Adding unpredictability to the USF support system through opaque quantile regression caps “gravely threatens continued investment in and the sustainability of rural broadband,” the National Telecommunications Cooperative Association told FCC Wireline Bureau officials Friday (http://xrl.us/bmz7wu). Rural LEC members have expressed a “consistent fear” that they might be “the next one” to trigger the caps, and lenders and investors have expressed “deep confusion” at trying to forecast the effects of the caps because of their dynamic nature, NTCA said. NTCA also discussed the substantive underlying problems it saw with the proposed regression analysis approach. “Based upon the discussion in this meeting, however, NTCA understands that the Bureau does intend to receive input from companies and then promptly remedy underlying data shortcomings in the regression analysis models without the need for the filing of individual company waivers,” the ex parte filing said.
It’s incumbent carriers against the world in the latest round of comments regarding the development of an IP-to-IP policy framework, addressed in the further notice of proposed rulemaking as part of the USF/intercarrier compensation order. Commenters also addressed the FCC’s ongoing transition to a bill-and-keep framework. States urged the FCC to proceed at a slower pace or even pause the implementation of intercarrier compensation rules.
Big Bend Telephone Co. will default on loan covenants by next year and could run out of cash in 2016 if its request for waiver of three new USF rules is denied, it said in reply comments Thursday (http://xrl.us/bmzxgc). BBTC pointed to comments of USTelecom and the National Telecom Cooperative Association, which support BBTC’s position due to the “particularly challenging nature” of its service area, and the “extraordinary costs” it faces. Should BBTC go under, consumers could lose access to voice and broadband services because there’s no other terrestrial provider of those services in its area, the telco said.
The Universal Service Administrative Co. disbursed $4.03 billion last year for the USF high-cost program, $2.23 billion for E-rate, $1.75 billion for the low-income program and $81.5 million for the rural health care program, said its annual report submitted last week to the FCC and Congress (http://xrl.us/bmzxdu). “USAC’s program knowledge generated new and improved processes that ultimately saved time and money for USAC and applicants while promoting program integrity,” the report said, pointing to its new payment quality assurance program that homes in on potential improper payments. The beneficiary and contributor audit program lets USAC tailor audit approaches to “both the distinctive features of an auditee’s organization and the specific amounts of money being audited,” the report said.
Wireline carriers are arguing over a proposal that would expand eligibility for incremental support funding under the Connect America Fund Phase I program. The American Cable Association and the NCTA came out Thursday against the proposal introduced in March by the Independent Telephone & Telecommunications Alliance, CenturyLink, Frontier and Windstream (CD Mar 8 p10).
The U.S. Department of Agriculture has asked the FCC to be flexible in its system for waivers of the USF/intercarrier compensation order, so the Rural Utilities Service has the flexibility it needs to adjust RUS loans held by rural carriers, Secretary Tom Vilsack told the Agriculture Subcommittee of the Senate Appropriations Committee on Thursday. “If we have it then I think we can make adjustments,” he said. His comments came in response to questioning by Sen. Jerry Moran, R-Kan., who in a February letter to Vilsack expressed his concern over how the order would affect the viability of the rural telecom companies, many of whom take out loans from the RUS.
The FCC should reconsider its requirement that privately held rate-of-return regulated carriers submit for public review annual reports of financial condition that have been audited and certified by an independent certified public accountant, the National Telecommunications Cooperative Association said in a letter to the commission Tuesday (http://xrl.us/bmzp2y). The requirement is “overly burdensome,” treats rural LECs inequitably compared to other USF recipients, and is “unnecessary,” the group wrote, arguing it is neither reasonably tailored nor appropriately balanced to “achieve the objective of accountability.” NTCA made three counterproposals: permit RLECs to submit a financial reporting form similar to that required by the Rural Utilities Service; allow RLECs to prepare the form through a compilation process rather than the “costly and burdensome” process of having a financial report audited and certified by a CPA; and allow RLECs to submit financial data “under seal pursuant to the established protective order process."
Small healthcare providers feel burdened by the number of FCC forms they must fill out each year to get support from USF rural health care (RHC) programs, National State Offices of Rural Health and the Michigan Center for Rural Health officials told Wireline Bureau staffers, said an ex parte filing (http://xrl.us/bmzpqb). Many recipients hire contractors to complete the required paperwork, the groups said, suggesting the commission consider a three-year period of eligibility so entities won’t have to refile Form 466 every year. They said that the RHC primary program has led to the creation of the greater Minnesota telehealth broadband initiative pilot, but implementation is being delayed because of “lack of administrative funding for the project, the difficulty in finding a 15 percent match, confusion at the outset of the program as to whether it was [a] grant program, and the unusual nature of the RHC competitive bidding process.” The driving factor for broadband adoption by rural health clinics is image size and the ability to do teleradiology, the groups said in a filing in docket 02-60 made Wednesday by a bureau staffer who participated in the March 7 meeting. It said the groups want the agency to “consider incentives for local telecommunications companies to build out last mile connections,” which could help with a lack of connectivity throughout Minnesota.
C-Spire, U.S. Cellular, Allied Wireless and other small carriers opposed a T-Mobile petition seeking reconsideration or clarification of the FCC’s USF/intercarrier compensation reform order. “Grant of the Petition would directly contravene the Commission’s overarching policy objective of reducing legacy USF support payments,” the carriers said in an ex parte filing reporting on their meeting at the agency (http://xrl.us/bmzo7q). “In un-capped states (e.g., Arizona, Hawaii, Louisiana and Oregon) any additional support to T-Mobile would necessitate increased funding from the USF pool.” The carriers said the support T-Mobile is seeking “is for prior investment, made perhaps many years ago by T-Mobile, without a penny of high-cost support.”
The structure of USF-supported capital and operating expense caps imposed in the FCC USF-intercarrier compensation order “defeats the predictability required of USF support as required by the Communications Act,” NTCA told an adviser to Commissioner Mignon Clyburn on Monday (http://xrl.us/bmzkvv). Dynamic, year-by-year alteration of the caps presents “substantial challenges” for all rural LECs, and instills a “consistent fear that any given RLEC might be next in line to trigger the caps if that RLEC undertakes further broadband deployment,” NTCA said in an ex parte filing. The dynamic nature of the caps also confuses lenders and investors, NTCA said. “Allowing such uncertainty to perpetuate and to potentially stymie the deployment of broadband would be contrary to the very purpose of the National Broadband Plan, the President’s own stimulus initiatives, and stated objectives of the Commission’s reform.” NTCA also expressed concern on continuing call completion issues, truth in Caller ID issues and access avoidance and phantom traffic problems.