Enterprises Could See Lower Federal Telecom Fees Under FCC’s Pai

//Enterprises Could See Lower Federal Telecom Fees Under FCC’s Pai

Enterprises Could See Lower Federal Telecom Fees Under FCC’s Pai

Enterprises Could See Lower Federal Telecom Fees Under FCC’s Pai

Enterprises concerned about fees in their telecom contracts may find some relief under the Federal Communications Commission’s new Republican chairman, Ajit Pai. Pai, who has served on the FCC since 2012, succeeded Democrat Tom Wheeler in late January at President Trump’s behest; he does not have to undergo Senate confirmation. Since his appointment, Pai has faced media scrutiny for his apparent views on net neutrality. But as chairman, he will address a range of matters, including those that impact American businesses’ day-to-day operations.

Andrew Lipman, Morgan Lewis

Andrew Lipman, Morgan Lewis

Since his appointment, Pai has faced media scrutiny for his apparent views on net neutrality. But as chairman, he will address a range of matters, including those that impact American businesses’ day-to-day operations.
“There’s a whole variety of instances where the interests of [these] users are at stake,” said Andrew Lipman, partner at Morgan, Lewis & Bockius LLP who specializes in communications law. The Universal Service Fee and Business Data Services (formerly Special Access) charges rank as two of the foremost such issues. Indeed, the USF rate now stands at 16.7 percent. Lipman said he thinks Pai may find a way to scale that back. “I think he will look at that as a bit of a telecom-related tax and I think he’ll be a fairly neutral umpire calling balls and strikes,” Lipman said. “I don’t think he would reflexively side with users versus carriers or carriers versus users.” Rather, Lipman added, Pai seems to want to achieve “an optimal choice” for both parties.

That ethos could extend to BDS rules as well. Recall that the Wheeler-led FCC proposed to oversee BDS so that large carriers would have to reduce their prices for access to the high-volume broadband that powers applications such as ATMs and gas station credit card readers. The change would have benefited enterprises such as banks, schools, retailers and more. Meanwhile, companies such as AT&T Inc., CenturyLink and Verizon Communications, maintained such regulation would hamper technological innovation and capital investment.

Wheeler dropped the planned vote on a BDS overhaul after Donald Trump won the 2016 presidential election.
Under Pai, Lipman predicts a return to a “more transparent environment” that may boost enterprise users’ comfort. Lipman spends much of his time negotiating contracts for enterprises with carriers. “A lot of discussion turns on this or that, whether special access rates are going up and down, and so on,” he said. “To the extent that there’s more clarity, I think the contracts themselves… will have more visibility over a longer horizon.” On the whole, Lipman said Pai appears “every bit focused on giving users a choice and transparency and increased broadband.”

Lipman said Pai also may tackle some of the other areas critical to enterprises such as whether and how special deals can be arranged off-tariff; whether the FCC will regulate privacy and cybersecurity; the question of where FCC jurisdiction ends and public utility commission jurisdiction begins; and to what extent the FCC approves new USF recipients and whether those fees will pass down through users. And while Pai has taken flak for his stance on net neutrality, enterprises stand to feel little if any ripple effect from that argument. Lipman sees Congress, rather than the FCC, handling that particular topic, with the core principles of net neutrality – including no blocking or paid prioritization – staying intact. “I think it would be largely neutral for most enterprises,” Lipman said.

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