USF Lobbying Intensifies as Deadline for Order Draws Near

Some consumer groups and non-wireline telecom companies have voiced concerns over the proposed ABC plan, but opponents are divided among themselves. Cable and rural wireless carriers have objected to proposed rules that would give incumbents rights of first refusal on universal service cash, but those sectors also differ on whether reverse auctions will be useful: Cable companies have pushed for auctions, but rural wireless carriers want a larger carve-out for their segment (CD Sept 30 p1). As a result, one incumbent official predicted the FCC would adopt about 60 percent of the ABC plan.

MF Global analyst Paul Gallant said he thought an order was coming. “Despite the last-minute jockeying and congressional input, I suspect it gets a vote later this month,” he said. “It still appears that the ABC plan is the basic framework, although with some potentially important adjustments around mobile and right of first refusal."

Commission staff is apparently open to whittling down some of the first refusal provisions, telecom lobbyists have told us. But U.S. Cellular said in meetings last week that mere tweaks weren’t enough. “Nothing in the ABC Plan would prevent a price-cap carrier from exercising the [first refusal rights], and then meeting its build out requirements by deploying a mobile broadband network, for example 4G LTE,” U.S. Cellular said in its ex parte notice (http://xrl.us/bmezkx). To U.S. Cellular, this would be like adopting an identical support rule “on steroids.” The ABC plan is “antithetical to the congressional mandate that support is for consumers, not companies,” U.S. Cellular said.

"By setting aside support for price cap ILECs, but allowing them to build mobile broadband networks in direct competition with other unsubsidized carriers who are locked out of the market, the FCC will abrogate its own core principle of competitive neutrality in ways never before imagined,” U.S. Cellular said in its ex parte filing. “This would explain why the price cap carriers included only $300 million per year for a mobility fund in the ABC Plan, since their needs will have been met by the incremental $1.2 billion they seek to have allocated under the plan to themselves.”

U.S. Cellular also handed out results of a poll it commissioned, which the company claimed showed “consumer desire for robust mobile broadband.” Sixty-five percent of the 1,003 respondents said they “strongly agreed” with the statement, “Consumers in rural areas of the country should have the ability to access both landline and wireless broadband communications networks,” U.S. Cellular said. Eighty-two percent of respondents said it would be “inappropriate” to give 5 percent of universal service cash to wireless carriers and the rest to landline companies, according to the poll. Sixty-three percent said a 50-50 split would be appropriate, the poll found.

Public interest opposition to the ABC plan and rural consensus framework has also intensified as the deadline draws near. Free Press met with FCC staff last week and called the incumbent-backed plan “an unprecedented industry giveaway,” according to an ex parte notice (http://xrl.us/bmezng). Analysts have said consumer groups are the biggest threat to the incumbent-backed plans because the plans increase prices, but consumer groups have not yet created the kinds of coalitions that they formed to oppose the AT&T/T-Mobile deal or in favor of strict net neutrality rules (CD Sept 12 p8).

In their lengthy ex parte notice, Free Press executives took aim at the proposed price increases. “The Communications Act is built upon the calling-party-pays principle, and Congress never intended for consumers or USF to bear more than their fair share of the joint and common costs of local telecommunications infrastructure,” Free Press said. “By moving to a uniform, near zero rate, and doing so fully on the backs of consumers, the Commission will run afoul of Section 254(k).”