CTIA, NCTA Oppose Challenges to High-Cost Loop Support Reform Order

CTIA called the reforms “relatively minor.” It said the commission should dismiss the applications for review because the regression-based benchmarks are “valid responses to significant problems,” and without the benchmarks, other carriers’ customers would have to pay for excessive costs through recovery from the USF. CTIA dismissed allegations of errors and inaccuracies in the regression methodology and associated data, arguing that “absolute perfection” is neither attainable nor required, and better dealt with through the waiver process.

The data is admittedly wrong, and in some cases there are errors that haven’t yet been identified, NTCA Senior Vice President Michael Romano told us. “I don’t think one can say we're requiring perfection, but we are requiring something that is a reasonable approximation of the actual costs of operating in high-cost areas.” OPASTCO Vice President Stuart Polikoff agreed, calling it “arbitrary and capricious” for the agency to base its support reductions on boundary data it knows is wrong. “The Bureau’s solution of making a waiver process available improperly places the ‘burden of disproof’ on small carriers,” he said by email. “Prior court decisions have made clear that the FCC can’t save an invalid rule by ’tacking on’ a waiver process."

CTIA characterized ILEC complaints about reduced support levels as “particularly troublesome given that, as a class, RoR ILECs face far fewer changes to their funding mechanisms than other classes of carriers in general, and wireless carriers in particular.” The USF/intercarrier compensation order reduces carriers’ dedicated support by more than half, CTIA said. “Universal service and intercarrier compensation simply cannot be reformed without shared sacrifices.” In response, NTCA and OPASTCO pointed to the rural associations’ 2011 proposal that would limit RLECs’ reimbursable capital expenditures via high-cost support on a going forward basis. That proposal took into account the accumulated depreciation in each carrier’s existing loop plant, Polikoff said, and ensured that carriers who most needed upgrades would be able to do them, while more recently installed equipment would see more constraints on reimbursement. That plan certainly “contemplated shared sacrifice,” Romano said.

CTIA said the requests for stay and review “are all based on a fundamentally flawed premise -- that RoR ILECs are entitled to the full measure of support necessary to allow them to recover all of their expenditures, irrespective of the prudence of those expenditures or the impact on the overall USF. That simply is not the law, nor is it good policy."

CTIA and NCTA argued that petitioners failed to meet any of the standards required to justify a stay. It could harm other interested parties, NCTA argued, because putting the reforms on hold while rural telcos continue to receive all their current high-cost support “would be a waste of limited government resources.” The association cited East Ascension Telephone Co., in Gonzales, La., which it said has received over $130 million “to build a gold-plated network in an area that already was well-served the private sector.” Giving it more money would be “tremendously harmful to every other company operating in that study area,” the association said. The petitioners also failed to demonstrate a stay would prevent irreparable harm, NCTA and CTIA argued. “Simply stating that some ROR incumbent LEC will lose support is not sufficient,” NCTA wrote, citing a 1985 U.S. Court of Appeals for the D.C. Circuit ruling that economic loss does not itself constitute irreparable harm.