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FCC-14-91A2

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STATEMENT OF

COMMISSIONER MICHAEL O’RIELLY

Re:

Jurisdictional Separations and Referral to the Federal-State Joint Board, CC Docket No. 80-286.

Today’s order is undeniably necessary to avoid re-imposing arcane jurisdictional separations

rules on a small segment of the communications industry. Indeed, it has been so long—thirteen years—

since the rules have been in effect that many carriers no longer have the staff or systems in place to

comply with them. Therefore, I support the order.

That said, I question the need to continue the jurisdictional separations rules at all in light of

intervening regulatory and marketplace changes. As the order explains, jurisdictional separations is the

process by which incumbent local exchange carriers apportion regulated costs between the intrastate and

interstate jurisdictions. That description nicely encapsulates why we should give sunsetting these rules

serious consideration.

As consumers increasingly opt for all-distance service from a variety of

unregulated competitors in an IP world, the concepts of regulated costs and jurisdictional line drawing no

longer make sense. These onerous rules only ever applied to incumbent LECs to begin with, and many of

the larger LECs have gotten out from underneath them through a series of forbearance orders, leaving

only the smaller LECs on the hook. Furthermore, the USF/ICC Transformation Order fundamentally

changed how regulated carriers recover their costs, which significantly diminished the relevance of

jurisdictional separations for even the small carriers.

Meanwhile, the ever-lengthening freeze has spawned its own share of problems. Carriers that

voluntarily agreed to the freeze assuming it would only last for five years have expressed concern that

extending it yet again would perpetuate a misallocation of investments and expenses. That is why several

parties asked to open a window for affected rate-of-return incumbent LECs to file petitions for waiver to

unfreeze their cost category relationships—a request we should have acted upon here.

I would have preferred to take these unnecessary rules off the books rather than prolong a

problematic freeze of their application. I hope that the Federal-State Joint Board on Jurisdictional

Separations will use this additional three-year window to complete a comprehensive review, with an eye

towards ending these rules.

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