FCC Rate-of-Return Rural USF Overhaul Order Could Be Adopted Soon
The FCC appears poised to overhaul rural telco USF subsidies in coming days, given commissioner public statements and agency voting procedures confirmed by two staffers. Chairman Tom Wheeler said recently at a Senate hearing there are three votes -- a majority -- for a draft order that would revamp rate-of-return carrier high-cost USF support mechanisms for the broadband era. Under internal FCC rules, the remaining two commissioners have until Wednesday -- 12 days after March 4, which was three weeks after the draft circulated -- to vote on the item, though either one could obtain a one-week extension until March 23, an agency spokesman and an official told us Friday.
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Wheeler has touted the draft order as a bipartisan collaboration with Commissioners Mignon Clyburn and Mike O’Rielly, including in a blog post outlining the proposed changes (see 1602190056). Those three are widely believed to be the three commissioners who have voted for the draft, and O’Rielly recently spoke favorably of the item and indicated he had voted on it. There were still only three votes on the item as of Friday afternoon, the agency official told us. The offices of Commissioners Jessica Rosenworcel and Ajit Pai had no comment.
The draft would give rate-of-return telcos the option of receiving broadband-oriented support over 10 years based on a cost model, or of receiving funding from revised legacy mechanisms, which for the first time would support stand-alone broadband service -- a key driver of the reform effort. It would also institute new broadband obligations and spending controls in exchange for the support.
Some parties have sought to revise the draft, but so far no changes appear to have been made, said the agency official and several other participants in the proceeding. With three commissioners already voting for the draft, it's hard to obtain changes, some said. “There’s no leverage to get anything else,” said one knowledgeable source Friday. “There are not a lot of issues spinning,” said NTCA Senior Vice President Mike Romano Thursday. “We’re in a bit of a holding pattern, waiting for the voting process to run its course.” Others said some modifications are still possible.
Rosenworcel has sought to include Alaska-specific provisions in the draft (see 1602190056). At the recent hearing, Sen. Dan Sullivan, R-Alaska, voiced concern that the draft didn’t include an “Alaska Plan” developed by rate-of-return carriers aimed at boosting broadband deployment in that vast state (see 1602250025). Under prodding from Sullivan, Wheeler and all four other commissioners agreed to act on the Alaska rate-of-return issues in Q2, but Rosenworcel added, “I’ve actually asked for the Alaska issues to be addressed right now, recognizing there’s rural and there’s rural Alaska, which are two different things.” (Wheeler also suggested he would pair the Alaskan rate-of-return action with Alaskan price-cap action in Q2.)
“We’ve been supportive of the Alaska Plan, but it’s our understanding that’s not going to be addressed until the second quarter,” said Derrick Owens, WTA vice president-government affairs. Christine O’Connor, executive director of the Alaska Telephone Association, which proposed the Alaska Plan, said the apparent Q2 timetable for action on the Alaskan issues would be “OK since that timing should align with the full reform anyway” and the extra time would allow the details to be fine-tuned. She doesn't expect any “fatal changes to our proposal.”
Native American groups sought to include a “tribal broadband factor” in the draft order. But the National Tribal Telecommunications Association and Gila River Telecommunications said recently in a filing that they understood the FCC plans to seek comment on the TBF in a Further NPRM. The groups expressed concern that NTTA members and other carriers serving tribal lands could suffer significant funding cuts under the draft and have asked the commission to act in the pending order to address the problem: first by waiving “application of any capex and opex limits” to carriers that serve only tribal lands, and second by committing to complete action on the FNPRM no later than the effective date of the broader USF overhaul, possibly in July.
Romano said NTCA didn’t get everything it wanted, but believes the draft, at least as outlined, is “a much more workable outcome” than some proposals that had been floated. “The key was to try to restore some level of certainty by getting the rules right for some time to come and getting a stand-alone broadband fix," he said.
The association remains anxious about the order's details and recently discussed potential capital expense limits with FCC officials, said Romano. “We want to make sure it gets done right.” NTCA believes carriers should have access to a streamlined waiver from a “component” of the capex limits the commission is considering, given industry variations, he said. “We’re holding our breath that things will read the right way when the order comes out," he said. “It is still too early to grade this thing. It could be anywhere on the spectrum. It all comes down to what the printed word on the page says.”