Despite setbacks, AT&T Alascom fights over rural rates

Posted: Tuesday, September 02, 2003

FAIRBANKS (AP) A federal regulatory official has rejected arguments by long-distance telephone provider AT&T Alascom to justify a rate formula change the company says would lower fees for rural customers.

But the company plans to press its case to the Federal Communications Commission, said Kristi Catlin, AT&T Alascom's government relations director.

The issue came before the FCC when AT&T Alascom missed a deadline last year to report to the agency on its tariffs how much it charges customers and other long-distance companies to carry phone traffic and why.

Catlin said a key employee retired and no one collected the necessary data for about nine months. Reconstructing the data would require analysis of 365 million daily individual call records, AT&T Alascom told the FCC in case filings.

Generally, though, AT&T Alascom has problems with the way the FCC regulates it in Alaska, and the company used some of those complaints to support its request for a waiver from the tariff-filing requirement.

In an Aug. 13 ruling, a top official at the FCC's Wireline Competition Bureau rejected Alascom's arguments.

''The conditions that led the commission to repeatedly reaffirm Alascom's tariff filing obligation persist today,'' said Jeff Carlisle, the bureau's senior deputy chief of the Wireline Competition Bureau.

Carlisle said AT&T Alascom failed to show that its current cost allocation model is performing so poorly that it should be scrapped. He ordered the company to file its tariffs and supporting information by Sept. 26.

The ruling illustrates flaws in AT&T Alascom's arguments, said a spokeswoman for General Communication Inc., Alascom's main competitor. The FCC rules are necessary because AT&T Alascom remains a dominant, monopoly phone provider in the Bush, said GCI spokeswoman Tina Pidgeon, a Washington, D.C., attorney.

But AT&T Alascom is at a disadvantage, Catlin said. Despite being one company, AT&T and Alascom must operate in many ways as separate entities in Alaska.

Alascom, for example, must file information with the FCC separately from AT&T to maintain its license to provide interstate service to Alaska.

''We have to basically do backbends any time we want to do business in Alaska,'' Catlin told the Fairbanks Daily News-Miner. The rules mean Alascom ''can't take advantage of AT&T's scale and scope,'' she said.

It also means that some AT&T calling plans aren't available in Alaska, she said.

The FCC also requires AT&T Alascom to account separately for its operations in rural Alaska under a system called a cost allocation plan. AT&T Alascom focused on the shortcomings of this system in seeking a waiver of its tariff filing.

The allocation plan is used to calculate the tariff that the FCC allows Alascom to charge customers, including other carriers such as GCI, for using its Bush earth satellite stations. The FCC required the separate accounting system for rural areas to ensure access and reasonable tariffs for other long-distance providers lacking satellite stations in the villages.

However, since Bush operations are costly and have relatively light traffic, the Bush tariff is higher than it would be if AT&T Alascom were permitted to average the costs over the entire state, Catlin said.

The high tariff actually helps competitors, Catlin said. That's because, when GCI sells access to rural Alaska through AT&T Alascom's equipment to other interstate companies, GCI can charge at or just below AT&T Alascom's tariff, Catlin said. But GCI's costs are lower than AT&T Alascom's, so it makes more profit from its reselling when the tariff is held high, Catlin said.

Pidgeon said the FCC should continue to require AT&T Alascom to file a separate Bush tariff based on the cost allocation plan because AT&T Alascom still is the sole provider of satellite earth stations in most villages.

The issue goes beyond the tariff rates, she said. The FCC needs to ensure that other companies are given access on reasonable terms and that AT&T Alascom doesn't discriminate among those companies, she said.

''Filing a tariff addresses those issues,'' she said.

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