The American Cable Association asked the FCC to revise financial qualifications a draft order would require of applicants seeking to participate in its planned reverse auction for broadband-oriented Connect America Fund Phase II subsidy support. The qualifications under consideration “are so onerous that they would act as a disincentive” to small-provider participation in the auction, said ACA in a Wednesday filing in docket 10-90 on a meeting with agency officials. Instead, the FCC should “tailor the requirements so that 'serious' smaller providers could participate,” said ACA, which represents small cable and telco video providers. To allow experienced small applicants to participate while ensuring they're financially qualified, ACA suggested smaller providers shouldn't be required to submit audited financial information before bidding. It said such information can cost $50,000-$100,000 -- “a large amount for a smaller bidder with no certainty of prevailing” in the auction, under which low subsidy bidders would generally win support. If the FCC remains concerned about small applicants' wherewithal, it could require them to put “a reasonable amount of money in escrow” that could be forfeited if they didn't comply with post-auction requirements, ACA said. And it said smaller participants should be allowed “to obtain a Letter of Credit ('LOC') other than from a 'top 100 bank' that has a Triple B or better credit rating and that is insured by the FDIC [Federal Deposit Insurance Corporation] or FCSIC [Farm Credit System Insurance Corporation].” That requirement might work for larger providers, ACA said, “but most of ACA's smaller providers only have relationships with community -- not top 100 -- banks." This "is not only driven by longstanding relationships within a community; it also has a sound financial basis” because “big banks find it inefficient and unprofitable to make small loans (or loan commitments)” and “smaller providers in turn are loathe to pay the high fees big banks demand,” the group said. ACA said it plans to offer specific alternative financial qualification proposals.
FCC and industry officials continue to seek to devise new rural USF mechanisms. The details have always been difficult, but tensions have surfaced in FCC public statements and industry filings and interviews over the basic scope and timing of the reform effort as a year-end commitment to a key lawmaker nears. Three commissioners are trying to develop a broadband-oriented overhaul, while two commissioners are more adamant the agency undertake a targeted “stand-alone broadband” fix in December, even if an overhaul takes longer. Rural telco groups are working with regulators to hash out policy proposals, and some believe the parties are close to a solution. But at least two of them, NTCA and WTA, appear concerned the FCC might rush into making major changes to legacy systems that would be harmful to their members.
FCC and industry officials continue to seek to devise new rural USF mechanisms. The details have always been difficult, but tensions have surfaced in FCC public statements and industry filings and interviews over the basic scope and timing of the reform effort as a year-end commitment to a key lawmaker nears. Three commissioners are trying to develop a broadband-oriented overhaul, while two commissioners are more adamant the agency undertake a targeted “stand-alone broadband” fix in December, even if an overhaul takes longer. Rural telco groups are working with regulators to hash out policy proposals, and some believe the parties are close to a solution. But at least two of them, NTCA and WTA, appear concerned the FCC might rush into making major changes to legacy systems that would be harmful to their members.
With the FCC struggling to revamp rate-of-return USF, some commissioners want the agency to make sure it at least addresses a “stand-alone broadband problem” this year even if it’s not ready to adopt a broader overhaul. Commissioner Ajit Pai said he “strongly” disagreed with speculation the commission can simply take more time despite a year-end commitment. “There is no reason whatsoever why we can’t act by December 31 if our focus is on solving the stand-alone broadband problem,” he said in a speech Monday at an NTCA Telecom Executive Policy Summit. “The difficulty only arises if we decide to link solving that problem to a number of other thorny issues.”
With the FCC struggling to revamp rate-of-return USF, some commissioners want the agency to make sure it at least addresses a “stand-alone broadband problem” this year even if it’s not ready to adopt a broader overhaul. Commissioner Ajit Pai said he “strongly” disagreed with speculation the commission can simply take more time despite a year-end commitment. “There is no reason whatsoever why we can’t act by December 31 if our focus is on solving the stand-alone broadband problem,” he said in a speech Monday at an NTCA Telecom Executive Policy Summit. “The difficulty only arises if we decide to link solving that problem to a number of other thorny issues.”
USTelecom believes the FCC and industry are "close to the finish line" in the effort to overhaul rural USF voice subsidy mechanisms to support both broadband and voice service by rate-of-return carriers. USTelecom is "committed to reaching agreement on the few remaining points that need to be resolved," said a filing posted Thursday by Robert Mayer, USTelecom vice president-industry and state affairs, after a meeting with FCC and state officials. "I noted that USTelecom had been working closely with a group of associations and our members on the plan and that we had members who were leaning towards the proposed Model option and others who were interested in the Non-Model option. I indicated that it was in our mutual interest to reach agreement among the participating associations," Mayer's filing said. NTCA earlier this week warned there wasn't enough time to adopt a broad rural USF overhaul this year, though more targeted reforms to fix the "standalone broadband problem" were more doable (see 1511100064). Other groups posted short filings Thursday in docket 10-90 noting FCC meetings on USF issues.
The NAB said some broadcast regulatory fees should be reassigned to wireless carriers to reflect the expected spectrum transfer between sectors from the upcoming incentive auction. “The only equitable approach is for the regulatory fees to ‘follow the spectrum.’ The spectrum to be repurposed through the incentive auction will benefit wireless service providers,” said the NAB in comments as industry parties responded to an FCC Further NPRM in docket 15-121 this week (replies are due Dec. 7). CTIA didn’t address the possible broadcast fee shift in its written comments and had no comment to us Tuesday.
NTCA raised questions about a possible FCC “bifurcated approach” to rural telco USF reform under which prior expenses would be recoverable through existing mechanisms while new investments and some stand-alone broadband expenses would be recoverable through new mechanisms. “While it is important to get reform done quickly, it is more important to get reform done right,” NTCA said in a filing posted Monday in docket 10-90 on a meeting with a senior FCC staffer. The rural telco group asked what the bifurcated approach's objective is, given that it believes FCC-articulated reform principles are more likely to be achieved by “already-proposed measures,” such as “budget controls and reasonable limits on operating expenses and prospective capital investments." Plus, NTCA said existing high-cost loop support (HCLS) and interstate common line support (ICLS) mechanisms have "shortcomings," but they have worked "better than any other system" to encourage and enable sustainable rural broadband investment. It's “essential that any reforms strike a careful balance toward both a reasonable opportunity to recover costs in accordance with the rules in place at the time the relevant investments and associated expenses were incurred and the need to provide sufficient and predictable support for future broadband deployment and operations; neither can or should be sacrificed for the other,” NTCA said. The group also voiced concerns about any “artificial cut-off” of HCLS/ICLS support that would move all associated costs “to the new mechanism as of a future date certain.” NTCA said HCLS and ICLS support should “continue for the useful life of networks used to deliver supported services; even after those networks are fully depreciated, rural rate-of-return-regulated local exchange carriers ('RLECs') will continue to incur expenses to deliver voice and broadband services over them.” NTCA also noted the “time sensitivity” of a request for commission review of a Wireline Bureau denial of a petition for reconsideration of an HCLS rate floor, which rural telcos believe was flawed. Rural telcos aren’t substantively challenging the application of the rate floor to HCLS support, but its methodology, and the FCC should act “well in advance of June 2016" to set "a more reasonable methodology,” the group said.
Public Knowledge President Gene Kimmelman rejected the latest proposal for net neutrality legislation from the Information Technology and Innovation Foundation. The think tank released the proposal Thursday and hosted a panel on which Kimmelman was the only participant who hadn't previously advocated for a bipartisan compromise open Internet bill.
Public Knowledge President Gene Kimmelman rejected the latest proposal for net neutrality legislation from the Information Technology and Innovation Foundation. The think tank released the proposal Thursday and hosted a panel on which Kimmelman was the only participant who hadn't previously advocated for a bipartisan compromise open Internet bill.