FCC Democrats Not United on Need for Larger USF Mobility Fund

FCC Chairman Julius Genachowski had yet to circulate a revised version of the order as of late Friday, FCC officials said. Staff working on the order had a key meeting with mid-sized price cap carriers Thursday. Changes based on that and other meetings were apparently still being incorporated into the order scheduled for a vote at Thursday’s commission meeting. Friday was the last day industry representatives could meet with FCC staff, with Sunshine restrictions kicking in at 5 p.m. EDT. FCC officials said there were several meetings on the eighth floor Friday, but not nearly as many as Thursday. The ABC plan proposed dedicating just $300 million per year to the wireless fund.

"I hear conflicting things,” said a wireless carrier official who has been active on the issue. “I have heard that the other two [Democratic] offices are not to a ‘yes’ vote yet, largely out of concern that there’s not enough funding for mobile broadband.”

"It has been an uphill battle for Mobility Fund support from the start,” said Jeff Silva, analyst at Medley Global Advisors. “My sense is the strong push for increasing the size of the Mobility Fund could enlarge the subsidy pool for wireless carriers beyond what was originally contemplated,” he said. “However, I suspect any increase would probably be marginal in nature. Dedicating dollars for the Mobility Fund is complicated in part by efforts to constrain the cost of the overall USF and the essential need -- for financial and political reasons -- to earmark sufficient subsidies and craft meaningful cost recovery mechanism(s) for rural rate-of-return telcos so as to minimize disruption in high-cost areas during the transition to a new regulatory regime.”

CTIA sent the FCC an additional USF letter late in the week, after Wireline Bureau staff released a white paper, a “Summary of Staff Analysis of Areas Where Mobile Service Is Available Only From a Small or Regional Provider Receiving High-Cost Support.” CTIA said the study should not be used to calculate the size of a Mobility Fund (http://xrl.us/bmgpx9). “As this Commission has itself found, there is no tight connection between current support amounts and the amount of support that would be necessary to ensure the deployment of broadband going forward. That is one of the fundamental reasons that reform is necessary,” said the letter from President Steve Largent. “Second, significantly, it entirely ignores areas where no service currently is available. This is a critical part of the broadband deployment challenge and one that the Mobility Fund will be called on to address. This represents a significant omission in the attempt to size a forward-looking Mobility Fund."

The Rural Cellular Association also objected to the study. “I am very disappointed with the Wireline Bureau’s decision to submit their Study less than two days before the FCC’s Sunshine period,” said President Steve Berry. “It is clearly an attempt by FCC staff to salvage a poor, unsubstantiated public policy recommendation that under funds wireless services.” The study “doesn’t offer any meaningful information about areas that would have no service at all without a supported rural wireless provider. Furthermore, it fails to answer the question of whether consumers throughout rural America have access to high-quality services that are reasonably comparable to their urban counterparts."

Commerce Committee member Warner said some USF reform plans “appear to award the vast majority of funding to incumbents with little or no opportunity for competitive broadband providers to participate.” He urged “competitive neutrality,” saying “separate streams of funding for different types of providers further dilutes limited taxpayer funds for broadband deployment.” Funds should be distributed through competitive bidding open to wireless, cable, satellite and other types of companies, Warner said. He objected to giving incumbents a right of first refusal because he said they already have an advantage in the market they serve: “If the Commission creates such a right, it should only be recognized as a credit in the competitive bidding process and should include a commitment to more quickly build out a targeted area."

Warner wants the FCC to tackle VoIP interconnection, he said. “I am concerned that the omission of clear requirements for direct interconnection with facilities-based VoIP over managed networks -- at a time when many existing agreements are due for renegotiation -- will mean that the competitive promise of the 1996 [Telecom] Act will remain unfulfilled,” he said. “Any further delay in clarifying the specific requirement to maintain technology-neutral interconnection and maintaining a role for the States, which have historically played an important role in arbitrating intercarrier interconnection disputes, would be a mistake at this juncture."

NARUC “strongly” agrees with Warner that states should maintain their current role in arbitrating disputes, President Tony Clark and Telecom Committee Chair John Burke said in a joint statement. “We also agree with his request that the [FCC] provide clear requirements for direct interconnection with facilities-based VoIP over managed networks.”