Customs Duty

Rural telcos from seven more states urged the FCC by year-end to approve increased USF Alternative Connect America Model (A-CAM) funding up to $200 per month per eligible customer location for broadband deployment. "We are ready, willing and able to meet" additional broadband deployment duties, said a letter posted Monday from six Alabama RLEC recipients of A-CAM support. They said the increased funding would allow them to guarantee 25/3 Mbps data speed to almost 6 percent more rural customers and 10/1 Mbps service to more than another 6 percent. Similar letters were posted in docket 10-90 in recent days from carriers in Arizona, Nebraska, Oklahoma, Oregon, Washington state and Wisconsin. Previously, RLECs from Georgia, Minnesota and Tennessee filed such letters (see 1711290027 and 1711240018).

FCC commissioners voted 3-2 to approve a Lifeline item to begin to revamp again the low-income subsidy program, going in a different direction than a 2016 overhaul. Chairman Ajit Pai and Republican colleagues said the combined orders and notices would crack down on program abuse and better target funding to those consumers and areas that really need it, while promoting facilities-based deployment. Dissenting Democrats said the actions and proposals would effectively gut the program and widen the digital divide. Congressional Democrats also hammered the moves.

Stakeholders criticized proposed FCC wireline broadband infrastructure actions in a draft item on the agenda for Thursday's commissioners' meeting (see 1710270040). Consumer groups, industry parties and others opposed changes the draft would make to agency rules adopted in past orders on technology transitions, copper retirements and telecom service discontinuances. Electric utilities voiced concern about possible FCC efforts to further drive down pole-attachment rates. The objections were in filings posted Monday and last week in docket 17-84, including on meetings before lobbying restrictions took effect Thursday.

Wireline-only telcos face fierce market pressures, with some struggling to survive financially and others adapting better though still challenged long term, analysts and consultants told us. The telcos continue to lose phone customers to mobile and VoIP competitors; wireline broadband is seen as inferior to cable broadband in most of the mass market; and 5G wireless is a coming threat. "It’s really a two-front war" against cable and wireless, and the outcome "may not be consistent with current debt and dividend loads,” said ex-FCC staffer Paul de Sa, Quadra Partners consultant: It's like "fighting in Europe and Asia at the same time.”

Fiber network equipment is classifiable as optical instruments of chapter 90 of the Harmonized Tariff Schedule of the U.S., the Court of International Trade ruled. ADC Telecommunications argued Customs and Border Protection should have classified its “value added modules” as duty-free data transmission equipment. CIT held Wednesday that optical equipment includes fiber cables that transmit non-visible light, confirming CBP’s liquidation as “other optical appliances and instruments” at a 4.5 percent duty. A lawyer for ADC didn't comment.

An iPhone case that includes a separate screen that shows information like photos, boarding passes and maps from the phone sent through a Bluetooth connection isn't classified based on the Bluetooth capability, Customs and Border Protection said in an Aug. 3 ruling that was recently released. CBP responded to an advice request from a customs broker for popSLATE Media, which makes the case. The company told CBP it believes the cases are best classified based on radio transceivers as the agency classified the Apple Watch and other "smartwatches" (see 1606280059). CBP disagreed, saying "the most prominent feature" is the image display screen. That classification has a 2.6 percent duty rate. We couldn't reach popSLATE Friday.

Large and small telcos sparred further over whether the FCC should scrap (see 1708290015) rural call completion data collection duties, with broader disagreement over a replacement. "Nearly every commenter agrees the Commission should eliminate the current data recording, retention, and reporting regime and adopt in its place its proposed new rule requiring covered providers to monitor intermediate providers’ performance and hold them accountable," said Verizon, as replies were filed Monday in docket 13-39. It said new standards and requirements proposed by "a few commenters" would "impose unnecessary burdens and ineffective obligations on covered providers." CenturyLink said no party disputed that RCC problems decreased, and it said current rules produce questionable data and are burdensome. It suggested the FCC give carriers "flexibility to offer a lower-cost alternative to sophisticated customers more concerned about costs than rural call completion." Sprint said the record shows rules "are ineffective and should be eliminated; that any rural call completion problems have abated sharply; and that intercarrier compensation reform, competitive market forces, and cooperative industry efforts are the most effective." It opposed new regulations or performance mandates. Windstream also supported eliminating RCC rules and opposed new monitoring or reporting duties, while seeking flexibility if the FCC wrote new rules. But RLEC groups NTCA and WTA said current rules should be maintained until "a demonstrably effective replacement is implemented." Relying on carriers to monitor intermediate providers "was tried, but did not prove effective," they said: "Rather than risk backsliding, the Commission should require covered providers to actively manage their networks and comply with ATIS best practices." The Minnesota Telecom Alliance backed keeping the rules until the FCC "adopts the service quality standards" for covered voice transmission by intermediate providers. The MTA sought new mandates, including quality of service standards for individual intermediate carriers and "safe harbor or comparable incentives (or express obligations)" for covered carriers to limit the number of intermediate carriers handling individual calls. HD Tandem said the FCC generally should ban use of more than two intermediate carriers in RCC paths, with waivers for "legitimate need."

Industry cautioned Alaska and Nebraska regulators about their state USF revamps, in comments posted this week. At the Regulatory Commission of Alaska, AT&T and rural phone companies said a proposed short-term fix should be temporary and the RCA should launch a more comprehensive proceeding. In Nebraska, wireless carriers asked the Public Service Commission not to proceed with a proposed shift to connections-based USF contribution.

Southeast Texas won't quickly recover after Tropical Storm Harvey damaged and flooded 911 facilities and utility infrastructure (see 1708290029 and 1708280049), emergency and utility officials said in interviews last week. Surging numbers of calls overwhelmed public service answering points (PSAPs) used to far fewer requests, said one official. Industry officials said providers are working together and continue to restore service and assist with relief. The FAA cleared drones to fly into the area.

The FCC should let industry self-regulate rural call completion and eliminate recording, reporting and retention rules, large carriers commented this week in docket 13-39. But smaller rural carriers said required reporting improved call-completion rates. A July Further NPRM (see 1707270053 and 1707130054) seeks to change or eliminate data-collection and reporting rules and require covered carriers to monitor rural performance of their intermediate providers and hold those providers accountable.