Incumbents Battle CLECs on School and Library E-rate Overbuild Rules
Incumbent rural broadband carriers and competitors disagreed in response to a petition from Texas carriers asking the FCC to prohibit the use of E-rate dollars from the USF to overbuild fiber networks for schools and libraries (see 1905230005). In comments posted to docket 13-184 through Tuesday, incumbents said current competitive bidding rules for E-rate funding can favor large, regional providers over local rural carriers and lead to inefficient use of government dollars when they support the builds of redundant broadband networks at the expense of unserved institutions. Those opposing the petition wrote that the proposals could stifle broadband competition, raise prices for rural schools and libraries, and drive up costs to the USF.
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NTCA wants the FCC to initiate a rulemaking as requested by the carriers to develop safeguards in its competitive bidding process to ensure USF E-rate and high-cost programs don't cannibalize each other and waste resources. It asked that existing providers be given an opportunity to respond when a school or library files an application for self-construction so the incumbent could match the price.
Incompas urged the FCC to deny the petition, arguing "the proposal would significantly distort the competitive process, result in higher prices, add significant delay for applicants trying to upgrade their broadband services, and likely compel schools and libraries to select the incumbent provider to receive E-rate funding in a timely fashion." Significant competition in the E-rate program resulted in lower prices and increased bandwidth for program participants, Incompas said. It noted selecting a competitive provider where fiber already exists doesn't always constitute a completely new build: "In some instances, competitors are seeking E-rate funding for last-mile builds that would connect to their broader fiber networks." Such networks could serve price-sensitive E-rate applicants looking for ways to save money.
USTelecom seeks NPRM issuance "expeditiously" to ensure rules are clear going into the 2020 E-rate funding year. It said the petition "does not go far enough in its requested relief" and ignores the plight of providers that are consistently overbuilt with E-rate funding. The association said such overbuilding "changes cost structures for those investing in the networks" and deprives efficient use of government funding that could be used by unserved areas in greater need.
The Consortium for School Networking and the Schools, Health and Libraries Broadband Coalition opposed the petition and said the changes "would serve as a barrier to competition" and could make it appear the FCC was "picking winners and losers by insulating existing providers from competitive market forces." CoSN and SHLB said when incumbent providers are worried about new market entrants, "the answer is for the existing provider to participate in the competitive bidding process and offer a cost-effective solution."
WTA supports the proposals as "narrow and reasonable." It said the changes "would only give high-cost support recipients the opportunity to show that they offer an existing and adequate fiber connection financed via such support to a school before a special construction project can be approved and funded with USF dollars." The incumbent would have 120 days to negotiate in good faith with the school for "reasonable, market-based terms for lease of the fiber," it said. WTA said rural phone companies are sometimes unable to bid on special construction projects when some of the schools involved in a consortium's project are outside the provider's service area, even when they already have provided fiber to some of the schools.
Uniti Fiber opposes the petition because the revamp would delay E-rate funding to eligible schools and libraries. "The requested changes add an additional 180 days when existing incumbents providers could review, challenge, and negotiate following the competitive bidding process," the company said, on top of the full year the competitive bidding and approval process can already take. "Such a lengthy process may not be viable" considering providers with winning bids must complete construction within the funding year, which runs July to June, it said.