated with the Universal Service Administrative Corporation's ("USAC") administration of the FCC's Universal Service Fund ("USF") contribution requirements.

The Petition requests Commission action on two issues affecting International Telecommunications Companies ("ITCs"). First, the Coalition proposed a solution to discriminatory pass-through charges imposed upon "de minimis" resale carriers. The USF is a federal program created to assist in national diffusion of telecommunications services. Unless exempted, all telecommunications carriers must contribute a portion of their interstate and international end-user revenues to the USF. Currently, the FCC's rules exempt "de minimis" providers, those whose contribution to universal service does not exceed $10,000 per year, from direct USF fees.

However, because the FCC treats these non-contributors as end-users, and allows underlying carriers to pass USF fees through to their end-user customers, de minimis carriers ultimately bear a significant USF burden. In fact, a provider's pass-through burden under the current system often exceeds the burden it would otherwise face as a direct contributor. The FCC also limits the burden on carriers whose interstate revenues amount to less than 12% of their combined international and interstate end-user revenues. However, a qualifying international carrier that is also a de minimis provider is especially at risk for high pass-through fees. While the FCC only requires direct payment on the interstate portion of a qualifying carrier's revenue, the underlying carrier can pass through fees on its entire revenue base. The Coalition urged the adoption of a rule allowing carriers to elect either to pay indirect pass-through charges or to contribute directly.

Second, the petition sought reclassification of resale Prepaid Calling Card ("PPCC") revenue as non-end-user revenue. At present, the FCC treats all PPCC revenue as end-user revenue, the effect of which is to substantially increase resale providers' USF liability. Finally, the petition requested abolition of the current rule requiring PPCC providers to report as USF-eligible revenues they never collect. This reporting method results in the imposition of higher USF rates on PPCC providers than upon other carriers. To solve the problem, the Coalition suggested allowing PPCC providers to deduct uncollected revenues from their USF-eligible revenues or to report only those revenues actually received.

In addition to the instant Petition, the Coalition is currently considering filing additional petitions to seek review of a variety of other USF administration issues that are particularly burdensome and which unfairly impact International Telecommunications Companies.

Interested parties are encouraged to monitor this proceeding and submit relevant, supportive comments and reply comments.

Interested parties are also invited to support the efforts of the Coalition through voluntary contributions. Taking advantage of this opportunity does not obligate disclosure of a party's name as a Coalition member. Further, there is no requirement to contribute to this filing or the future endeavors of the Ad Hoc Coalition of International Telecommunications Companies.

Please consider supporting the Coalition in its efforts to purge the federal Universal Service Fund of ambiguous, inconsistent, and imbalanced contribution requirements which frequently result in the inequitable treatment of wholly or predominantly international services providers.

Parties interested in submitting comments or in learning more about the Coalition's efforts, membership, and how to support the Petition or future endeavors should contact Jonathan S. Marashlian at jsm@commlawgroup.com.

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