FCC Approves Order to Offer RLECs More USF Support for More 25/3 Mbps Broadband
The FCC unanimously adopted an order to offer rural telcos more USF support in exchange for deploying more 25/3 Mbps broadband, as some expected (see 1812100052). The main elements appear largely the same as in a draft (see 1811210032). "Many more rural Americans will have access to high-speed broadband service," said Chairman Ajit Pai. A key lawmaker and RLEC groups praised the rate-of-return USF item -- which includes a reconsideration order and Further NPRM -- approved at commissioners' meeting Wednesday.
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The order will offer up to $67 million a year in additional support to carriers already receiving funding based on an Alternative Connect America Cost Model (A-CAM), along with duties to expand broadband deployment, said the commission. It said the new offer could increase the number of rural homes and businesses with access to 25/3 Mbps service by up to 100,000. Pai noted previous offers required A-CAM carriers deploy 10/1 Mbps service to locations estimated to cost below $200 monthly, which was reduced to less than $150. "We’re increasing the support available to these carriers back to the intended maximum of $200 per location," he said. "This increase is now tied to requirements that those carriers deploy 25/3 Mbps service -- the FCC’s definition of 'broadband' -- to additional locations."
RLECs that didn't take model-based support also will receive the new A-CAM offers, along with requirements they "provide 25/3 Mbps service to all homes and businesses whose costs are fully funded" through the model, the FCC said. Pai said the duty covers all locations the model predicts will cost $200 per month or less to serve. Carriers serving tribal lands will get more support, he said.
Annual funding for rural telcos remaining on legacy USF support will be increased beyond a current $1.4 billion budget, through annual inflation adjustments, elimination of scheduled 2018 budget cuts and "setting a guaranteed floor of minimum support for each carrier," said the FCC, noting additional 25/3 Mbps commitments. It said the order reduces "the maximum per-line subsidy in the legacy program" from $250 to $200 by July 2021; eliminates a "burdensome capital expenditures allowance rule"; and determines market-based auction can best address subsidies to incumbent RLECs in areas largely or completely served by unsubsidized competitors.
Another order denies petitions for reconsideration of a decision to offer further support to carriers accepting revised A-CAM support. An FNPRM seeks comment on how to structure the subsidy auction, address conversions to broadband-only lines and whether to include a tribal broadband factor for legacy carriers.
To maximize A-CAM use, "this item offers legacy carriers a very generous deal," Commissioner Mike O'Rielly said. "Given the potential for increased USF support, it’s hard to imagine what more we could waive to further sweeten the deal, or a circumstance in which a model winner wouldn’t take the offer." Despite "apprehensions about the implications of A-CAM II," he backed "policy cuts in order to approve the rest of the item," and thanked Wireline Bureau staff for responding to his request for budget data on different election scenarios: "This deliberative process was helpful in determining the worst-case scenario for budgetary purposes -- in other words, if only model winners take the plunge -- which would result in expanding the rate-of-return portion of the high cost program by approximately 16 percent or $400 million per year." He looks forward to implementing a remote areas fund auction.
Senate Commerce Committee Chairman John Thune, R-S.D., called the rural broadband funding order “an extremely important step to enable the continued deployment of broadband so critical" to rural communities. "By ensuring predictable and sufficient support," he said, the commission "fulfilled an important obligation to ensure universal service.”
RLEC reactions were positive. ITTA "enthusiastically supports the Commission's action." WTA said the order "ensures" small rural broadband providers "have the resources they need to build out more robust networks" to more customers. USTelecom praised actions "reforming the unpredictable and insufficient funding for rate-of-return carriers" and promoting broadband, a view basically shared by the S.C. Coalition for Broadband in Rural America. NTCA hailed "a watershed moment" as the "landmark order" delivers on "much of the promise" of prior efforts "and will hopefully put the high-cost USF program on a path for greater success and stability." TDS Telecom said the money will help investment in "remote, hard-to-serve areas."