Wheeler Proposes Increasing CAF Broadband Speed

A number of providers had urged in comments that the commission make some changes to help pay for the increased speed, including doubling the length of CAF support, from five years to 10 years. The agency official said Thursday the wide-ranging order addresses many of the issues raised in April’s Further NPRM, and is designed to allow the commission to begin offering CAF support early next year, but declined to go into details

In addition, several telecom officials said commission officials tell them Wheeler is proposing some changes aimed at giving schools more options for getting broadband, in a separate draft E-rate order he's also circulating for the December meeting. The changes would allow schools to get E-rate funds to activate dark fiber leases, and would require providers to submit bids to provide broadband to schools in the areas they serve with CAF funding. That would be a significant step, EducationSuperHighway CEO Evan Marwell said. Schools can now be reimbursed by E-rate for leasing dark fiber but can't get reimbursed for the equipment to use it or to maintain it. “If you have a piece of glass connecting two buildings but no electronics, you don’t have any bandwidth,” said Marwell, who said he didn’t know what was in the E-rate order.

An FCC spokesman declined to give details on the E-rate item. Wheeler on Monday had said he was circulating the draft order, which calls for raising the E-rate annual spending cap by $1.5 billion (see 1411170042), but did not describe the other changes. Both the E-rate and CAF orders were included in the tentative agenda released Thursday for December’s meeting.

Increasing the CAF broadband speed requirement was aimed to deal with the speed gap between urban and rural areas, said the official, who said National Broadband Map data show that in December 2013, 99 percent of urban customers had broadband speeds of at least 10 Mbps, while only 31 percent in rural areas had speeds that high. The increase would follow the speed proposed in the further NPRM issued in April when the commission approved CAF reforms (see 1404240034).

Increasing the speed requirement without taking other measures “would hinder carriers from recouping the substantially greater investment increasing the speed would require,” ITTA President Genny Morelli said in an email. “We have urged the FCC to increase the funding period to 10 years, give CAF recipients the flexibility to serve fewer than 100 percent of eligible locations and to substitute eligible locations in partially served census blocks for locations in otherwise eligible census blocks,” she said. We believe that these modifications, taken together, would enable effective network deployment in furtherance with the FCC’s universal service objectives.” USTelecom and CenturyLink officials told aides to commissioners Mike O’Rielly, Ajit Pai and Jessica Rosenworcel last week they supported the increased requirement, “under certain conditions to make it economically feasible.” (see 1411170046). "Changing the program parameters to provide 10 Mbps at the outer reaches of these rural networks can provide very significant benefits to rural area," Jonathan Banks, USTelecom senior vice president-law and policy, said in a statement to us Thursday. “However, the CAF will need significant corresponding changes to support the very significant increase in costs and resources need[ed] to push fiber and new electronics far out into rural areas.”

E-rate Changes

Wheeler had said the draft order would include proposals to give schools more choices in getting broadband; he spoke during a media call on Monday about the E-rate cap increase proposal. The telecom officials said they also were told CAF recipients would be required to bid to serve schools. It was unclear, Marwell and the industry sources said, whether the E-rate order includes another step EducationSuperHighway and other education advocates wanted to allow schools to be reimbursed for building their own fiber if service providers do not build broadband connections to them or charge high prices. The cost on E-rate would ultimately be less than reimbursing the schools for paying high rates, Marwell said.

An FCC spokesman told us only that a September CoSN and School Superintendents Association study found that 6 percent of school districts indicate they got no responses to the E-rate request for proposals. “The chairman will be proposing some modifications to existing rules to give more options to schools like these,” the spokesman said.

NCTA urged the commission on Wednesday that if it were considering allowing schools to use E-rate funds to build their own fiber or use dark fiber, it should cap the amount of money available each year for such infrastructure costs, according to an ex parte filing posted Thursday in docket 13-184.

A cap would ensure the E-rate fund “does not devote an excessive amount of support to large up-front payments,” which could foreclose their ability to use the fund for monthly recurring charges for broadband services, Jennifer McKee and Steve Morris, both NCTA vice presidents and associate general counsels, told a Wireline official, the filing said. The “need for such limits was particularly urgent if the E-rate program will be funding construction projects in which schools and libraries themselves do not contribute to construction costs,” NCTA said.