The FCC made tariff review plans available for ILECs updating interstate access service tariffs. A Wireline Bureau order in Thursday's Daily Digest included a link to the TRPs, which support rate revisions by both price-cap and rate-of-return telcos in their tariffs. "The completion of the TRPs appended to this document will provide the supporting documentation to partially fulfill the requirements established" in various sections of the Commission’s rules, the order said. Rate-of-return telcos on July 1 must adjust their tariffs to reflect an 11 percent authorized rate of return under a six-year phasedown from 11.25 percent to 9.75 percent adopted in the FCC's rural USF overhaul order in March (see 1603300065). Both rate-of-return and price-cap telcos must incorporate other tariff modifications that were detailed in the order.
Rural telcos will have to provide more broadband, often with less federal support, said Fletcher Heald attorney James Troup, who represents RLECs and examined recent FCC actions overhauling high-cost USF subsidies for rate-of-return carriers (see 1603300065 and 1603310039). The commission is "imposing numerous additional obligations upon rate-of-return regulated incumbent local exchange carriers (ILECs), while leaving many rural ILECs with the same or even less compensation to satisfy the significant broadband build-out expenditures mandated by the new regulations," Troup said in a blog post Wednesday. The FCC is phasing down the authorized rate of return from 11.25 percent to 9.75 percent over six years and giving carriers two options: shifting to model-based support or staying with legacy mechanisms, with one revamped as Connect America Fund Broadband Loop Support (CAF BLS) and providing stand-alone broadband support. In both cases, ILECs "will have new broadband construction obligations entailing additional costs," Troup wrote. "The FCC did not allocate additional funds to recover the increase in construction expenditures for those ILECs that elect to receive CAF BLS and high cost loop support. The FCC only provided $150 million more to pay for all the new broadband construction it is mandating for those ILECs that select model-based support. The funds within the current budget will first be distributed to those that elect model-based USF, and what is left within the current budget will be available for those that receive CAF BLS and high cost loop support." Many RLECs will receive less funds under a "regression analysis" that limits operating and corporate expenses, and due to capital budget constraints, he said. The changes create substantial uncertainty for those choosing legacy support, Troup told us Thursday. He said rural telcos will be forced to bear the burden of broadband construction that benefits long-distance providers, wireless carriers and Internet edge players using those networks.
The Competitive Carriers Association remains optimistic that small carriers will be active in the TV incentive auction, President Steve Berry said. Berry predicted the forward auction, in which carriers will bid for licenses, will start in May or June, in comments streamed from the CCA spring conference in Nashville. “A number of policy wins were essential to make this auction actually a reality for smaller carriers and many of our members,” Berry said. The smaller license sizes, spectrum reserve and mandated interoperability in the FCC’s rules were CCA priorities, he said. “CCA members are a critical part of the mobile infrastructure system.”
Frontier Communications gained access to $48.6 million in Connect America Fund subsidies for serving 114,610 locations in areas of two states covered by wireline systems it recently acquired from Verizon (see 1604010036), said an FCC Wireline Bureau order in Tuesday's Daily Digest. Frontier was authorized to receive $32 million for California and $16.6 million for Texas that Verizon had accepted in broadband-oriented CAF Phase II support. The bureau directed Universal Service Administrative Co. to disburse to Frontier the USF subsidy amounts, which included some deferred amounts and other adjustments not previously disbursed to Verizon.
Some of the seven telecom bills the House Communications Subcommittee will consider at 10:15 a.m. Wednesday contain problems and should be opposed, some of the nine witnesses plan to tell lawmakers, according to written testimony. CTIA will object to the House Republican bill to cap the Lifeline program at $1.5 billion, while the American Civil Liberties Union will question the privacy protections of another bill.
The new version of the Alternative Connect America Cost Model (A-CAM, v2.2) incorporates inputs and changes from the FCC's recent rate-of-return USF overhaul order (see 1603300065), said a Wireline Bureau public notice Friday in the Daily Digest, posted in docket 10-90. The bureau released illustrative results showing support amounts for carriers to assist their decisions on whether to opt in to the model-based support, but it said the model hasn't been finalized. The PN invited unsubsidized rural telco competitors to update information on their broadband-oriented deployments, which can be used to deny incumbent carriers new Connect America Fund support. Comments challenging competitor coverage data are due April 28.
The FCC proposed the biggest fine ever for a Lifeline violation, $51 million, against Total Call Mobile for allegedly enrolling tens of thousands of duplicate and ineligible consumers into the program. The FCC also ordered the company to explain why the agency shouldn't suspend it from the Lifeline program. One commissioner from each party said the proposed fine is too small. Commissioner Ajit Pai alleged that Chairman Tom Wheeler kept the order under wraps until after a vote on Lifeline overhaul. Total Call didn’t comment on the notice of apparent liability.
The Congressional Research Service circulated documents on the FCC’s Lifeline overhaul and telemarketing regulation. The Lifeline document is a mere two pages and dated April 5. “The announced expansion of the program has once again brought the program under additional scrutiny,” the CRS brief said. “The policy debate over the design and expansion of the Lifeline program has continued with the release of the 2016 Lifeline Order.” Issues include “the impact that minimum broadband and voice standards may have on the ability of providers to offer services within the $9.25 per month subsidy and such standards' potential for the need for subscriber co-pays” and “whether a firm budget cap should be established consistent with the other USF programs,” CRS said. The separate telemarketing report, dated April 1, is 12 pages. “This report will outline the laws underpinning the National Do Not Call List; describe the regulations implementing the list; answer some of the most frequently asked questions related to the list; and discuss the possible penalties for violating the rules,” the report says in its summary. “The report will also briefly discuss some of the ways the various states have implemented their own do not call lists.”
Three telcos urged the FCC to provide interim USF support for voice service in extremely rural, high-cost areas not yet covered by Connect America Fund Phase II support. CenturyLink, FairPoint and Frontier Communications said they understand the commission is considering including the areas in a planned reverse auction of CAF II broadband/voice subsidy support, but for now a number of price-cap telcos are responsible for maintaining voice service without support. "Our specific request is that the Commission continue to fund voice services in the highest cost, remote areas where carriers have accepted CAF II support but where there are remaining rural customers that are not covered by CAF II support," they said in a letter to all five commissioners Tuesday in docket 10-90. "Voice access is critical to our customers in these areas for personal, professional and public safety reasons. Therefore, voice service funding should be maintained while these areas await the Commission’s actions to implement a workable broadband deployment solution."
The federal USF had more than $8 billion in financial assets as of Dec. 31, said the 2015 annual report of Universal Service Administrative Co., which oversees the fund for the FCC. The USF, which had assets of $4.5 billion in 2006, paid out $8.4 billion in 2015 but collected more than that, further increasing its cash and other assets, said industry consultant Billy Jack Gregg in an email Wednesday summarizing findings from his analysis of the annual report (see 1603310052). A portion of the assets was used to offset USF funding commitments in 2015, such as model-based Connect America Fund Phase II support, Gregg said. "These assets also provide the reserve funds which the FCC will use to mitigate the $1.5 billion annual increase in the Schools and Libraries Fund, and to underwrite CAF Phase II competitive bidding support." The assets include $6.8 billion in investments, the report said.