The National Exchange Carrier Association proposed modifications to its USF formula for calculating high-cost loop support for "average schedule" rate-of-return companies in 2017. The proposal incorporates changes from the FCC's March 31 rural broadband USF overhaul order, including a continued annual reduction of 25 basis points in the authorized rate-of-return and new restrictions on operating expenses, said a NECA filing Thursday in docket 05-337. The previous 11.25 percent rate of return dropped to 11 percent July 1 and will drop to 10.75 percent July 1, 2017, under the proposed formula, on its way to 9.75 percent in 2021.
FCC staff announced two new filing windows for seeking USF rural healthcare support for the 2016 funding year that began July 1, plus another window for the 2017 funding year. The program provides subsidies for rural healthcare telecom services and broadband connectivity. An initial March 1-June 1 filing window drew $35.5 million in requests, with the program operating on a first-come, first-served basis since then, said a Wireline Bureau public notice Friday in docket 02-60. A new filing window is Sept. 1-Nov. 30, with no funding requests accepted through Jan. 31 the PN said. Universal Service Administrative Co. will process all the requests to that point; if there's still funding available under the FCC $400 million annual cap for the program, which the bureau expects, a third funding request window will run Feb. 1-April 30, with the possibility of a new window after that, it said. It also announced an overlapping initial filing window of Feb. 1-April 30 for the funding year that begins on July 1, 2017. The PN said demand for rural healthcare USF support has been growing and could reach the $400 million cap during one of the windows for this funding year, which would require USAC to divvy up support to qualifying requests on a "pro-rata basis" for that window.
NTCA said the FCC should approve its petition for reconsideration of a USF overhaul for rate-of-return carriers, given the lack of any opposition to its requests and ITTA's support for some of them. The FCC should admit that its rules will preclude most rural telcos from offering standalone broadband at rates reasonably comparable to urban rates, and either revisit its rate-of-return budget or suspend a requirement that carriers certify they are providing standalone broadband at reasonably comparable rates, said NTCA in reply comments, one of several replies posted Thursday and Friday in docket 10-90. NTCA also said it asked the agency to address concerns its new budget controls and "haircuts" would create an unlawful regulatory "black hole" into which carrier costs disappeared and were never recovered. GVNW Consulting, which works with rural carriers, agreed with NTCA's "black hole" description and proposal to either revisit the budget or suspend the stand-alone broadband certification requirement. GVNW also backed various WTA requests, including for the FCC to alter the definition of a qualifying unsubsidized competitor (which prevents an RLEC from receiving funding) as one that can provide the same broadband speeds as the incumbent, and to give carriers more flexibility on meeting buildout requirements. Custer Telephone Cooperative and other RLECs said there was no opposition to their petition for reconsideration of the agency decision to reduce support and add broadband buildout requirements for rate-of-return carriers remaining on revised legacy support mechanisms while shifting support to carriers electing model-based support. The National Tribal Telecommunications Association agreed with NTCA and WTA concerns about the budget and the need to ensure reasonable comparability, which NTTA believes is particularly appropriate regarding tribal areas. NTTA believes its proposed tribal broadband factor would help rate-of-return carriers provide tribal service. Sacred Wind Communications, which serves the Navajo Nation, agreed with WTA that qualifying competitors should be held to the same broadband speed standards as incumbent rural carriers, and said there should be a streamlined extension process for meeting buildout duties.
AT&T disputed an FCC Enforcement Bureau-proposed $106,425 fine, denying it overcharged two Florida school districts and violated a "lowest corresponding price" (LCP) rule under the E-rate USF subsidy program. The bureau's arguments are "factually wrong," "deviate from the FCC's own rules and existing precedent" and continue a "troubling pattern of 'rulemaking through enforcement,'" said Joan Marsh, vice president-federal regulatory, in a blog post Friday. Marsh said the bureau was wrong to assume AT&T should have provided rates based on one-year contracts when the school districts never asked for those and instead bought services month to month, which she said the commission recognized as a valid basis for price distinctions in a 1997 order. She said the bureau was wrong to fault AT&T for not providing rates as if the school districts belonged to a Florida E-rate consortium, which pools the purchasing power of state agencies and organizations and which the districts chose to avoid. The bureau also took "the extreme position" that the LCP obligation applied even if the service was not purchased through the E-rate Form 470 competitive bidding program, a view she said the FCC never before had articulated and was at odds with the program. Finally, Marsh said the bureau disregarded procedures by ignoring a statute of limitations that had expired and the lack of FCC jurisdiction to adjudicate disputes over intrastate services. She said the company was filing its response to a July 27 notice of apparent liability (see 1607280028).
Lifeline wireless providers plugged their petition for FCC reconsideration and clarification of its order overhauling the USF low-income subsidy program. The commission March 31 approved extending Lifeline funding to broadband service while phasing out stand-alone voice support, shifting the duty to oversee consumer eligibility from carriers to a national verifier, and creating a process for designating national Lifeline broadband providers supplementing the current state-by-state eligible telecom carrier (ETC) process (see 1603310056). The Joint Lifeline ETC Petitioners said they looked forward to offering broadband Lifeline service and working with regulators on ways to improve the enrollment process both before and after a national verifier is implemented, in a filing posted Thursday in docket 11-42 by American Broadband & Telecommunications, Blue Jay Wireless, i-wireless, Telrite, Assist Wireless, Easy Wireless, Prepaid Wireless Group and TruConnect. They said the Joint ETCs also are asking the commission to: "modify a minimum service standard formula and adopt a more graduated phase-in" of broadband requirements; complete a Lifeline market report before ending support for stand-alone voice service, given the "continuing value of voice service"; ensure the national verifier can engage in real-time eligibility determinations; and extend streamlined 60-day consideration to all ETC petitions. It opposed some calls of other petitioners, including to ban in-person handset distribution and incentive-based compensation, and to lift a "12-month benefit port freeze for broadband plans."
FairPoint Communications updated the FCC on its move to private broadband carriage for its rate-of-return telco affiliates, which allows them to stop making USF contributions for associated revenue (see 1606280037). The telco June 23 notified the commission it planned to cease offering broadband internet transmission service as a telecom service and begin offering it as private service for 19 of its rate-of-return LEC affiliates (see 1606230071). That took effect Monday, FairPoint said in a filing Wednesday in docket 14-28. It further notified the FCC of its plans to shift its three remaining "average schedule" rate-of-return LEC affiliates to private broadband carriage on Oct. 23. In a June 15 order, the FCC confirmed that rate-of-return carriers could offer de-tariffed wholesale transmission service only to their affiliated ISPs on a private carriage basis as an input in the provision of mass market retail broadband Internet access service, relieving that service of USF telecom revenue contribution duties. Carriers choosing that option had to give the Wireline Bureau 60 days notice. Trey Judy, Hargray Communications director-regulatory affairs, said in June he expected other rate-of-return carriers to follow FairPoint's example. Home Telephone ILEC told the FCC in an Aug. 12 filing it would move to private broadband carriage. Price-cap telcos, including FairPoint's affiliates, are currently not subject to USF contributions for their broadband revenue, though a USF federal-state joint board that advises the FCC is reviewing contribution issues.
The FCC teed up Global Reconnect's planned buy of TerraCom, a wireless and wireline telecom carrier that serves low-income persons with funding support from the Lifeline USF program. Comments are due Sept. 7 and replies Sept. 14, said a public notice Wednesday in docket 16-268.
The FCC could learn much about process from state utility commissions, said state commissioners in interviews amid their lawsuit against the federal regulator over usurping state powers (see 1606030053). State commissioners from both parties and four states said it should be a priority for the FCC to answer stakeholder concerns about transparency and politicization at the federal agency. NARUC President Travis Kavulla told us his Montana Public Service Commission "and probably most state commissions have much more sunshine than the FCC does." The FCC isn’t dysfunctional, but to maintain public trust it shouldn’t take openness concerns lightly, said Florida PSC Commissioner Ronald Brisé.
Commissioner Mike O'Rielly says the FCC has made strides in resolving his concerns that commissioners faced censorship on pending agency items while Chairman Tom Wheeler and his staff were free to selectively disclose matters. "Thankfully, we've had decent progress toward fixing this one process area," O'Rielly said, responding to our query. However, questions remain about a leak that FCC and congressional Republicans say helped scuttle a bipartisan Lifeline compromise among commissioners March 31, which is being investigated by the agency's inspector general. Responses to a Communications Daily Freedom of Information Act request detail much late congressional lobbying of the FCC on Lifeline.
This Communications Daily Special Report, "Assessing Wheeler's Legacy," shows how the FCC under Chairman Tom Wheeler has operated, controversies, plaudits and all. Subscribers also can now access these seven stories online at www.communicationsdaily.com.