FCC's Wireline Competition Bureau Upends USAC TelePacific Decision, But Creates New Concerns
Kelley Drye Client Advisory
May 4, 2010
On Friday, April 30, 2010, the FCC's Wireline Competition Bureau released an order addressing TelePacific's request for review of a USAC decision that had found TelePacific liable for contributions to the federal universal service fund on its broadband Internet access product revenues. In its order, the Bureau rejected USAC's interpretation of the 2005 Wireline Broadband Internet Access Order, finding that retail broadband Internet access services are not subject to federal universal service contributions.

Notably, the Bureau did not decide an ancillary question raised in the proceeding -- whether TelePacific should have contributed indirectly to the federal universal service fund on T1 wholesale inputs purchased from incumbent LECs. While the order concludes that the record did not contain enough information to address whether TelePacific must make indirect contributions on the T1s it purchases from the ILECs, the order contains additional language, likely reflecting acceptance of a compromise position in the decision making process, that creates ambiguity with respect to this issue. Indeed, in a footnote, the Order seems to suggest that the incumbent LECs are on the hook for contributions for Internet access related wholesale T1 revenues and suggests further that whether they can go after TelePacific for reimbursement is a matter of tariff or contract interpretation. Also on point, the Bureau orders TelePacific to provide USAC with the names and contact information for its wholesale T1 providers within 60 days.

The Bureau also directed TelePacific to provide detailed information as to its apportionment methodology for bundled T1-based services within 60 days.

For further information, please contact your usual Kelley Drye attorney or any member of the Communications practice group. For more information on the Communications practice group, please click here.