Even with FCC progress in easing the infrastructure path to 5G deployment and extending broadband connectivity, industry officials at a Multicultural Media, Telecom and Internet Council event Wednesday sought lower barriers to infrastructure deployment. Some commissioners also said the draft Telecom Act Section 706 broadband deployment report points to big progress in closing the digital divide.
Former FCC Commissioner Mignon Clyburn, now a consultant to T-Mobile/Sprint on their proposed deal, offered her first public defense during a Capitol Hill lunch sponsored by the Georgetown Institute for Tech Law & Policy Tuesday. The panel presented arguments for and against the transaction, now before the FCC and DOJ. T-Mobile acknowledged to lawmakers it spent $195,000 at the Trump International Hotel in Washington since announcing its proposed buy of Sprint in April (see 1903050044).
FCC staff rejected as "overly broad" an Alaska Telecom Association request to waive a requirement that carriers receiving Alaska Plan USF support submit fiber network maps accurate within 7.6 meters. ATA "fails to plead with particularity the facts and circumstances warranting relief," said a Wireless and Wireline bureaus order in Monday's Daily Digest and docket 16-271. It noted ATA's Feb. 6 petition came after some members submitted data meeting the accuracy standard and less than a month before a March 1 deadline. "Relief is unnecessary for the over fifty percent of ATA members who have already certified in their initial filing," nearly six months early, the order said. "ATA provides no detailed information on the level of accuracy of the network data that its other members possess, why they do not possess similarly accurate data, or why a majority of its members had no problem meeting the requirement." ATA declined comment Monday. GCI Communication and its United Utilities and Yukon Telephone submitted confidential information Friday "to comply as fully as possible" but "cannot certify" that all fiber information is locationally accurate to the standard. "I certify that the links depicting aerial and buried fiber are accurate to within 50 meters to an 80 percent confidence level," wrote Frederick Hitz, vice president-regulatory economics and finance. "I also certify that all other information is accurate to within 7.6 meters to a 95 percent confidence level." ATA changed its name from the Alaska Telephone Association in mid-2018.
The Q2 USF contribution factor will fall to 18.8 percent from Q1's 20 percent of carriers' U.S. interstate and international telecom end-user revenue, consultant Billy Jack Gregg emailed Friday. Universal Service Administrative Co. projected USF-applicable telecom revenue will edge down $23 million to $12.27 billion in Q2, which combined with a previous projection of $1.92 billion in quarterly USF demand produces the expected factor drop. The Q2 revenue decline continues a downward trend that places long-term upward pressure on the factor, he noted: USF revenue for the year through Q2 is expected to be $1.9 billion lower than the year ending in Q2 2018, a 3.6 percent decline.
Utah’s connection-based USF surcharge will increase to 60 cents monthly from 36 cents, starting May 1, the Utah Public Service Commission ruled 3-0 last week in docket 18-999-15 (see 1901150026). The commission noted CTIA red flags about increasing state USF costs but said “these concerns offer no basis upon which to delay or refuse to implement the necessary increase to the surcharge.” The commission won’t second-guess the legislature, which made changes that "significantly increased costs," including adding broadband to services eligible for disbursements. The change will be published in the Utah State BulletinMarch 15, with a comment period ending April 15, the agency said.
Windstream's Chapter 11 bankruptcy filing is "concerning," given its status as a large internet and voice service provider, said FCC Commissioner Geoffrey Starks Tuesday. "I will be monitoring the situation closely to ensure that there are no disruptions," he said, citing Windstream's provision of 911 and broadband services, and receipt of USF support. He's thankful Windstream "took immediate steps to ensure that it can continue to operate." Wireline Bureau Chief Kris Monteith made similar comments Monday (see 1902250058). The Communications Workers of America plan "to take an active part" in the bankruptcy proceeding to reorganize the telco's debt. "We are assessing the details as they emerge and have retained an experienced law firm to help protect the interests of our members and retirees," said a release posted Tuesday, noting CWA represents about 1,200 active members at Windstream locations. Windstream sought bankruptcy protection Monday after a recent court reversal in a bondholder dispute. The U.S. District Court of Southern New York awarded bondholder Aurelius Capital Management a $310 million judgment over the telco's spinoff of telecom network assets into Uniti Group (ticker: UNIT), a real estate investment trust, and their leaseback arrangements (see 1902190043). "While we are one pivotal event through the decision tree, and at current levels there are various upside opportunities for UNIT shares, there is simply too much process risk, too little visibility, and outcome variance far too wide (i.e. payment cut can range) to recommend the stock," Cowen analyst Gregory Williams wrote investors Tuesday. "What’s ultimately at stake for UNIT shares is the level of rental cuts, if any, that the company could incur through the Windstream restructuring process." Uniti's proposed deal related to Bluebird Network (see 1901150052) involving Otto Maly was granted antitrust clearance under an FTC early termination notice posted Monday. Maly is chairman of Maly Commercial Realty. Moody's downgraded Windstream's probability of default rating to "D-PD from Caa3-PD" Tuesday and said it subsequently will withdraw its ratings for the company due to the Chapter 11 filing.
Windstream expects to continue operating normally after its Chapter 11 filing Monday seeking to restructure debt in U.S. Bankruptcy Court for the Southern District of New York (see 1902250025). The FCC welcomed the assurance but vowed to remain vigilant on potential USF and 911 ramifications. Others suggested more Chapter 11 bankruptcy filings are possible and cited difficult economics for rural-oriented telcos. Some had suggested Windstream could seek Chapter 11 after a federal district court reversal in its dispute with bondholder Aurelius Capital Management (see 1902190043). Moody's Friday downgraded the carrier (see 1902220057) .
An FCC order, offering rural telcos more USF support in exchange for deploying 25/3 Mbps broadband, partially takes effect March 21, said a rule from docket 10-90 in Tuesday's Federal Register. It noted some rule changes in the order adopted Dec. 12 with an NPRM (see 1812120039) will take effect Jan. 1. OMB must approve other, associated reporting requirements, which will be the subject of a future FCC document in the FR, the PN said.
The FCC provided guidance on complying with USF rural healthcare program rules, with applications due through May 1 for the 2019 funding year beginning July 1. A telecom or broadband "service provider should determine the rural rate before it responds to a health care provider’s request for bids (FCC Form 465) and ensure that the rate is sufficiently documented at that time," said a Wireline Bureau public notice in docket 02-60 and Tuesday's Daily Digest. "Once the health care provider selects a winning bid and service provider, and enters into a commitment, any attempt to change the rates or other contract terms could violate the program’s competitive bidding rules. ... [H]ealth care providers must have program-compliant rural rates supported by documentation in hand before they file their FCC Form 466 funding applications." The PN noted three methods that service and healthcare providers can use to determine rural rates.
Amid the FTC's "huge portfolio that’s much different" from his agency's, FCC Commissioner Mike O'Rielly said, are "a bunch of things that are unrelated. It makes it a very challenging opportunity for them." He was answering a question about the two agencies' coordination on net neutrality, during an episode of C-SPAN's The Communicators to be online Friday and televised this weekend. He repeated that net neutrality is a federal, not state, issue and raised national security concerns about Chinese 5G gear.