Frontier Seeks Interim FCC Voice Support in CAF Auction Order; Cable Opposed
Frontier Communications urged the FCC to include interim voice support in a pending draft order on a Connect America Fund Phase II reverse auction of broadband-oriented subsidies for areas served by price-cap incumbent telcos. Frontier and other ILECs say the support is needed to maintain voice service in extremely costly but currently unsubsidized remote areas that won't receive broadband/voice support through CAF II auction winners for some time. The FCC is tentatively scheduled to vote on a CAF II auction framework order at its May 25 meeting, which is expected to be followed by further proceedings to finalize the auction (see 1605050036). The cable industry's main trade group opposed the Frontier proposal.
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Frontier pushed its initiative in a flurry of meetings Friday with FCC officials, including Commissioner Ajit Pai and an aide, aides to Chairman Tom Wheeler and Commissioners Mike O'Rielly and Jessica Rosenworcel, and Wireline Bureau Chief Matt DelNero and other bureau staffers. "Frontier’s representatives discussed its proposal for interim support to ensure continuity of voice service to extremely high-cost locations in the territories of price cap carriers that accepted the offers of model-based support," said a Frontier filing Tuesday in docket 10-90 on the discussions. Incumbent telcos in August accepted $1.5 billion in initial CAF Phase II broadband/voice support for high-cost areas in many states, but it didn't cover extremely high-cost areas (see 1508270068).
"Frontier explained that the current lack of support places customers in these areas at risk for unnecessary loss of voice service during extreme weather events and urged the Commission to implement an interim voice maintenance support mechanism as it adopts the reverse auction framework for the next phase of the CAF," the filing said. Frontier Executive Vice President Kathleen Abernathy, a former FCC commissioner, was among the company representatives in the discussions. An FCC spokesman and other commission officials didn't comment Wednesday.
USTelecom, the main ILEC trade group, backed Frontier. "It’s a continuing challenge to deliver voice service in these extremely high-cost areas, and consistent with the commission’s policy of pairing support to obligations, we think this has to be dealt with sooner rather than later,” Senior Vice President Jon Banks told us. "We’re hopeful the commission will deal with it in the auction order.” A draft FCC order circulated by Wheeler on a USTelecom forbearance petition would have given price-cap ILECs some voice support, but the funding was removed from the final order adopted in December, with Commissioner Mignon Clyburn saying it was outside the "four corners" of the petition (see 1512170052).
AT&T, CenturyLink, Frontier, Verizon, Windstream and USTelecom renewed efforts in January to obtain voice subsidies in remote areas where traditional USF support was cut off but their phone service obligations continue during the transition to the CAF mechanisms, which fund broadband networks that provide voice service (see 1601220046). They called the voice obligation an unfunded mandate. CenturyLink and Frontier in February filed a proposal for $176 million in interim USF support for the remote areas (see 1602240033). NCTA filed in opposition (see 1603140053), but the CEOs of the two ILECs were joined by the FairPoint Communications CEO in an April letter to the FCC seeking interim voice support (see 1604060044).
NCTA remained unmoved Wednesday. “We stand by our position that there is no basis for granting the requested interim support," the cable group emailed. "These are areas where telcos face no competition and where they are not spending any money on new broadband construction. They have provided no evidence that the actual cost of maintaining their existing voice facilities in these areas exceeds the revenue they generate from those facilities, let alone that there is a $176 million annual shortfall that should be paid for by American consumers.”