The FCC’s proposed net neutrality rules are “in big legal trouble” in the wake of the recent decision by the U.S. Court of Appeals for the D.C. Circuit in Comcast v. FCC, Commissioner Robert McDowell told reporters Friday. “The concept of a new regulatory regime is in real trouble.” McDowell is skeptical the commission should get more involved in the retransmission consent process, thinks TV spectrum reallocation won’t be held up by Comcast and hopes the regulator deals with an indecency complaint backlog, he said.
FCC Commissioner Mignon Clyburn hasn’t decided whether broadband should be reclassified under Title II, she said in an interview on C-SPAN’s The Communicators. She said she’s passionate about open networks, making sure consumers know what they are getting and other goals listed in the National Broadband Plan, but how the commission will accomplish them hasn’t been decided. “We are still in negotiations with the American public and companies we regulate” on how to move forward, Clyburn said. Public-safety network interoperability and a Universal Service Fund overhaul are among her major goals as the commission tries to carry out the plan, she said. On USF, the commission will work within the “existing financial framework” and won’t “cause the contribution factor to go up,” Clyburn said. “There is a probability of shifting in terms of the factors, especially as it relates to rural carriers, and those are the types of conversations we must have. Rural carriers, in particular, are concerned about the migration from land line support to this new kind of infrastructure or this new system we're putting forth. Those are the types of details we are going to have to work out.” Moving from the Public Service Commission of South Carolina was a culture shock because at the FCC there’s less interaction with the people involved, she said. The FCC filing process is exact and it’s a little “cold” compared to the evidentiary hearings at the state commission, Clyburn said. At first, she said, she sometimes felt like she was on a “big eighth floor island.”
In a surprise, CenturyLink agreed to buy Qwest in a $22.4 billion deal, including a $10.6 billion all-stock transaction and $11.8 billion debt, the companies said Thursday. The deal is expected to close in the first half of 2011. It’s likely to be approved by regulators within a year with attached conditions, such as an obligation to expand broadband access or to provide it at certain prices, analysts said.
The FCC issued a notice of inquiry and a notice of proposed rulemaking for a Universal Service Fund overhaul. The action at the commission meeting Wednesday jump starts the switch from the high-cost fund to the Connect America fund, said Wireline Bureau Deputy Chief Carol Mattey. The commission will seek comment on an analytical framework and cost model aimed at containing the cost of USF and identifying the places with the greatest need, said Amy Bender, a Wireline Bureau deputy division chief. “A model that identifies efficient levels of support could be an important tool even if the commission ultimately adopts market-based mechanisms to identify supported entities and support levels,” she said.
The FCC won’t undertake Universal Service Fund reform specifically for the non-rural high cost support mechanism, it said in an order. The commission decided it has met its statutory obligation to provide sufficient support, it said late Friday. The FCC also found that “rural rates are reasonably comparable to urban rates if they fall within a reasonable range of the national average urban rate. … The current non-rural high-cost support mechanism comports with requirements of Section 254” in the Communications Act.
The American Public Communications Council said the FCC should act with care on a seemingly “innocuous” request by Virgin Mobile to be allowed to sign customers up for the federal Lifeline program online or through automated voice response, without talking to a sales representative for the prepaid mobile provider. The District of Columbia’s Public Service Commission expressed similar concerns about risks of Universal Service Fund fraud. Comments on the petition were due at the FCC last week.
Universal Service Fund “reform” should focus on consumers and “reflect market reality,” CTIA said in a presentation to Priya Aiyar, aide to Chairman Julius Genachowski. “USF should focus on the services that consumers demand, namely mobility and broadband,” CTIA said, in an ex parte letter, saying there now are 285 million wireless subscribers and contributions make up 43 percent of the total USF contribution base. “Reform should avoid marketplace distortions; encourage efficiency; minimize administrative complexity; and require accountability."
All eyes are on Chairman Julius Genachowski on one of the first controversial orders before the FCC since he became chairman: A proposal to reclassify broadband under Title II of the Communications Act in the aftermath of the Comcast v. FCC decision. He faced repeated questions Wednesday, at a Senate Commerce hearing on the National Broadband Plan, about his position on whether the commission needs to reclassify broadband Wednesday. But he offered little beyond what he has said since the decision came down last week. (See related report in this issue).
The schedule for implementing the National Broadband Plan recommendations “is no surprise, either in timing or scope,” Dow Lohnes said in a memo. The most important wireless proceeding this year likely will be that addressing the shifting of some TV spectrum to use for wireless broadband. With more than 20 items, the Universal Service Fund items are the most ambitious parts of the agenda, they said. The entire agenda “is noteworthy for the way the FCC distinguishes between decisions it intends to make and proceedings it intends to open,” it said. The spectrum timetable is the most ambitious and committed, Stifel Nicolaus said in research note. Auctions will begin in 2011, and broadcast spectrum is targeted for auction in 2013. After the Comcast court ruling “challenging the FCC’s broadband jurisdiction, it’s good to push ahead with action where it has clear authority,” the firm said. The commission plans to complete USF rulemakings in 2011, but there is no timetable for orders, “which may reflect some increased uncertainty after the broadband court ruling,” they said. A special access rulemaking this fall could create some risks for the Bells and “opportunities for competitive local exchange carriers and wireless,” Stifel Nicolaus said.
The FCC Thursday put forward a list of 64 items for FCC action, along with time lines. The list includes most of what was recommended by the National Broadband Plan, released last month. The FCC had a similar list of items to work from when it implemented the 1996 Telecom Act, said a former FCC official. Eighth floor advisers were briefed on the plan Wednesday.