The FCC approved a Connect America Fund Phase II subsidy auction plan to provide $215 million in annual broadband-oriented support to unsubsidized rural areas traditionally served by larger telcos. At their Wednesday meeting, commissioners voted almost unanimously to adopt an order setting the CAF II auction framework and a Further NPRM to flesh out certain auction specifics, including "weights" for bidders offering different broadband service levels. Commissioner Mike O'Rielly partially dissented on the FNPRM, but even he credited his colleagues with making a fiber-oriented draft item more balanced among technologies: "We are still a long way from home, but at least we're back on course for now."
The FCC said streamlined review of a "study area" waiver petition filed by two rural carriers is inappropriate. Comments are due June 22 and replies July 7 on the waiver sought by Mutual Telephone Co. of Sioux Center, Iowa, and Winnebago Cooperative Telecom Association, said a Wireline Bureau public notice in docket 96-45. The petition asks to "redefine the Consolidated Communications of Iowa f/k/a Heartland Telecommunications Company of Iowa (Heartland) study area" by breaking off the Bancroft and Lakota exchanges to form a new study area for Winnebago, with the remaining Heartland exchanges to be owned by Mutual, the PN said. Although the bureau noted petitioners intend to honor broadband-oriented Connect America Fund Phase II buildout commitments and say the study area change won't raise USF burdens, it said the request raises questions that need further evaluation.
A growing cable industry sense of its concerns being ignored by FCC Chairman Tom Wheeler has raised the likelihood that whatever rules come out of the agency regarding set-top boxes, broadband privacy and business data services almost surely will be met by legal appeals, cable executives and experts tell us. "I think everybody takes for granted that everything is going to end up in court," MCTV President/American Cable Association Chairman Robert Gessner said in an interview Friday.
The FCC plans to consider a Connect America Fund auction order and Further NPRM Wednesday "regarding a competitive bidding process" for CAF Phase II high-cost USF support, said the agenda for the commission's monthly meeting. The FNPRM wasn't mentioned in a May 4 tentative agenda for the meeting that listed an order "adopting rules implementing a competitive bidding process" for CAF Phase II; nor was it mentioned by FCC Chairman Tom Wheeler in a blog post discussing the agenda, nor by an agency official who said the order would set a general framework for the auction, followed by a public notice seeking further comment and another PN setting auction procedures (see 1605050036).
The FCC has more work to do in promoting broadband adoption after adopting a Lifeline modernization order, said Gigi Sohn, counselor to Chairman Tom Wheeler, Wednesday at the Net Inclusion 2016 gathering in Kansas City, Missouri. Sohn said the order directs the Consumer and Governmental Affairs Bureau to develop a comprehensive digital inclusion plan to help the commission "better understand non-price barriers to broadband adoption" and to propose ways to remove those obstacles. The CGB is also to engage with community-based organizations, local and tribal governments, and industry stakeholders to pursue strategies for promoting broadband adoption through Lifeline and increased digital literacy, she said. The bureau is also tasked with helping broadband ISPs work with schools, libraries, community centers and others that serve low-income consumers, she said. Sohn asked for audience members to help. "Successful broadband adoption programs come from the bottom up, not the top down," she said in prepared remarks. "Trusted community-based organizations and anchor institutions know how best to serve residents most in need of the tools to get connected. We at the FCC will be counting on you and your partners to do one-on-one work with people in your communities to help eligible consumers who don’t have Internet access take advantage of the new Lifeline." A Wireline Bureau public notice asked any carriers with pending Lifeline compliance plan requests or petitions to be a Lifeline-only eligible telecom carrier to affirm in writing by June 7 that they still want bureau review of their applications. The Lifeline order is "part of a much greater accomplishment that I don’t think people rightly appreciate -- largely because it happened so gradually over a span of seven years," said Sohn, referring to FCC moves to shift various USF voice mechanisms to broadband support. "With the modernization of the FCC’s universal service programs -- notably Lifeline -- we are in a stronger position to bridge the digital opportunity gaps in the years ahead. If we seize this opportunity and do the day-to-day work to get people connected, we will look up in a few years and there will be millions more Americans enjoying the benefits of high-speed Internet -- for employment, for education, for entertainment, for health care, for civic engagement, for a better quality of life. Now that’s very gradual change we can believe in."
BOSTON -- The FCC was criticized by another group of stakeholders at INTX, as the show drew to a close Wednesday. All four state telecom regulator panelists heaped criticism on the FCC over a range of process and legal issues. Critiques involved moving Lifeline subsidies for the poor to broadband from voice in a way that allows the FCC to certify providers as eligible telecom carriers (ETC) instead of just states having that authority, and pre-empting anti-municipal broadband state law. Process concerns included that the federal commission takes too long to issue the text of orders, is too partisan, and commissioners don't cooperate. State commissioners of both parties said the FCC doesn't work closely with state telecom regulators and follow through by having such cooperation reflected in rules. Asked in Q&A whether the FCC had any bright spots, panelists praised it for moving USF to broadband.
A federal court set a briefing schedule on AT&T challenges to two FCC orders from December 2014 and December 2015 on price-cap telco USF duties. In an order (in Pacer) Tuesday in docket 15-1038 and consolidated cases, the U.S. Court of Appeals for the D.C. Circuit said an initial joint brief from petitioners and supporting intervenors is due June 17; the brief from respondents FCC and DOJ is due Aug. 1; a joint reply brief from petitioners and supporting intervenors is due Aug. 31; and final briefs incorporating an appendix are due Sept. 7, with oral argument typically at least 45 days later. AT&T, petitioner/intervenor CenturyLink, intervenor USTelecom and respondents FCC/DOJ had submitted an unopposed joint briefing proposal (in Pacer) Friday. Earlier this year, AT&T asked the court to consolidate its two challenges seeking more relief from USF duties (see 1601110036), which CenturyLink called "an unfunded mandate" (see 1602050029).
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.