‘Integral’ Connect America Fund Details Remain Unclear, Attorneys Say
Long overdue, Phase II of the Connect America Fund has several open questions about its implementation, attorneys told a Federal Communications Bar Association audience Thursday evening. Originally scheduled to be in place by the end of 2012, the second phase will provide five years of USF support to price cap carriers in return for a statewide commitment to build out networks that can provide voice and broadband service. But many questions are still up in the air, panelists said, from how the cost model will work to what approach the competitive bidding process will take.
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Thursday’s FCC meeting had a status update about implementation of USF reforms (CD Nov 15 p4), but that update made no mention of CAF auction progress, said Genny Morelli, president of the Independent Telephone and Telecommunications Alliance. On one hand, that’s not surprising because the topic hasn’t generated a lot of advocacy, she said. Not since USTelecom visited the agency in late August has anyone spoken to the commission about the auction process, according to Morelli’s review of the docket. “On the other hand, it’s integral to full implementation of CAF Phase II for price cap carriers,” she said. “You have to settle how the auction process will run, and there are so many open issues.”
Open issues include such basics as how the auction will be designed and conducted, Morelli said. “You need to know what you're getting into, as a price cap carrier, if you decide to decline statewide support.” If price cap carriers decline, the support will be awarded on a competitive bidding basis. Other issues include whether to aggregate census blocks using census tracts or a bidder-designed approach that sets the minimum aggregation of census blocks; whether to allow package bidding; and if so, whether the FCC should predetermine the packages bidders can bid on, she said.
An October Wireline Bureau order clarified some Phase II details, such as minimum speed thresholds and data caps, but several more details are unknown, said Eric Einhorn, senior vice president-government affairs for Windstream. Benchmark rates haven’t been set, he said, nor have various cost model inputs. There have also been a number of proposals by providers operating in insular and noncontiguous areas about how the FCC should account for that. “We all agree that the model the commission started with … wasn’t really tailored for those areas, but there are lots of disputes about what that should mean,” Einhorn said.
What happens to places where a price cap carrier doesn’t elect the statewide commitment, and no one bids, Einhorn asked. Will there be competitive bidding at the end of a five-year commitment, and how would that work? “It can almost make your head spin,” he said. No one knows when the auction will occur, he said. The FCC still needs a “substantial chunk of time” to run the cost model, come up with the results, and deal with the challenge process before the auction can proceed. It’s “theoretically possible” it could happen in the middle of 2014, he said. “Maybe if we're lucky.”
At the FCC meeting, Republican Commissioner Michael O'Rielly questioned Wireline Bureau Chief Julie Veach about the status of the Remote Areas Fund. The fund is intended to provide at least $100 million annually to supply terrestrial broadband in the most remote areas of the country. “We believe that the solutions for those locations need to be decided in conjunction with the rest of the Phase II decisions, which we are working very hard to present for the commission’s consideration” in 2014, Veach responded.