2020 Democratic presidential hopeful and South Bend, Indiana, Mayor Pete Buttigieg backed telehealth investment improvements as part of a rural healthcare policy platform. Buttigieg urged doubling annual funding for the FCC's USF Rural Health Care Program to $1 billion. The platform also proposed to “massively expand” broadband coverage across the U.S. and “expand the types of care settings that can receive reimbursement for telehealth services.” Release of Buttigieg's plan Friday was two days after a trio of other 2020 Democratic hopefuls -- Sens. Kirsten Gillibrand of New York, Amy Klobuchar of Minnesota and Elizabeth Warren of Massachusetts -- issued competing rural-focused policy platforms that propose major investments in broadband deployments (see 1908070070). Much of the tech-focused debate during the 2020 campaign until last week was on the antitrust implications of the growth of major tech companies, including Warren's proposal to break up big tech companies like Google, Facebook and Amazon (see 1904170046 and 1906270010).
CenturyLink reported Q2 2019 revenue of $5.58 billion Wednesday, down from $5.9 billion in the same quarter last year, as it continues to expand its fiber network. The company's "guiding principle" is growing free cash flow per share, said CEO Jeff Storey during an earnings call (requires login). The company generated $956 million in free cash flow in Q2, excluding cash paid for integration and transformation costs and special items of $55 million, it said in an earnings report.
Frontier Communications stock received a rating of underperform Wednesday in an equity research note from analysts at Wells Fargo Securities after Frontier's Q2 2019 earnings report Tuesday. Frontier reported $2.07 billion revenue for the quarter, down from the Q1's $2.1 billion (see 1904300217). The company's net loss for the Q2 was $5.32 billion, for a net loss of $51.07 per common share. It reported a net loss of 71,000 broadband subscribers. On an earnings call Tuesday, Frontier CEO Dan McCarthy called the increased customer churn to 2.14 percent on the consumer side "disappointing," blaming it partly on seasonality, competitive pressures and customer roll-off as promotional bill credits ended. McCarthy said it's premature to speculate how the company's federal broadband subsidies will fare under an upcoming USF transition from the Connect America Fund to the proposed Rural Digital Opportunity Fund still at the NPRM stage. He suggested the terms of the RDOF reverse auctions may be less favorable to Frontier than they were under CAF Phase II auctions. Frontier plans to participate in the RDOF auctions and is pleased that latency will be a consideration in how the bids will be weighted, McCarthy said. The company said it expects to close on the sale of its operations in Washington, Oregon, Idaho and Montana, announced in late May, sometime in the first half of 2020 (see 1905290042). "The focus is clearly on liquidity, with plans of divesting its northwest operations to bring $1.3 billion in cash to the balance sheet," said Wells Fargo, "but the incremental investment required to meet the terms of the deal coupled with lower than expected benefit from FTR's transformation program and higher payments due in 2H 2019 that weren't initially considered with 2019 guide, all leave us firmly on the outside looking in." Frontier's share price dipped under a dollar early Wednesday and closed at 94 cents, down 23.59 percent.
The Universal Service Administrative Co. projects it will spend $59.56 million during the fourth quarter, including $33.8 million in direct costs to support individual USF programs plus $25.76 million administrative common costs, it said in a report Friday. It budgeted $13.58 million for its program to deploy broadband in high-cost areas, $17.28 million to help subsidize telecom services for low-income consumers, $3.75 million to support rural healthcare, and $24.95 million for broadband aid to schools and libraries. The individual program budgets include both direct and common costs. USAC said it did extensive outreach to program participants in the last quarter in the form of webinars.
The FCC issued an NPRM for its $20.4 billion Rural Digital Opportunity Fund and posted it Friday in docket 19-126 (see 1907110031). Comments are due to the Wireline Bureau 30 days after publication in the Federal Register and replies 30 days later. Incompas CEO Chip Pickering on Monday commended FCC Chairman Ajit Pai for moving the rulemaking forward. "We were the first organization to call for USF funding to be tied to 1 Gigabit speed," he said, adding speeds of 25 Mbps downstream, 3 up, are "antiquated, out of date and insufficient." In its proposed reverse auction for bidders who want to participate in the RDOF USF program, the agency seeks comments on how much weight a broadband service's speed and latency should be given in a bid (see 1907230061). Commissioner Jessica Rosenworcel also supports aiming high on performance measures for the RDOF program. In comments at the FCC meeting Thursday, she said the NPRM takes today's performance standards and assumes they make sense "10 years hence." She said the FCC should "think bigger and bolder." Mintz communications attorney Angela Kung issued a report on the RDOF program Monday.
Comments are due Sept. 3, replies Sept. 18 on a proposed eligible services list for the E-rate program's funding year 2020 for the USF mechanism that supports schools and libraries. The FCC Wireline Bureau posted the proposed list Friday in docket 13-184. Funding for three E-rate category two services -- managed internal broadband services, caching and basic maintenance of internal connections -- is scheduled to expire at the end of 2019 unless an anchor institution is still operating under a five-year budget cycle in FY 2020. The agency doesn't propose substantive changes, it said.
Multiple stakeholders are asking the FCC not to phase down Lifeline support for voice services under its USF program. The requests came in comments that were due Wednesday and posted through Thursday. They were in response to a joint petition by CTIA and others and a July 1 public notice in docket 11-42 (see 1907010055).
FCC commissioners voted Thursday to release for comment an NPRM for a $20.4 billion Rural Digital Opportunity Fund. Commissioners Jessica Rosenworcel and Geoffrey Starks dissented in part, but all the commissioners and Chairman Ajit Pai said the new USF subsidies would play a big role in helping close the digital divide. The pushback from the two Democrats was expected (see 1907300072).
Despite last-minute opposition from lawmakers, the FCC didn't pull from Thursday's meeting agenda an order on overhauling the way it subsidizes participants in its Rural Health Care (RHC) program (see 1907310055). Industry stakeholders also had asked for a delay or revisions to the draft in docket 17-310, which will adjust the way rates are determined when providing telehealth subsidies to rural healthcare providers (see 1907230005).
Sens. Ron Wyden, D-Ore., and John Hoeven, R-N.D., led a bipartisan letter Tuesday with 11 other senators urging the FCC to delay its planned Thursday vote on a rural telehealth report and order that would in part revamp the USF Rural Health Care Program's payment distribution and create a database of payment rates based on geography (see 1907120003). Rural healthcare providers (RHCPs) and the telecom companies that service them have also sought a vote delay or revision of the FCC proposal (see 1907230005). “The proposal neither provides sufficient guidance to applicants nor addresses several of the” existing RHCPs' “key issues, and will ultimately lead to increased confusion and funding delays for rural health care applicants and providers,” the lawmakers wrote FCC Chairman Ajit Pai. The other senators signing the letter were 2020 Democratic presidential hopeful Michael Bennet of Colorado; Tammy Baldwin, D-Wis.; Sherrod Brown, D-Ohio; Shelley Moore Capito, R-W.Va.; John Cornyn, R-Texas; Kevin Cramer, R-N.D.; Martin Heinrich, D-N.M.; Angus King, I-Maine; Joe Manchin, D-W.Va.; Lisa Murkowski, R-Alaska; and Tom Udall, D-N.M. The existing “lack of sufficient funding” for the RHC program, “combined with a lack of program rules concerning its allocation, has led to substantial delays for rural health care providers seeking to increase their telemedicine capabilities,” the senators said. The proposal “does not address the need for more funding, set forth the methodology for calculating the rural and urban rates, nor provide adequate maps to determine the rural area boundaries needed to determine pricing. Instead, it delegates rate-setting to” the Universal Service Administrative Co., “an entity that does not have relevant subject matter expertise.”