The Arizona Corporation Commission applauded a state budget agreement that includes $3 million for broadband expansion to rural schools. The legislature and Gov. Doug Ducey (R) agreed to the plan; debate and votes are planned for Thursday, the ACC said in a Wednesday news release. The agreement follows the commission's adoption of an $8 million state broadband fund for rural schools (see 1703140055). The $8 million in state USF funding plus the budget’s $3 million makes the state eligible for federal matches of more than $100 million for broadband through federal E-rate Category One, the commission said. “The commitment of funds in the Legislature’s budget and in the AUSF creates a huge win for our state and our students,” said Chairman Tom Forese. Commissioner Andy Tobin said the broadband investment will bring greater “parity between our urban and rural areas.”
The USF contribution factor could spike in Q3 from 17.4 percent to 19.6 percent or more of carriers' U.S. interstate and international (long-distance) telecom end-user revenue, said industry consultant Billy Jack Gregg in his quarterly email update. He cited Universal Service Administrative Co. projections of increased USF demand, particularly for E-rate school and library discounts, as the driver, and said the contribution (or assessment) factor could go even higher if projected industry revenue declines, as it has been trending. A 19.6 percent factor would be "the highest assessment factor ever." The previous high was 18.2 percent in Q1 of 2016, he said Wednesday. Some reacted to us with concern.
Big telecom companies opposed proposals to expand Missouri USF support to broadband-only and high-cost voice services. In comments Monday in docket TW-2017-0078, Verizon said law prohibits the Public Service Commission from using state USF to support broadband. The statute says it’s only for local voice service, and broadband isn’t a telecom service subject to state jurisdiction, Verizon said. Competition is keeping voice service affordable, it said: “There is no justification for imposing higher MoUSF fees on Missourians in order to create a high cost fund when the competitive market is operating as it should.” CenturyLink, Level 3 and the Missouri Cable Telecommunications Association separately opposed both proposals in other comments. AT&T opposed high-cost voice support, commenting that “technology has evolved past the point where supporting traditional voice service makes sense.” The carrier didn’t oppose a state broadband fund, but suggested conditions: “To the extent Missouri seeks to make state-based USF support similarly available for broadband service, the state USF statutory scheme will likely need to be amended to provide the Commission with necessary jurisdiction, recognizing that the FCC has reiterated that broadband internet access is an interstate service.” Participation in the state program should be voluntary and the fund shouldn’t duplicate existing broadband networks or federal support from the FCC Connect America Fund, AT&T said. FairPoint and a group of small Missouri phone companies supported the broadband fund and high-cost voice support. "The FCC has required ETCs [eligible telecom carriers] receiving [federal USF] high-cost support to spend even more money on their networks, while at the same time, the FCC is providing less financial support through FUSF and ICC [intercarrier compensation] to accomplish that mandate,” the small telcos commented: That “created a real need for states like Missouri to consider establishing their own high-cost funds to assist ETCs in continuing to provide state-of-the-art telecommunications services, including Broadband, in rural areas where the cost of doing so is significantly higher than more populous, urban areas.” Most commenters disagreed or didn’t comment on eliminating the state USF, but AT&T said it wouldn’t be opposed if that’s what the PSC wants.
TDS Metrocom and XO Communications asked the FCC to reverse a staff order denying requests to review Universal Service Administrative Co. audit findings on USF contributions, though the staff remanded some issues to USAC (see 1703310042). The companies said the Wireline Bureau erred in determining whether mixed-use private line revenue should be considered "interstate" (and assessed for USF contributions) under a "ten percent rule" that assigns private line revenue as intrastate if 10 percent or less of a line's total traffic is interstate. TDS, which combined with US Link, one of the original parties, said the order made errors. "It applies the ten percent rule in violation of Commission precedent; it is based on mistakes in fact that presume all intrastate private lines are mixed use and connected to the Internet; and it violates the Administrative Procedures Act [sic] by substituting new law for old -- applying the ten percent separations rule to CLECs and adopting a new burden of proof and production -- without notice and comment," said the company's application for review posted Tuesday in docket 96-45. TDS said the FCC should reverse the order, apply it only prospectively or give the company a waiver on a 2010 audit. In its application seeking reversal, XO made similar arguments: "The Bureau misinterpreted the Commission’s orders involving the jurisdictional classification of private line revenues and, like USAC, essentially requires [XO] to prove that a circuit is not interstate. Commission history and the purpose of the Ten Percent Rule, however, demonstrate that so-called 'mixed use' private line services are to be treated as intrastate communications if, as in the case of [XO], the circuits are physically intrastate and are configured by the provider as closed networks and there is no affirmative evidence that any of the traffic is interstate."
Rep. Kevin Cramer, R-N.D., led a USF-focused letter expected in March, circulating at the NTCA meeting then (see 1703270047) and being sent to the FCC Tuesday. Ultimately, 101 other House lawmakers from both parties signed. The lawmakers are “highlighting how an insufficient USF High Cost budget undermines the statutory mission of universal service and the broadband availability and affordability goals of the USF reforms adopted by the FCC last year,” NTCA CEO Shirley Bloomfield said. Cramer posted the letter with the signatures. The missive is endorsed by the House Rural Broadband Caucus co-chairs, Cramer’s office said.
CenturyLink got a tentative greenlight for its Level 3 buy from the Washington Utilities and Transportation Commission. UTC telecom staff Friday filed an all-party settlement in docket UT-170042 to approve the $34 billion deal, the commission said in a Friday news release. Staff, Level 3, CenturyLink and the state attorney general’s public counsel signed the settlement. It includes commitments by CenturyLink to (1) file an annual report for three years showing spending on network maintenance, with explanation if the amount spent per access line is less than 2014-2016; (2) notify the UTC about major outages within 30 minutes, until 2021, and copy the UTC on Network Outage Reporting System reports about the state that it files with the FCC; (3) file annual reports on federal USF support from July this year to 2021; (4) file Communications Act Section 251 interconnection agreements between CenturyLink subsidiaries and Level 3 subsidiaries; (5) issue a news release about transaction closing and notify customers if the company’s name changes; and (6) assign a dedicated project manager to work on the transition to Next-Generation 911. The UTC will formally present the settlement May 25 to the parties, which then will accept, reject or modify the agreement, the commission said. “We are pleased to have reached a settlement in Washington in the case regarding the acquisition of Level 3," a CenturyLink spokeswoman emailed Monday. "This is an important milestone as we make progress toward the completion."
A draft item that would review nearly all of the FCC’s media regulations is hugely broad and likely will loop in controversial topics such as retransmission consent alongside narrower procedural rules, broadcast and pay-TV attorneys told us Thursday, after the draft public notice on the review was released. The Modernization of Media Regulation PN is planned for a vote at the commission’s May 18 meeting, as is a draft NPRM on eliminating the main studio rule for TV and radio broadcasters. Though the review item excepts media ownership and accessibility rules from the review, it includes every other media rule, according to the draft PN. Media entities likely will treat the proceeding “like a wish list,” asking the FCC to do away with every rule they don’t like, said Fletcher Heald broadcast attorney Frank Jazzo. FCC Chairman Ajit Pai announced both draft items at NAB 2017 (see 1704250065). Pai also is seeking votes on an open internet NPRM (see 1704270044) and on smaller wireless, wireline and satellite items at the meeting.
Telecom companies urged convening of state USF contribution revamp workshops in Nebraska, even if they delay the Public Service Commission's proposed adoption of a connections-based mechanism (see 1703280032). CenturyLink, Cox Communications and Level 3 sought workshops, in reply comments dated April 21 and posted Wednesday at the PSC (NUSF-100). “It is abundantly clear that more information must be presented before a connections-based mechanism can be safely implemented,” and it’s OK if that causes the PSC to miss a self-imposed Jan. 1 deadline for action, Cox said. "Stabilization of the fund can be achieved in 2018 under the current methodology while a thoughtful, reasonable connections-based methodology is created.” In another reply, CTIA said the PSC shouldn’t adopt USF changes now but instead should urge the Federal-State Joint Board on Universal Service to craft a plan for all states. "Nebraska is not unique in seeing declining revenues for its universal service program,” CTIA said. “Other states are seeing similar trends,” but the Nebraska PSC is alone in proposing "a novel contribution mechanism,” it said. However, a rural independent company -- Great Plains Communications -- replied that the PSC should reject calls for delay. “Any such delay should not occur since the Commission has already amply demonstrated that NUSF contribution reform is an urgent matter due to the continued erosion of the NUSF remittances generated by the current NUSF contribution mechanism.”
Consolidated Communications pledged a minimum level of capital investment in Vermont if the Public Service Board OKs its acquisition of FairPoint Communications. In a filing posted Monday in docket 8881, Consolidated Vice President-Regulatory Michael Shultz agreed to several commitments sought by the state Department of Public Service. For three years, Consolidated will invest at least 10 percent of projected Vermont regulated ILEC revenue in Vermont network improvement annually, and it will share a three-year investment plan after the transaction completes, Shultz said. He also agreed that for three years, Consolidated won't act to reduce the level of USF in Vermont or relinquish ETC designation for Vermont entities. Schultz said the company agreed to maintain all Vermont-related assets and liabilities in a separate subsidiary. The company commits to keeping the experience of wholesale customers the same after the merger, he said. It agrees to work closely with Vermont's consumer affairs division, and to notify the Vermont Board and DPS of Vermont-specific synergies and before any layoffs, he said. But the company won’t agree to conditions sought by labor intervenors that restrict how the company manages its business and staffing, Shultz said. Last week in Maine, Consolidated refused to commit to providing broadband speeds of 25/3 Mbps (see 1704180016).
FCC staff set forth "Tariff Review Plans (TRPs)" used by all incumbent telcos "to support interstate access service tariff revisions filed" this year. "These TRPs reflect implementation of the transitional rate changes and recovery rules adopted" in a 2011 USF and intercarrier-compensation overhaul order, said the Wireline Bureau order in docket 17-65 listed in Tuesday's Daily Digest. "The rate-of-return TRPs also include implementation of the universal service reforms and related tariffing requirements adopted" in a 2016 rate-of-return USF overhaul order, the bureau said. "The completion of the TRPs appended to this document will provide the supporting documentation to fulfill, in part, the requirements contained in sections 61.38, 61.39, 61.41 through 61.49, 51.700 through 51.715, and 51.901 through 51.919 of the Commission’s rules. The TRPs display support data in a consistent manner, thereby facilitating review of the incumbent LEC rate revisions by the Commission and interested parties," it said.