RCA Still Has Major Concerns About USF Order After Text Released
The Rural Cellular Association panned the FCC universal service overhaul (CD Nov 19 Bulletin). “I appreciate the FCC’s work to modernize USF, but unfortunately the Order confirms our previous concerns that wireless services are significantly underfunded,” RCA President Steve Berry said. “Adequately funding wireless services would have encouraged competitive carriers to participate -- needless to say, this was a missed opportunity for the FCC to promote industry competition and the build-out of advanced high-speed mobile services."
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The association would not commit to suing over the order. “We are reserving all our options and will make a decision based on the impact of the Order,” a spokeswoman said. But RCA was the first group to condemn the order publicly. Many telecom observers expect RCA to be among the first to appeal the order because the group is already locked into litigation over a preliminary order that kept relinquished Universal Service Fund cash from being redistributed amongst carriers (CD Nov 16 p2).
The group’s members are likely to suffer heavily from the elimination of the identical support rule. FCC staff and Chairman Julius Genachowski have trumpeted the USF order for creating a $500 million mobility fund that they say commits the agency to recognizing the vital role of wireless broadband. But that’s likely to be cold comfort to many rural wireless carriers. U.S. Cellular alone received nearly $128 million in support in the first three quarters of 2011, data kept by the Universal Service Administrative Co. showed.
In Q2, RCA member companies accounted for at least $114 million in USF cash, USAC’s data showed (http://xrl.us/bmi7pe). RCA member U.S. Cellular took in nearly half of that, but other, smaller wireless carriers also took in millions, records show: GCI Communications received more than $11.9 million, Nex-Tech Wireless was given more than $7.4 million, Pioneer was given more than $5.4 million and Bluegrass Cellular more than $4.8 million in the second quarter. Sprint Nextel, an affiliate member of RCA, and its subsidiaries, took in nearly $16 million in Q2.
If RCA does appeal the order, it will likely argue that it violates the Telecom Act because Section 254 requires USF support for telecom services, telecom industry officials said. Broadband is not formally classified as a telecom service, so RCA will probably argue that requiring broadband buildout for universal service cash is a kind of unfunded mandate, a telecom lawyer said.
Despite the FCC’s diplomacy with state regulators, most telecom observers expect a challenge over preemption. Vermont and Maine have already unsuccessfully challenged the FCC after the commission refused to increase USF support for rural carriers (CD Nov 21 p14). Pennsylvania is also a likely appellant, a state regulator said.
The rest of the telecom world was still reviewing the lengthy order. “Time will tell whether ... support amounts are sufficient to promote and sustain mobile voice and broadband networks in high-cost rural areas,” said Carri Bennet, general counsel to the Rural Telecom Group. “RTG will work with the FCC’s Wireless Bureau to ensure that such limited support is efficiently targeted to genuine high-cost areas and is used to provision mobile voice and broadband services rather than to pad corporate bottom lines."
Industry lawyers, who read the order over the weekend, saw few surprises, they said. Several told us at an FCBA luncheon Monday the FCC had done a good enough job of explaining the main aspects of the order after it was approved, and they learned relatively little by closely examining the text.
"We are just disappointed [by] the point at which we've arrived, where the wireless industry and the rural consumers who depend upon wireless services have been shortchanged in a process that has appropriated high cost USF support to fix the crippled intercarrier compensation system,” said a lawyer who represents a small wireless carrier. A second wireless lawyer said he saw few surprises as he read through the massive order. “Honestly, it’s a huge order and there’s so much going on that some subjects are treated rather summarily ... and will probably require working with the staff to understand fully what they have done,” he said.