CenturyLink and Frontier said NCTA "misses the point" in objecting to their request that the FCC give price-cap ILECs $175 million a year in interim USF support for continuing to provide voice service in extremely remote areas so far unfunded by a new broadband-oriented subsidy mechanism. "The FCC determined last year that customers in these remote areas should continue to be offered voice service until that broadband solution is in place," the two incumbent telcos said in a joint email statement responding to NCTA opposition in docket 10-90 (see 1603140053). "Unfortunately, however, the FCC failed to continue the necessary USF support for that obligation. CenturyLink has joined AT&T and USTelecom in appealing this unfunded mandate." The ILECs said their proposed interim funding "would only be available in areas where there are no other competitive providers, such as cable companies, offering service and where the FCC has recognized that it is too costly to serve without support." They said they share NCTA's concern about devising a long-term solution and agreed the FCC should move swiftly to set up a Remote Areas Fund. "It is disappointing that NCTA is against our proposal as it surely would oppose any action to impose a comparable unfunded voice obligation on cable companies," they said. "More importantly, by adopting interim funding, the FCC will ensure that customers continue receiving critical voice services in these extremely rural, high-cost areas while the FCC moves as rapidly as possible to adopt the Remote Areas Fund."
Sprint said “flawed” FCC proposals to modernize Lifeline USF would harm provision of subsidized phone services to millions of low-income Americans. Commission plans to mandate unlimited mobile talk are unrealistic and plans to eventually withdraw Lifeline support for stand-alone mobile, but not fixed, voice service violate competitive neutrality principles, Sprint said. Separately, General Communications (GCI) said the FCC’s proposed minimum Lifeline standards could render parts of rural Alaska ineligible for the program. The agency had no comment. The FCC tentatively intends to vote March 31 on a draft order to extend Lifeline USF subsidies to broadband and make administrative changes (see 1603080024 and 1603080054).
NCTA urged the FCC to deny an incumbent telco bid for an additional $175 million in annual USF subsidy support for voice service in costly remote areas where the ILECs are no longer being subsidized. Responding to a request from CenturyLink and Frontier Communications (see 1602240033), NCTA said price-cap ILECs had "received exclusive access to $9 billion in high-cost support" over six years through the FCC's broadband-oriented Connect America Fund Phase II USF mechanism. "At a time when the Commission repeatedly has acknowledged the importance of providing all Americans with access to broadband, the notion of spending hundreds of millions of consumers’ dollars on a program that does not deliver broadband to a single home should be a non-starter for the Commission," NCTA said in a letter Friday in docket 10-90. NCTA said it didn't oppose providing support to the areas identified by the ILECs. "But any additional money for these areas should be distributed solely through the competitively and technologically neutral Remote Areas Fund the Commission adopted in 2011 for the express purpose of bringing broadband access to these remote areas, not through a new ad hoc fund for incumbent LEC voice services," it said. NCTA said CenturyLink and Frontier hadn't offered any evidence to support their assertion the ILECs would be unable to maintain and repair the voice network in the identified areas without the additional subsidies. It also said the new money "seems to be untethered from any obligation," unlike new broadband support. CenturyLink and Frontier had no comment Monday.
AT&T said FCC Lifeline USF modernization efforts seem "to be moving in the right direction" but will depend on the details. AT&T welcomed an FCC draft order's plan for a national entity to verify consumer eligibility for the low-income support program, which would be extended to cover broadband service (see 1603080054). The proposal to take eligibility out of the hands of Lifeline providers "has the potential to be a transformative change if properly implemented," said AT&T Senior Executive Vice President Jim Cicconi in a Monday blog post. "It could close the door on provider-initiated eligibility fraud and help re-focus the program on the consumers it was intended to serve." Cicconi said it's not clear how long it would take before Lifeline providers can stop performing the functions and whether the national eligibility verifier would take over other administrative functions providers currently perform. "Our fingers will remain crossed until we see all the details, and we may not uncross until we get further down the road to implementation. But Chairman [Tom] Wheeler and Commissioner [Mignon] Clyburn should be commended for championing this approach," he said. Cicconi said AT&T also appreciated the FCC's acknowledgement that existing Lifeline rules impose costs and burdens that discourage provider participation. He was disappointed, however, the FCC didn't propose to eliminate "eligible telecom carrier" requirements for Lifeline providers. He added, "It is also hard to imagine how the Commission can justify phasing out Lifeline support for standalone wireless voice but continue to support standalone wireline voice. Lifeline consumers overwhelmingly choose wireless voice over wireline. If any voice support is to be phased out it should be a technology neutral phase-out of support for all standalone voice. "In a filing Monday in docket 11-42 summarizing a meeting with aides to Wheeler, NCTA lauded the FCC proposal to create a streamlined national ETC process for designating Lifeline broadband providers.
The FCC appears poised to overhaul rural telco USF subsidies in coming days, given commissioner public statements and agency voting procedures confirmed by two staffers. Chairman Tom Wheeler said recently at a Senate hearing there are three votes -- a majority -- for a draft order that would revamp rate-of-return carrier high-cost USF support mechanisms for the broadband era. Under internal FCC rules, the remaining two commissioners have until Wednesday -- 12 days after March 4, which was three weeks after the draft circulated -- to vote on the item, though either one could obtain a one-week extension until March 23, an agency spokesman and an official told us Friday.
The FCC proposed an industry USF contribution factor for Q2 of 17.9 percent of end-user interstate and international telecom revenue, said an Office of Managing Director public notice Thursday in docket 96-45. Industry analyst Billy Jack Gregg had predicted the Q2 factor would fall to 17.9 percent from Q1's 18.2 percent (see 1603020012). Total USF program support is projected to be $2.2 billion in Q2, with the high-cost fund projected to require $1.125 billion of that, the PN said. The proposed contribution factor will be deemed approved if the agency doesn't act on it within 14 days, it said.
FCC reform of the USF high-cost program for rate-of-return carriers was based on an unusual level of collaboration (see 1602190056), FCC Commissioner Mike O’Rielly said at a Faegre Baker lunch Tuesday. “At my request, a number of Commissioners worked extensively with the requisite trade associations in order to fully understand their concerns and the impact of any changes,” O’Rielly said, according to his written remarks posted by the agency Wednesday. The event was closed to the news media. “I also traveled to a number of places around the country to hear firsthand from carriers," said O'Rielly. "After almost a year of discussions, I believe we have a solid framework that provides regulatory certainty for rate-of-return carriers for years to come.” Compared with some of the other areas tackled by the agency, rate-of-return reform was “one of the more inclusive procedural efforts that I have been part of at the Commission,” he said. The order addresses “antiquated rules” to allow reimbursement for stand-alone broadband, he said. The order also imposes build-out requirements and other strictures to ensure money is “wisely and efficiently spent, while providing transitions where appropriate,” he said. O’Rielly had less good to say about two items expected to get a vote at the agency’s March 31 open meeting. Lifeline program changes (see 1603080024) must include controls on the size of the program, O’Rielly said. “I have made clear that I’m willing to support expanding the program to cover broadband but, in return, the Commission must adopt a reasonable overall budget at the same time,” he said. “That is non-negotiable.” O’Rielly also raised concerns about an expected NPRM on privacy rules for ISPs (see 1603080067). The net neutrality order is still pending before the courts, he said, so FCC authority to act is in question. “The Commission doesn’t understand how its new burdens will impose unnecessary and costly compliance on broadband providers,” he said. “Who does the Commission think is going to pay for this? Additionally, by all measures the Commission is ill-prepared to address the complexity of privacy matters, lacking the history and necessary expertise.”
NARUC and TracFone voiced serious concerns about an FCC draft order to revamp the Lifeline low-income USF support program outlined Tuesday (see 1603080024 and 1603080054). NARUC said a proposal to bypass states in designating Lifeline broadband providers would invite abuses. TracFone said proposed minimum standards would effectively require co-pays that many low-income consumers couldn't afford. Others, including Comcast, welcomed the Lifeline proposals. The cable company applauded the commission’s effort to modernize the program to support broadband and streamline administration.
A proposed $2.25 billion Lifeline USF budget became an immediate flash point after an FCC draft order circulated Tuesday that would extend the program’s support for low-income phone service to broadband coverage and streamline consumer eligibility verification duties and provider participation requirements (see 1603080024). The draft order, which is expected to be considered at a March 31 meeting, would index the budget to inflation and require the Wireline Bureau to notify the FCC when program funding reaches 90 percent of the budget and analyze the causes of the spending growth, “followed by Commission action within 6 months,” said an agency fact sheet.
A new draft FCC reauthorization bill from Senate Commerce Committee Chairman John Thune, R-S.D., no longer includes some process overhaul provisions that he floated last year. Thune announced last week that he wants to mark up the FCC Reauthorization Act in the coming weeks, and a new nine-page draft bill text is circulating. A Commerce Committee aide told us the bill could be marked up as soon as next week. The tentative markup date is March 16, a telecom industry lobbyist confirmed.