FCC Staff Focusing on Right-of-First-Refusal Proposals, Lobbyists Say
Cable’s lobbying against the right-of-first-refusal sections of the incumbent-backed ABC plan appears to be gaining traction at the FCC, with staff pressing incumbents with concerns about the proposals, telecom officials told us Friday. Wireless and satellite companies have also lashed out at the plan, but cable has been the most aggressive, they said. Cable has stormed Capitol Hill and the commission in the past few weeks with objections to right-of-first-refusal that would let ILECs be the first to be able to refuse USF funds and other parts of the plan (CD Sept 22 p2). “It’s definitely on the radar screen at the commission, as an issue,” a telecom lobbyist said.
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Incumbents have been mystified by cable’s posture, saying publicly that they made what they view as significant concessions to cable interests in the ABC plan. “It shouldn’t be a hard issue for the commission, because the equities are so much in favor of a right-of-first refusal,” a telecom lobbyist said. Incumbents have pointed specifically to the part of the plan that would forbid USF cash from going to areas where unsubsidized competitors are already operating. That goes farther than NCTA’s 2009 reform proposals, the telecom lobbyist said. The right-of-first-refusal has come to dominate meetings between commission staff and incumbent lobbyists, telecom officials said.
The telcos’ reasoning “is laughable,” NCTA spokesman Brian Dietz said. “We have long held that the current bloated system unfairly rewards incumbents in areas where subsidies are not needed, but that has never been our exclusive concern, nor has it been the exclusive concern of consumers who get stuck with the bill for subsidies that are not justified."
If the ABC plan is adopted as-is, more than 80 percent of USF cash would be subject to the right-of-first-refusal, officials said. Incumbents have been adamant that the plan is the best way to build broadband out quickly. In a meeting with FCC staff Friday, the Independent Telephone & Telecommunications Alliance said first refusal “is essential,” according to an ex parte filing (http://xrl.us/bmeacg). It “allows current subscribers to benefit from uninterrupted service” and “provides for the preservation and upgrading of networks that already have been deployed with implicit and explicit subsidies,” the notice said.
Cable has been just as emphatic in its meetings, saying auctions are the best way to get the most broadband to the most people the most efficiently. Cable has been joined by public interest groups, who have their own concerns about the ABC plan. It would be better to create a “competitive, local process” that “could mitigate the need for a ROFR, as carriers with substantial investment in a given area would be well-suited to secure winning bids, and such a process could allow other carriers who are also suited to provision to an area the opportunity to at least compete,” New America Foundation officials told commission staff last week, according to an ex parte notice posted to docket 10-90 (http://xrl.us/bmeaep).
One of the weaknesses of the ABC plan, a telecom lobbyist told us, is that it bases the right-of-first-refusal on wire centers, not just on wire centers in high-cost areas. That has made the plan “very vulnerable to criticism,” the lobbyist said, because it tells incumbents, “you've invested in the hole, so we'll give you the donut.” In meetings, commission staffers have been asking incumbents about their commitments to high-cost areas, not just low-cost areas, the lobbyist said.
The ABC plan did pick up another Congressional endorsement last week in a letter from Rep. Morgan Griffith, R-Va., to FCC Chairman Julius Genachowski. “It is my understanding that the framework provided by these proposals will accelerate deployment in a responsible manner by carefully targeting funding and keeping the USF high-cost within its current bounds,” Griffith wrote. “I would hope that the Commission could take advantage of this unprecedented consensus to move expeditiously, within the timetable you have established, and issue an Order by the end of October.” In November, Griffiths unseated Democrat Rick Boucher, longtime chair of the telecom subcommittee.