Big Telcos Cite Prior Plans, ‘Uncertainty’ About Future Obligations, in Rejecting FCC Broadband Support

AT&T told the commission it’s “in the midst of evaluating its options for further rural broadband deployment.” Until it finalizes its strategy, it “cannot say at this time that participation in the incremental support program fully aligns with AT&T’s overall broadband strategy,” a filing said (http://xrl.us/bnh6w3). AT&T also pointed to “uncertainty as to how participating in this program will affect our continuing efforts to be relieved of outdated legacy obligations, as well as some questions about the potential scope of the service obligations that accompany this support.” In two conversations with an aide to Chairman Julius Genachowski over the past week, AT&T Vice President Henry Hultquist expressed concerns over “the potential for future modifications to the service obligations that arise from acceptance of incremental funding” (http://xrl.us/bnh6w5).

Verizon said it “fully supports” November’s USF order establishing the CAF Phase I incremental support to extend broadband to the unserved. After careful consideration of accepting “the relatively small amount” of $19.7 million, the company decided to decline the funding (http://xrl.us/bnh6xh). “We decided not to participate in order to focus resources and capital on our own wireline and wireless broadband deployment plans,” a spokesman told us. “Verizon’s prior deployment and additional plans for private investment in broadband complement the FCC’s universal service goals and the Connect America Fund."

AT&T and Verizon were two of the leading forces behind the FCC’s reform of the USF, and achieved a lot of what they were looking for, so “their refusal of money adds an ironic twist to a huge policy makeover,” said Medley Global Advisors analyst Jeff Silva. “The whole reform effort is going to remain a work in progress for a while, given the fact that you don’t know what the courts will do, and you don’t know what tweaks the FCC may make down the road.” If AT&T and Verizon’s declining the subsidy means the incentives aren’t optimally aligned to get companies to bring broadband to unserved areas, there could be a problem and the agency may want to consider rebalancing the rules, he said. “The reality is, anything this big, you're never going to get it entirely correct the first time. The FCC took a huge step forward in a very complex area, and the dynamics will remain complicated for the foreseeable future."

Vitelco said it was unable meet a requirement of the funding. The company said it can’t certify that deployment funded through the CAF subsidy “will occur in areas shown as unserved by any other carrier on the National Broadband Map, and that, to the best of the carrier’s knowledge, the locations to be served are, in fact, unserved,” Vitelco told the commission, quoting the public notice announcing support levels (http://xrl.us/bnh6xw). The map shows that fixed broadband service is “ubiquitously available” in the U.S. Virgin Islands, but “based on VITELCO’s experience, the National Broadband Map overstates the availability of fixed broadband, and areas that the map reflects as served are in fact unserved,” the telco said.

Vitelco said the commission’s most recent data are consistent with its own experience -- that “there are considerably more unserved locations in the USVI as compared to what is reflected on the National Broadband Map.” The telco urged the commission to allow CAF Phase 1 support to be put to use in the U.S. Virgin Islands, regardless of what the map says. “Residents of the USVI stand to lose if CAF Phase I support is not made available to VITELCO -- a result that would be particularly regrettable given that the USVI lags in broadband availability as compared to the mainland,” it said.

An FCC official had said the commission never expected all $300 million to be accepted -- and if it had been, then that would have meant the conditions weren’t stringent enough (CD July 25 p3). Other telcos accepted partial funding. An FCC spokesman said the $115 million of public funding that had been accepted, and that will be coupled with tens of millions more in private investment, marked “the beginning of the most significant public-private effort in history to ensure that every American has access to broadband by the end of the decade.” Nearly 19 million rural residents lack access to broadband, the spokesman said. Said Genachowski: “Today’s action is just the beginning of our efforts to unleash the benefits of broadband for millions of homes and small businesses in unserved rural communities across the U.S.”