AT&T told the FCC that BellSouth’s proposals to exempt ILECs’ bro...

Commission that cost allocation rules were “vital accounting safeguards and eliminating them or creating an arbitrary exemption for broadband services would only enhance the Bells’ already significant opportunities to harm consumers and competition through discrimination and cross-subsidization.” AT&T also argued that BellSouth basically was seeking deregulated status for broadband service except for cost allocation rules where it “paradoxically claims that such services should, for those purposes only, still be considered ‘regulated.'” AT&T said it didn’t support the idea of deregulating broadband services, but “if broadband services are to be deregulated, then the only nonarbitrary conclusion would be that broadband services must also be deemed ‘nonregulated’ under the Commission’s cost allocation rules.” AT&T said that under FCC rules, classifying a service as nonregulated triggered the cost allocation rules, which require ILECs to separate the costs of nonregulated services from regulated services. “Making this distinction between regulated and nonregulated services is the critical first step in the Commission’s accounting safeguards,” AT&T said. It also disagreed with BellSouth’s proposal to remove wireline DSL revenues from the USF contribution base to gain parity with cable broadband providers, which don’t contribute. Said AT&T: “BellSouth is simply mistaken in contending that it cannot be required to contribute to universal service based upon the interstate revenues from its wholesale transport offerings unless cable broadband providers also contribute to universal service.”