Wireless Carriers Hope FCC Will Agree to Significantly Expanded Mobility Fund
Wireless carrier officials say they see some willingness on the FCC’s part to make changes to the final Universal Service Fund/intercarrier comp order to address wireless concerns. Numerous small and mid-sized carriers have been at the commission in recent days to make clear their concerns. One discussion point has been the size of the fund, industry officials said. A second has been putting in place rules that would guarantee a dedicated fund for wireless buildout.
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FCC staffers have also asked questions about whittling down some elements of the right-of-first-refusal, telecom officials said Thursday. Staffers have asked, specifically, about whether to base first refusal rights on wire centers in ultra-high-cost areas, the official said. The ABC plan gives first refusal rights to incumbent-based wire centers, which some have said is akin to giving someone a donut for having invested in its hole.
The ABC plan proposed $300 million to pay for wireless buildout and to reduce the high cost of satellite service in areas where putting in a network expansion proves difficult. But under the ABC proposal, the Mobility Fund could be much lower than that amount in a given year if other costs rise.
FCC officials have not made a concrete offer this early before the Oct. 27 meeting, industry officials said, though there were some indications that the FCC might be open to a fund as high as $500 million.
"I think they're trying to find a number that a lot of people are comfortable with,” said a wireless carrier official. The FCC is making the case that small carriers will pay less in intercarrier comp costs under the plan, partially offsetting loses in USF dollars, the official said. But carrier calculations show that these savings would fall far below lost USF revenues, the official contended.
A second wireless industry official said the size of the Mobility Fund is definitely in play. “I am hearing it has moved up from $300 million,” the lawyer said. “Of course, it’s still fluid."
The Rural Cellular Association recently proposed an $800 million fund. “A $300 million, or even a $500 million, wireless fund would dramatically undervalue the ability of wireless providers to deliver broadband service to high-cost, rural communities,” the group said (http://xrl.us/bmercx). “USF reform is like a puzzle,” said RCA President Steve Berry. “Chairman [Julius] Genachowski cannot and should not claim victory until all the pieces are in place. It appears, however, that the chairman’s office is getting the message that wireless is the consumer-preferred technology."
"The ABC Plan sets aside $300 million annually specifically to support mobile services,” said USTelecom Senior Vice President Jonathan Banks. “In addition, at least $440 million, and potentially significantly more, would be available for competitive bidding in which wireless carriers could participate and potentially win. To efficiently target funding and to minimize the burdens on consumers who pay for universal service, the ABC Plan targets broadband support to only high-cost areas in which there is no private business case to provide service. Funding for wireless providers should be governed by a similar rule."
U.S. Cellular was expected to file a letter in which it compared the first refusal proposal to the scrapped identical support rule, a telecom lawyer told us. The ABC plan bases its costs on a wireline model but doesn’t require recipients to deploy wireline for broadband, U.S. Cellular was likely to argue, the lawyer said.
Other industry voices appeared willing to compromise. Cable companies, for instance, had been the most vocal in their criticism of the ABC plan, but Time Warner Cable and Cox each said they would be willing to accept the plan’s transition to interstate rates (CD Sept 29 p13).
Arkansas Gov. Mike Beebe opposes any provision in the USF revamp proposals that would preempt states’ authority to promote the deployment and adoption of broadband and other advanced services in rural areas, he said in a letter to the FCC. States play a vital role in consumer protection, designating eligible telecom carriers and setting intrastate rates, he said. The FCC lacks the legal authority to preempt states on intrastate access and reciprocal compensation, NASUCA said. Additionally, elimination of public interest obligations in areas like COLR and ETC designation would “spell the end of Universal Service,” the consumer advocate group said. It claimed there’s no industry consensus in support of the ABC plan and its proposed access charge regime. Rather, it’s a consensus of the largest ILECs and some rural ILECs, it said.
Under the ABC plan, all VoIP traffic would be deemed interstate, hurting state revenue used to fund USF and state regulation generally, NASUCA said. The group also argued that broadband hasn’t been found to be a supportable service under the 1996 Telecom Act. Broadband must be found to be eligible for USF prior to adopting such support, NASUCA said. Under the ABC plan, broadband would be funded with no access or interconnection obligations, the group said.