The National Exchange Carrier Association proposed a modified formula to calculate USF "high-cost loop expense adjustments for average schedule companies" covering the second half of 2016. The proposal includes a reduction in the authorized rate of return for rural carriers from 11.25 percent to 11 percent, said a NECA filing Friday in docket 05-337. The 25 basis points drop is the first in a six-year phasedown to 9.75 percent adopted by the FCC in its March 30 order overhauling rate-of-return USF mechanisms (see 1603300065).
NTCA pressed the FCC for "sufficient" budgets to carry out its overhaul of rate-of-return USF high-cost mechanisms through a new voluntary model-based approach and updated legacy support of stand-alone broadband. The FCC raised its $2 billion annual budget to $2.15 billion to cover possible increased support based on a broadband cost model, and also instituted new controls of capital and operating expenditures and lowered the authorized rate of return, leading NCTA to seek further budget flexibility (see 1603300065 and 1604180055). In a Thursday filing in docket 10-90 about a call with Wireline Bureau Deputy Chief Carol Mattey, NTCA backed "equitable sharing of budget resources and fair application of budget controls" among all rural carriers, with each RLEC responsible for the consequences of its model decision "rather than having the risk and consequences" spread to all carriers. "To the extent that the Commission does not adopt such a clear-cut approach to model elections, NTCA suggested two alternatives that could be used in ensuring equitable management of the budget among all RLECs," it said, providing numerous details of its proposals in an attachment. In an earlier filing about a call with Mattey and other bureau officials, WTA asked how certain aspects of the model-based selection process would work and also voiced concerns that some options would reduce the overall budget for all carriers sticking with the updated legacy mechanisms. Also, NTCA, in a letter discussing the "challenge process" for model-based support, said the FCC shouldn't overlook "clear evidence in the record indicating that certain Form 477 data are simply inaccurate or imprecise in measuring the presence of competition." Rural incumbents facing certain levels of unsubsidized competition aren't eligible for the new support, but many RLECs are challenging the Form 477 data of competitors (see 1604280011).
Rural telco groups said the FCC should be careful in changing rate-of-return rules for carrier cost recovery and related practices. Regulatory changes should apply prospectively only and should be targeted to provide increased clarity about allowable expenditures where helpful, said various RLEC groups in comments Thursday in docket 10-90, responding to a recent Further NPRM included in an item that overhauled rate-of-return USF mechanisms (see 1603300065 and 1603310039). Some voiced concern the FCC could make sweeping changes to throw out rules -- which they said had worked reasonably well -- based on "anecdotal" accounts of isolated problems.
Frontier Communications urged the FCC to include interim voice support in a pending draft order on a Connect America Fund Phase II reverse auction of broadband-oriented subsidies for areas served by price-cap incumbent telcos. Frontier and other ILECs say the support is needed to maintain voice service in extremely costly but currently unsubsidized remote areas that won't receive broadband/voice support through CAF II auction winners for some time. The FCC is tentatively scheduled to vote on a CAF II auction framework order at its May 25 meeting, which is expected to be followed by further proceedings to finalize the auction (see 1605050036). The cable industry's main trade group opposed the Frontier proposal.
The FCC said it received prohibited written presentations in the Lifeline USF proceeding in which the commission adopted an order overhauling the low-income subsidy program at its March 31 meeting (see 1603310056). The presentations in docket 11-42 were from the American Enterprise Institute, National Association of Counties and six individuals, said a public notice, saying presentations to decision-makers are generally not allowed from the day after release of the meeting's Sunshine agenda until the text of the item is issued (see 1604270028), which in this case was from March 25 until April 27. The presentations "will be associated with, but not made part of the record," said the PN in Tuesday's Daily Digest.
Nex-Tech Wireless, a small wireless carrier in rural Kansas, asked the FCC to cut it a break after it made a mistake on a form carriers use to report revenue subject to the USF. “For the first time since it began filing Form 499, NTW made a clerical error on its Form 499-Q due February 1, 2016, resulting in a large overstatement of its projected interstate revenues for the second quarter of 2016,” NTW said. NTW said it didn't learn of the error until it received an invoice April 22. As a result, the company missed the 45-day deadline for revising the filing, it said. “As a result, the charges on its April 22 invoice were nearly three times what they should have been,” NTW said. Dollar figures were redacted in the public version of the FCC filing. NTW asked for a waiver of the 45-day deadline and a break on interest and penalties as a result of the mistake.
Alaska telcos are battling over a plan to give broadband-oriented USF support to rural telcos and wireless competitors in the state. The Alaska Telephone Association (ATA) and General Communications (GCI) say their Alaska Plan is a consensus proposal to provide wireline and mobile broadband to consumers in remote areas of the state without increasing high-cost support. ATA disagrees with Alaska Communications that the "competitive eligible telecom carrier (CETC) portion of the Alaska Plan should be disapproved, delayed, or subject to ACS's proposed conditions," it said in a filing Monday in docket 10-90. GCI last week responded to Alaska Communications' "repetitive and unprincipled attempts" to "scuttle the Alaska Plan, as it uniquely continues to collect the same amount of high-cost support as it did in 2011, despite the absence of any performance commitments."
The FCC's E-rate budget will be $3.94 billion for funding year 2016 (beginning July 1), a 1 percent increase from the $3.9 billion budget in the current funding year, said a Wireline Bureau public notice Friday in docket 02-6. The E-rate program, which gives schools and libraries telecom discounts, is subject to annual inflation adjustments. Meanwhile, consultant Billy Jack Gregg projected the contribution factor for carriers paying into the overall USF program would drop from 17.9 percent to 17.6 percent of interstate and international end-user revenue, if the industry revenue base stays constant. The decline would occur because USF demand is projected to fall in the quarter due to out-of-period adjustments, Gregg said in an email May 2. But if revenue falls -- and it has been trending down over the years -- the contribution factor could be higher than 17.6 percent, he said, noting the Universal Service Administrative Co. will issue its revenue projections at the end of May.
Respect state authority over fixed interconnected VoIP services, said the Minnesota Public Utilities Commission, urging a court to reject a magistrate judge’s recommendation to hear a complaint by Charter Communications. In objections filed Thursday in the U.S. District Court in Minnesota, the state commission asked the court to modify the magistrate report, reject the recommendation and grant the PUC’s motion to dismiss the Charter complaint. Alternatively, the court should vacate reference of the motion and rehear it anew, it said.
The FCC would put over $2 billion in broadband-oriented rural subsidies up for grabs over the next decade in a reverse auction of Connect America Fund (CAF) support, FCC Chairman Tom Wheeler said Wednesday. "We hope the power of competitive bidding will spark robust broadband deployment and service offerings across rural America in the most cost-efficient way possible," he said in a blog post on a draft CAF Phase II auction order and other items on the tentative agenda for the commission's May 25 meeting (see 1605040066).