Opinion ID: 757345
Heading Depth: 2
Heading Rank: 1

Heading: Immediate Replacement of Existing System

Text: 5 The BellSouth petitioners first argue that the Commission's Order violates the statutory mandate of § 254 that all mechanisms to preserve and advance universal service subsidies be specific and predictable. Id. § 254(b)(5). By delaying the implementation of a new regime of explicit universal service subsidies until at least January 1, 1999, 5 while at the same time promoting immediate competition in the local exchange market as a means of bringing access charges more closely in line with actual costs, the BellSouth petitioners contend that the FCC has ensured that universal service support subsidies will be detrimentally deflated to such an extent that they will cease to serve their purpose. 6 The FCC replies that changes to interstate access charges made in the Order are well within the discretionary authority granted to the Commission by Congress to implement the policies of the 1996 Act, including the promotion of competition in the local exchange market, the elimination of implicit universal service support subsidies, and the preservation of universal service. The Commission argues specifically that its decision to open local exchange markets to competition in compliance with 47 U.S.C.A. § 251(d) (requiring completion by August 1996 of regulations to implement market opening provisions) prior to the full implementation of a new, explicit regime of universal service support pursuant to § 254, is permissible under the 1996 Act. By its specific language, the Act contemplates sequential implementation of, initially, the market opening provisions of § 251, followed by the new explicit universal service support mechanisms of § 254. The decision to promote competition in the local exchange market prior to the enactment of a new universal support mechanism is therefore reasonable, according to the FCC. 7 We agree that the FCC's decision to adjust the computation of interstate access charges to eliminate implicit subsidies and promote competition in the local exchange market before an explicit universal service support mechanism is fully operational is reasonable in light of the specific language of the 1996 Act. Section 251(d)(1) required the Commission to adopt rules implementing the market opening provisions by August 1996. Section 254(a)(2), however, did not require the FCC to adopt universal service rules until May 1997. See id. (The Commission shall initiate a single proceeding to implement the recommendations from the [the Federal-State] Joint Board [on universal service] ... and shall complete such proceeding within 15 months after February 8, 1996.). The Act does not require that the rules promulgated under § 254 immediately implement a new, explicit universal service support mechanism. Rather, the rules enacted by the FCC must establish a specific timetable for implementation. Id. By establishing an explicit universal service support regime in the In re Federal-State Joint Board on Universal Service, First Report and Order (CC Docket No. 96-45), FCC 97-157, 12 FCC Rcd No. 16 8776 (released May 8, 1997)[hereinafter Universal Service Order ], petitions for review pending, Texas Office of Public Utility Counsel v. FCC, 5th Cir. No. 97-60421, that will be fully operational by January 1999, the Commission has proceeded in a manner contemplated by the Act. The Commission has made a predictive judgment, based on evidence in the record and adequately explained in the Order, that competitive pressures in the local exchange market will not threaten universal service during the interim period until the permanent, explicit universal service support mechanism has been fully implemented. See City of St. Louis, 936 F.2d at 1534 (Such forecasts must be accepted 'if they are rational, based on a consideration of all the relevant factors, and adequately explained.' ) (citations to quoted cases omitted). 8 The Commission's decision to promote competition in the local exchange market and eliminate implicit subsidies embedded in interstate access charges prior to the full implementation of a new, explicit mechanism for universal service support does not violate the provisions of the 1996 Act, nor does it represent an unreasonable interpretation of the Act.