Executive Summary
The Federal Communications Commission (FCC) has adopted a number of new rules that impact the rates that Local Exchange Carriers (LECs) may charge for switched access service and how Competitive Local Exchange Carriers (CLECs) file their interstate switched access tariffs with the FCC.

• LECs currently engaging in “access stimulation” are required to cap their switched access rates to the lowest incumbent carrier in the LEC’s service area starting December 29, 2011 . All rate reductions must be filed by February 13, 2012 .
• Switched access rates will begin a step-down process as carriers move to a bill-and-keep system.
• All CLECs are required to electronically re-file their current tariffs on file with the FCC by January 17, 2011 .

A copy of the Order may be found here. (FCC 11-161; WC Docket Nos. 10-90, 07-135, 05-337, 03-109; GN Docket No. 09-51; CC Docket Nos. 01-92, 96-45; and WT Docket No. 10-208)

Discussion
On November 18, 2011, the FCC released its Order and Further Notice of Proposed Rulemaking in the Connect America Fund docket, reforming Intercarrier Compensation (ICC) and the Universal Service Fund (USF) (the USF/ICC Order). As part of this Order, the FCC establishes new tariffing requirements for carriers that may be engaging in what it calls “access stimulation.” The FCC states that a LEC is engaging in “access stimulation” when it has an access revenue sharing agreement with another entity and the carrier has a 3-to-1 ratio of interstate terminating to originating traffic in a given month or has had a 100% or greater increase in originating or terminating switched access minutes in a month as compared to the same month in the previous year.

LECs that engage in “access stimulation” are now required to cap their interstate switched access rates to the rates of the price-cap incumbent carrier in the state with the lowest switched access rates within 45 days after the carrier begins to engage in “access stimulation.” The USF/ICC Order is effective December 29, 2011. Carriers already engaging in “access stimulation” have 45 days after that date, which is February 13, 2012, to file an updated federal switched access tariff with their new rates. LECs that engage in “access stimulation” in the future will be required to update their switched access rates within 45 days of having triggered the “access stimulation” criteria.

LECs still may file their tariffs on 15-day notice to obtain “deemed lawful” status.

In addition, the FCC is moving access charges to a bill-and-keep system, and has developed a step-down system where rates will be reduced as carriers transition to a bill-and-keep system of recovery. Initially, price-cap incumbent carriers and CLECs required to mirror price-cap incumbent carrier rates are required to reduce their intrastate switched access rates to match their interstate rates by July 1, 2014. Local switching rates are then subject to a step-down to bill-and-keep system by July 1, 2017. Transport rates, including tandem switching, are then subject to a similar step-down process to a bill-and-keep system, which will be completed by July 1, 2018. Please download the following table, which outlines each step of the transition and the dates when each step is to be completed.

Electronic Filing Required
As a reminder, under new FCC rules, all CLECs that maintain a tariff on file with the FCC are required to re-file a copy of their current tariff, also known as the carrier’s Base Document, electronically by January 17, 2012 in the FCC’s Electronic Tariff Filing System (ETFS). Until now, only incumbent carriers were required to use ETFS. This requirement now is applicable to all CLECs, regardless of any requirement to reduce rates under the USF/ICC Order.

CLECs must include a transmittal letter with their Base Document filing. There is no filing fee applicable to this initial filing. A CLEC may not make changes to its Base Document prior to filing it via ETFS. All subsequent tariff revisions, including those reducing rates in accordance with the USF/ICC Order, along with any associated working papers, must be filed in ETFS.

Any tariffs that are currently on file with the FCC, but are not re-filed in ETFS by January 17, 2012, will be cancelled by the FCC.

A copy of the Report and Order establishing the ETFS requirement may be found here. (FCC-11-92, WC Docket No. 10-141) A copy of the FCC’s public notice that announced the window for filing may be found here. (DA-11-1706, WC Docket No. 10-141)

For more information, please contact Katherine Barker Marshall or any of our attorneys in the Arent Fox Telecommunications Practice Group.