The FCC is looking to overhaul rate-of-return USF systems fairly early in 2016, rural telco representatives told us. To support and spur broadband deployment, the commission is pursuing a two-track plan that would both modernize legacy subsidy flows and give rural carriers an optional new mechanism based on a cost model, they said Wednesday. The FCC’s “message to industry is ‘let’s keep working and see where we get to,’” said Lynn Follansbee, USTelecom vice president-law and policy. “I have no doubt that we will get to an order sometime early next year.”
The FCC gave incumbent telcos relief from “obsolete” phone regulations while preserving others it said are needed to protect consumers and competition. The commission approved an order at Thursday’s meeting granting several USTelecom requests that the agency forbear from requiring ILECs to meet certain requirements on wholesale network access (including to some conduits), stand-alone residential long-distance service, and “enhanced services.” But it denied ILECs relief from duties to provide voice service in certain rural areas, safeguards for “enterprise” stand-alone long-distance service, and a prohibition against “contract tariffs” for business data services in some areas.
TracFone resisted AT&T Lifeline proposals for the FCC to overhaul the USF support program for low-income consumers. TracFone opposed AT&T suggestions that carriers be removed from all Lifeline enrollment functions and that eligibility be initially tied solely to the federal food stamps program, which TracFone said would have a “devastating impact on Lifeline availability.” The comments came in a response posted Tuesday to a Nov. 23 AT&T filing flowing from an NPRM (see 1506180029). Other parties filing recently in docket 11-42 included the Cherokee Nation, Incompas, Lifeline Connects Coalition and Smith Bagley, with many comments addressing proposed minimum service standards for Lifeline broadband/voice coverage.
TracFone resisted AT&T Lifeline proposals for the FCC to overhaul the USF support program for low-income consumers. TracFone opposed AT&T suggestions that carriers be removed from all Lifeline enrollment functions and that eligibility be initially tied solely to the federal food stamps program, which TracFone said would have a “devastating impact on Lifeline availability.” The comments came in a response posted Tuesday to a Nov. 23 AT&T filing flowing from an NPRM (see 1506180029). Other parties filing recently in docket 11-42 included the Cherokee Nation, Incompas, Lifeline Connects Coalition and Smith Bagley, with many comments addressing proposed minimum service standards for Lifeline broadband/voice coverage.
The regulatory fee battle raged as the American Cable Association and ITTA urged the FCC to shift some fees from wireline to wireless companies, while CTIA opposed that. CTIA also opposed NAB’s proposal to reapportion regulatory fees to the wireless sector because of the planned incentive auction, which will allow wireless providers to bid for broadcast TV spectrum. ACA and CTIA filed reply comments (here and here), while ITTA made an ex parte filing this week in docket 15-121 on a recent meeting with FCC officials. NAB met with officials last week to discuss its proposal (see 1512030061).
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.
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.”