FCC Drafts Consider USF for Territories; 3.5 MHz; Broadcast Filings; DBS Rules

The FCC said some rural LECs "have been taking advantage of inefficiently high access charges allowed under the current intercarrier compensation regime to engage in an arbitrage scheme known as 'access stimulation.'" The LECs may generate many inbound calls, and pass on termination fees to long-distance carriers. The agency said such telecom traffic, stimulated by offers of "free" chat lines and conference calling, can cost interexchange carriers $60 million-$80 million yearly.

Unchecked, access stimulation harms others, the agency said. Excessive call volume can make it harder for other customers to make regular calls. The intercarrier compensation regime was created to protect access to phone service in rural America through implicit subsidies in termination fees from long-distance companies to the smaller LECs, the agency said, but when long-distance carriers face excessive terminating fees, they spread that cost among all their customers. The draft order aims to reduce incentives to stimulate excessive call volume and to change the intercarrier compensation system to a "bill-and-keep" model.

The draft proposes requiring LECs that stimulate the high-volume calls bear the cost for tariffed switching and transport charges associated with delivery of the call traffic from the long-distance carrier to the LEC that stimulates the volume. The agency cited recent comments indicating at least 21 LECs are involved in access stimulation in at least 11 states, especially in Iowa and South Dakota. The FCC proposes redefining access stimulation to include cases where the access-stimulating LEC has no revenue-sharing agreement with a third party if it meets one of two specified traffic triggers. It proposes ways to identify when a LEC is no longer engaged in access stimulation.

USF, 3.5 GHz

Requirements for recipients of $950 million in USF funding to address telecom resilience and restoration in Puerto Rico and the U.S. Virgin Islands following 2017 Hurricanes Maria and Irma are detailed in a draft order (see 1909040028).

The agency doesn't expect to use deployment timelines as a means to score bidders in its USF auction. It would require all winners to complete buildout and service obligations within six years, and interim deployment milestones within the first three years. The regulator expects all carriers would be motivated to build faster so they can collect revenue more quickly. The agency wouldn't subject projects under auction to comment because it would add unnecessary delay, it said, but would review all winning bids.

In Puerto Rico, bids would be accepted for any or all of the 78 municipalities. The agency decided not to allow bids at the census block or more granular geographic area level because it doesn't want to risk leaving some higher cost areas without applicants. Winning bidders would have to agree to offer service to anyone within its winning municipality.

The FCC provided more information Thursday on its proposal for a 3.5 GHz auction, starting June 25 (see 1909040073). The agency would offer seven priority access licenses in each county-based license area. Each PAL would offer a 10 MHz unpaired channel, for a total of 22,631 licenses. Some aspects were controversial, especially license size. Commissioner Jessica Rosenworcel dissented on revised rules in October (see 1810230037).

Proposed bidding procedures are consistent with other recent auctions, said a draft PN. “We propose to limit information available in Auction 105 in order to prevent the identification of bidders placing particular bids until after the bidding has closed.” It proposes a $25 million cap on the total amount of bidding credits that may be awarded to any eligible small business, and a $10 million cap for an eligible rural service provider. “Past auction data suggests that the proposed caps will allow the substantial majority of eligible businesses in the auction to take advantage,” the FCC said.

Also in keeping with past auctions, the draft proposes an ascending clock auction design “in which bidders indicate their demands for generic license blocks in specific geographic areas,” the FCC said: The auction “would proceed in a series of rounds, with bidding being conducted simultaneously for all spectrum blocks in all counties available in the auction.” A bidder could opt to target four 10 MHz licenses in any one market.

The commission asks whether it should allow bidders to target cellular market area licenses, bidding for blocks in all the counties “comprising certain large CMAs.” The agency would limit the practice to the 172 CMAs that are classified as metropolitan statistical areas “that incorporate multiple counties.”

DBS, Broadcasting

Despite pushes to use its DBS proceeding to loosen restrictions on multichannel video distribution and data services (MVDDS) in the 12.2-12.7 GHz band and make 500 MHz available for 5G (see 1903270006), the draft DBS order opts not to.

The draft lifts the 14-year-old freeze on new DBS systems, adopts a first-come, first-served application process and expands the same streamlined milestone and bond provisions that cover geostationary orbit fixed satellite service to DBS. The draft extends the DBS satellite license term from 10 years to 15 and gives DBS the option of a two-step FCC/ITU license application process. The agency said the MVDDS 5G Coalition's 2016 pending petition addresses the 12 GHz band item (see 1604260068).

The draft FNPRM on broadcaster notices tentatively proposes to replace requirements that broadcasters publish notices of FCC applications in local newspapers with online notices (see 1909030057). "Placing the written notice in the newspaper is costly to the applicant, appears in the newspaper only intermittently, and at best provides the reader with an abridged version of the filed application,” the draft said. The online notices would be published on station websites or other publicly available websites, stay up for 30 days, and link directly to application documents in station online public files, the FNPRM proposes. The item proposes streamlining on-air notices to also refer viewers and listeners to the online public file.

Though similar proposals were offered in a previous NPRM, the draft item says more focus is sought this time on the specific sections of rules involved. The PN rule for broadcasters “has become increasingly complex, creating compliance difficulties,” the draft said. “Comments received to date generally lack specificity about many other aspects of section 73.3580, thus prompting us to seek further comment.”

NAB and other commenters wanted the broadcaster-generated notices eliminated entirely. The agency lacks the authority, the draft item says. “We tentatively conclude that we are statutorily required to retain some form of local public notice.” The item seeks comment on extending similar notice requirements to hearing designation orders.