A court panel heavily scrutinized an FCC VoIP decision allowing local competitors to collect certain switching charges for routing over-the-top long-distance calls to local phone customers. Two of three judges asked numerous questions and sparred with attorneys -- though in different ways -- in oral argument at the U.S. Court of Appeals for the D.C. Circuit on AT&T v. FCC, No. 15-1059. The session ran well over the scheduled 40 minutes as the judges delved into the technical and legal intricacies of telecom network switching of Internet calls.
The FCC met its USF duties to price-cap telcos even though a few of their high-cost areas aren't subsidized, the government said, responding to carrier court challenges to 2014 and 2015 commission orders denying telco relief requests (see 1607120073). The FCC reasonably required the telcos to continue to provide "interim" voice service without USF support in about 6 percent of their rural census blocks to protect consumers during a complex shift to broadband-oriented subsidy mechanisms, the commission and DOJ said in their brief to the U.S. Court of Appeals for the D.C. Circuit posted Tuesday (AT&T, CenturyLink v. FCC, No. 15-1038 and consolidated cases). The government entities said the arrangements complied with a requirement that qualifying telecom carriers be "eligible" to receive USF support "because nationwide carriers are 'eligible' for and receive, considerable high-cost support," and they can seek support for unsubsidized areas through petitions or a planned Connect America Fund Phase II subsidy auction. The FCC and courts have never found that carriers must receive support in every particular area to be "eligible" for such support, they said, citing the commission's "broad discretion" to balance competing USF principles. Once the CAF II process is fully implemented, carriers "will be supported or receive forbearance in all or nearly all blocks," and the FCC has promised to revisit remaining obligations, they said. For now, carriers are free to prove they need additional support to provide service, "a showing no carrier made here," they said.
Parties disagreed on the adequacy of the scope and pace of broadband deployment under a Telecom Act Section 706 mandate, and on the metrics the FCC should use. Major wireline and wireless telco groups said advanced telecom capability (ATC) is being rolled out to all Americans in a reasonable and timely way, and urged the commission to keep or soften its current ATC criteria. Smaller wireless carriers and consumer advocates said broadband isn't being deployed widely and quickly enough, and urged the commission to raise and expand ATC benchmarks. Comments were posted Tuesday and Wednesday in docket 16-245 in response to a notice of inquiry, which cited ATC and broadband similarities but said not all broadband services provide ATC.
The USF contribution factor for Q4 will decrease from 17.9 percent to 17.4 percent of carrier interstate and international telecom end-user revenue, said industry consultant Billy Jack Gregg in an email update Thursday. Despite a Universal Service Administrative Co. projection that the industry revenue base will fall to its lowest quarterly level ever at $14.2 billion, the contribution factor will drop because USAC had projected Q4 USF demand would drop (see 1608030047). Total 2016 USF demand will be $8.76 billion, "$67.4 million higher than 2015, but $772.7 million less than peak annual USF demand during 2012," he wrote. "However, because of the continued decline in the USF revenue base, the average assessment factor for all of 2016 will be 17.8%, the highest average assessment factor in the history of the USF." The previous highest average was 17.1% in 2012, and it was 16.9 percent in 2015, he said.
The Alaska Telephone Association and others lauded FCC adoption of a modified ATA plan to provide broadband USF support to fixed and mobile providers in Alaska high-cost areas served by rate-of-return carriers and their wireless affiliates (see 1608310067). ATA said the plan "ends recent funding declines and secures 10 years of predictable federal support" for providers to expand broadband in underserved areas. "This is a big win for Alaska," said Christine O'Connor, ATA executive director, in a release citing 16 plan "partners," including General Communication Inc. “Alaska carriers like GCI will be able to leverage the federal support to incent private investment and bring Alaskans the kind of service that people in the Lower 48 take for granted,” said GCI General Counsel Tina Pidgeon in the release. Wireless providers must deploy 4G LTE or better mobile service to 85 percent or more of rural Alaskans, up from 9 percent, and participating wireline providers are committed to bringing fixed broadband speeds of at least 10/1 Mbps to 90 percent of the locations in remote Alaska, up from 60 percent, the release said. Sen. Dan Sullivan, R-Alaska, who pressed for action on the plan, issued a statement commending the FCC for recognizing challenges facing Alaska carriers. “NTCA has long urged the FCC to take stock of the special challenges of serving Alaska," said CEO Shirley Bloomfield in a statement. "Today’s order attempts to do that, while being careful to make sure the steps taken will not have an adverse impact on smaller carriers committed to serve the rest of rural America." A Further NPRM attached to the order sought comment on the specifics of implementing a process to head off any duplicative support to providers serving the same areas. Dissenting Commissioners Mignon Clyburn and Ajit Pai said the order allowed duplicative support and didn't solve middle-mile problems. But Commissioner Michael O'Rielly said duplicative support will be eliminated after five years if it develops. Alaska Communications, which had criticized the original plan as providing GCI a big windfall, didn't comment.
Broadband providers challenged up to 36,897 of 317,243 census blocks on a preliminary FCC list of areas targeted for a planned Connect America Fund reverse auction of $215 million in annual broadband USF subsidies, according to our review. The agency asked interested parties to update the FCC on areas that wouldn't be eligible for auction support because of the presence of a qualifying broadband service -- with 10/1 Mbps, minimum usage of 150 GB or greater at a rate meeting a commission benchmark, and latency not exceeding 100 ms (see 1608110018). Twenty-two parties submitted filings that were posted by Thursday in docket 10-90. Frontier Communications led the way, saying it provided qualifying broadband service to 15,789 census blocks on the preliminary list, based on our tabulation of its submission. JAB Wireless (Rise Broadband) said it served 11,278 census blocks and Windstream said it serves 3,170 census blocks on the list. AT&T serves 2,929 census blocks and Charter Communications serves 1,341 census blocks on the list. The numbers could increase because some parties said they will update their totals, and N.E. Colorado Cellular (Viaero Wireless) filed its list confidentiality. But it's also possible there's some overlap among the census blocks identified by different parties as served, which could reduce the total number of reportedly served census blocks. After the FCC completes the review process, it will issue a final list of eligible census blocks. Some auction rules are still under consideration.
States, the FCC and industry plan extensive outreach to reduce consumer confusion about changes to Lifeline that will allow the USF program for low-income people to get broadband and not just phone service, officials said on a Wednesday webinar staged by the National Regulatory Research Institute, the research arm of NARUC. "We think it's very important that we help in getting the word out … because there will be a lot of confusion," said Massachusetts Department of Telecommunications and Cable Commissioner Karen Charles Peterson. Lifeline tops the department’s list for planned outreach efforts, and the state government hopes the low-income program will play a big role in a state effort to increase broadband adoption, she said. The FCC plans to make copious amounts of information available through its website and other outreach venues, said Wireline Bureau Telecommunications Access Policy Division Chief Ryan Palmer. TracFone plans targeted communications to customers rather than a broad and generalized approach, said the company’s Corporate Counsel Stephen Athanson. AT&T sees potential for customer confusion because it will take some time for states to sync their programs with the federal program, said Executive Director-Public Policy Beth Fujimoto. She said the company supports a USTelecom reconsideration request pending at the FCC, including deferring the effective date of the streamlined eligibility criteria to give states more time to make necessary changes (see 1608090023). States won’t find a uniform method to implement the order, said Peterson. "Each state is unique and they're going to have to address it in their own way." The commissioner said one concern of states is what happens to consumers’ ability to call 911 if they're moved from voice to broadband plans. She said the issue is “hard to explain to the average citizen.” Massachusetts plans to work with consumers, industry and the FCC “to make sure a consumer doesn’t have to pick” between voice and broadband, she said.
FCC staff teed up the National Exchange Carrier Association's proposed modifications to its high-cost loop USF formula for "average schedule" rate-of-return companies in 2017 (see 1608260028). A Wireline Bureau public notice Wednesday in docket 05-337 said comments are due Sept. 30, replies Oct. 17 on the NECA proposals, which incorporate changes from the FCC March 30 rural broadband USF overhaul order (see 1603300065).
The FCC opposed Blanca Telephone's court petition to halt the commission's effort to collect a debt resulting from $6.7 million in USF overpayments the agency said the company received. The FCC said it demanded repayment in full from Blanca June 2; the firm filed an application for review by the commission June 16; the agency informed the telco it would take no further action to collect the debt while that application is pending; and the company filed a petition for a writ of prohibition with the U.S. Court of Appeals for the D.C. Circuit. "Remedies under the All Writs Act, such as prohibition, are reserved for extraordinary cases and, in addition to other requirements, are available only where the petitioner lacks any other means to obtain the relief sought," said the FCC opposition posted Wednesday. "Here, when the agency acts on Blanca’s pending application for review, if Blanca remains aggrieved, it can seek judicial review pursuant to ... the Communications Act and the Hobbs Act. It is well established that the availability of such statutory review procedures are adequate alternative remedies. The petition is therefore baseless." The case is: In re Blanca Telephone Company, No. 16-1216. A Blanca representative said the company would file a court response.
Some FCC members of each party voted for and against an Alaska plan for broadband-oriented USF support to fixed and mobile providers in high-cost areas of the state served by rate-of-return telcos and their wireless affiliates. The commission adopted the Alaska Telephone Association's (ATA) "consensus plan" with "minor modifications," said the 3-2 order and Further NPRM released Wednesday in docket 10-90. Commissioners Mignon Clyburn and Ajit Pai dissented. Pai said the plan would provide $1.5 billion in support over 10 years. A separate Alaska price-cap USF draft order is pending.