Google, Others Propose Alternative to USTelecom-Brokered USF Plan

The filing comes as other industry groups and companies are preparing comments on the USTelecom-brokered agreement on USF and intercarrier compensation changes -- due at the FCC Wednesday. Industry officials said last week many groups and companies are putting extensive time and resources into drafting comments, with the FCC still expected to take up a reform order, most likely in the fall.

The FCC must ensure that USF and intercarrier comp changes are in keeping with the goals of the National Broadband Plan, to promote broadband deployment and adoption nationwide, the filing said. “The FCC must weigh how these proposals impact all parties, including the users and high-tech and online companies that inherently create the Internet’s value and who bear the real costs of subsidies and network traffic charges,” the group argued. The filing warns that “the suggested lengthy transition period to more cost-based traffic termination rates and extension of the antiquated carrier access charge regime” to VoIP applications “are likely to be felt most negatively by users large and small of IP-based offerings."

The FCC also should keep in mind what it has already acknowledged, that “fully transitioning legacy ... networks to all-IP is in our country’s best interest,” the filing said. “Though much of the nation’s communications networks have already been upgraded and enjoy the benefits of IP, we are still far from end-to-end IP transmission everywhere."

A major goal of the FCC should be to eliminate USF and “implicit” intercarrier compensation support in favor of a purely broadband plan, the group said. “The FCC has already taken a significant step with its Connect America Fund (CAF) proposal,” the filing argues. “Consistent with the CAF, the most logical and helpful step is for the FCC to shift all subsidies to support broadband deployment and operations over a phase-in period, while at the same time eliminating the implicit subsidies that continue to distort user and network provider decisions.” The filing suggests a target date of 2016 for transitioning support from legacy to IP networks and that the new fund should have separate components to pay for deployment and operations.

The broadband deployment fund should be “technologically neutral,” the group said, acknowledging wireless concerns. The FCC should “gather and rely upon all available data, including from the states and localities, as well as from network providers of all technologies, to size and target these monies appropriately to unserved areas and ensure efficient broadband build-out is attained,” the filing said. The operations fund would take over after deployment. “Rather than simply assume any network provider requires assistance based upon geography or history, the FCC should require applicants to make a showing of need, including by assessing all current and foreseeable revenues,” the group argues. “The FCC should also establish performance objectives to ensure accountability and efficient use of funding.” The filing suggests that the FCC could mandate the same kinds of requirements imposed on recipients of NTIA Broadband Technology Opportunities Program grants, “including routine independent audit requirements."

"This is an open process,” said David Fish, spokesman for the group that offered the USTelecom-brokered proposal. “The FCC asked stakeholders for their input. We offered a solid and constructive plan that enjoys a broad base of support and will expand broadband to people in high-cost areas. Obviously, the FCC will review a variety of options. We look forward to working with everyone as this process moves forward."

"This appears to be an effort to shift the conversation away from the carrier proposal and back to a more broadband centered approach,” said Public Knowledge Legal Director Harold Feld. “The points raised in here are not new, and have certainly been discussed at length on the record. I would read this as an effort to provide a foundation for an end game that does not simply tweak the plan negotiated by [USTelecom]. What this means is that the commission has before it not one possibility to which parties can respond, but two.” Feld said with the filing two proposals have emerged, one by what he calls the “USTA 6” and a second by this new “Gang of 5.” “Uncommitted stakeholders can now align themselves either with the Carrier 6 or the Gang of 5, or can urge the commission to find a compromise between the approaches,” he said. “It will be interesting to see in the next week or so how stakeholders line up between these choices."

Free State Foundation President Randolph May said, “In theory, I agree with the thrust of the Google proposal to end the legacy USF support swiftly. Indeed, I've suggested that the FCC should subject any new support for broadband to a ’sunset’ review in ten years to avoid simply establishing a new entitlement in perpetuity ... That said, the [carrier] plan contains a number of positive market-oriented elements, such as a cap on the size of the fund and targeting support to unserved areas, that should form at least the very minimum level of reform. More would be better, including a quicker phase-out of legacy support for narrowband.”