Not All On Board to End ETC Regulations for USF Broadband

Others don't rule out the possibility the FCC could open a proceeding to forbear from the ETC rule stemming from the Telecom Act that now applies to winning bidders receiving federal dollars from RDOF or the Connect America Fund. Those providers need state OKs to be ETCs. The FCC declined to comment.

"We'd hope the FCC or Congress would move quickly" enough to remove a barrier that some see to RDOF participation, said NCTA Executive Vice President James Assey. Changing the ETC rule would serve consumers because USF would reach more people with more RDOF bidders, he said.

ETC requirements are "in the statute," said USTelecom Senior Vice President-Policy and Advocacy Patrick Halley. To the extent it's handled, it would have to be done by Congress, he said.

"You can always have a proceeding" at the FCC, said NTCA Senior Vice President-Industry Affairs and Business Development Mike Romano, "but it's not clear what the justification is. You don't have to get an ETC designation until you win, so it's not a barrier to participation." If the agency does open a proceeding, it could seek comment on how big the burden is and how much it costs to get and maintain ETC status, Romano said: "What is the burden proportionate to benefits received, which can be millions of dollars?" The FCC would have to examine what authority it has to forbear, Romano said.

Free State Foundation Senior Fellow Andrew Long said it isn't clear whether the agency has authority to forbear, though he would favor such a proceeding. However, "such a proceeding could lead to litigation and delays," he said: "We haven't seen any indication the FCC is anxious" to address this.

The window for short-form applications for RDOF auction 904 opened Wednesday and closes 6 p.m. EDT July 15, said a public notice Wednesday in docket 20-34. With short-form RDOF applications due so soon and auctions in October, some question whether action could come in time to influence participation. It's unlikely any proceeding could conclude by the time Phase I RDOF applications are due, said Long. It's not too late for Congress to act, said telecom consultant Carol Mattey. Bidders must be designated ETCs within six months of being named winners, not during the auction, she said.

Rep. G.K. Butterfield, D-N.C., filed the Expanding Opportunities for Broadband Deployment Act on June 11 to repeal ETC requirements (see 2006110063). A week later, Commissioner Mike O'Rielly blogged that ETC requirements place a regulatory burden on ISPs that could prevent them from competing in reverse auctions (see 2006180063). O'Rielly argued Congress is best positioned to address the issue. His office told us Tuesday it’s premature to say whether an FCC proceeding on forbearance would be needed in the absence of legislation, but noted the blog included it as an option.

States Upset

NCTA and the Wireless ISP Association back the Butterfield bill. States aren't on board.

"WISPA agrees with the general principle that Commissioner Mike O'Rielly offered, which is that removing the ETC requirement would improve competition in USF auctions," said Vice President-Policy Louis Peraertz.

USTelecom appreciates "the desire to revisit participating in USF programs and understands ETCs are a barrier to participation," said Halley. If Congress revisits the Act and removes ETC requirements for new participants in USF programs, "it should remove those requirements for all participants," including incumbents, he said. "We think there's absolutely merit in Congress taking a close look at ETC requirements from 1996, but it should be done holistically."

Tuesday, NARUC asked Senate Commerce Chairman Roger Wicker, R-Miss., and ranking member Maria Cantwell, D-Wash., to not remove state oversight of ISPs in federal USF programs. It asked the letter be added to the record for the June 24 FCC oversight hearing.

Removing ETC requirements is "not only an awful idea, it's an anti-consumer idea," NARUC President Brandon Presley told us. He said the regulatory change would promote waste, fraud and abuse "by taking cops off the beat." States that provide ETC designations "are closer to the people" than the FCC, Presley said, and can be more responsive to consumer complaints. If Congress considers removing the requirements, Presley said, "it would be the top No. 1 priority of NARUC to push back."

"We're not living in a voice world anymore," said NCTA's Assey. ETC regulations deter otherwise qualified ISPs from participating in federal USF broadband programs, he said: Other federal and state broadband subsidy programs don't have such requirements. Seeking ETC designation can be complicated because a larger company would have to file in multiple jurisdictions, he said.

Those concerns "ring hollow," said NTCA's Romano. "We haven't seen any cost-benefit analysis." It's "a solution in need of a problem," he said. States' role in high-cost broadband programs "is still really important," Romano said: They "can see where the network is being built and where it's not."

If the FCC removes state-run ETC designations, WTA Senior Vice President-Government and Industry Affairs Derrick Owens would want to see future USF auctions preserve voice-only options. "There's a lot of communities where my members serve with seniors who don't want broadband or are happy with DSL to check email," he said. "A voice offering needs to be part of the picture."