Treatment of VoIP and the transition from incumbent telcos are among issues to be ironed out after the FCC Connect America Fund Phase II subsidy auction, a National Regulatory Research Institute webinar heard Wednesday. Winning CAF II bidders are to receive $1.49 billion cumulatively over 10 years to provide broadband and voice service in areas traditionally served by price-cap telcos (see 1808280035). "You have a whole new cast of characters," said consultant Carol Mattey, citing fixed-wireless, electric utilities and ViaSat. The $23 million OzarksGo will receive is a "drop in the bucket" of a $180 million fiber project offering gigabit speed, said General Manager Randy Klindt, whose company will lease capacity from parent Ozarks Electric Cooperative. To become a CAF eligible telecom carrier, winning bidders must provide a telecom service, said Mike Romano, NTCA senior vice president. He said ETC aspirants should familiarize themselves with common carrier requirements, given uncertainties. He noted an 8th U.S. Circuit Court of Appeals ruling that interconnected VoIP is an information service and FCC reluctance to decide the matter. Romano said rate-of-return rural telcos see the CAF II support as a way to "edge out" service areas. USTelecom Vice President Mike Saperstein cited a "halo effect" where ILEC winning bidders provide service above minimum speeds in areas adjacent to their territories. Romano said CAF II winners won't technically be carriers of last resort, but "practically speaking" will be, replacing price-cap telcos no longer being subsidized. He and Mattey said that raised questions about the transition as CAF II winners build out over six years. Mattey said the FCC will have to issue a new NPRM on Remote Areas Fund details, including any change to a 2011 plan for a $100 million annual budget. She thinks that amount would be enough if the FCC confined the RAF to CAF II areas that didn't receive winning bids, but not enough if it broadens coverage. She said ViaSat, a CAF II auction winner, and Hughes, a New York State broadband auction winner, essentially revealed what they need to provide satellite broadband in high-cost areas: "a very low number." Asked if the U.S. would ever get to 100 percent broadband coverage, Mattey quipped, "We're just going to move the goal posts." She expects the FCC to increase the 10/1 Mbps standard for new CAF phases within three years. Romano agreed, saying 25/3 Mbps is likely. USF contributions must become more sustainable, said speakers. Nobody was optimistic.
Puerto Rico Telephone Co. asked the FCC to further hike fixed service USF support in stage 2 of a Uniting Puerto Rico Fund, calling the current proposed increase insufficient to meet its goals. PRTC said the Connect America Cost Model estimates it would take $553 million in annual operating expenses to run a fiber-to-the-premises network to 1.67 million locations, but expected revenue from subscribers would be just $456 million. A proposed $8.4 million increase in annual support to $44.5 million would cover only half the deficit, said the incumbent telco's filing posted Monday in docket 18-143. The carrier proposed an additional "annual budget for fixed providers of $62 million above the existing legacy frozen support for a total of $98 million" annually. "If offered this funding on a right of first refusal basis, PRTC will be prepared to modernize and expand voice and high‐speed broadband service to a specified percentage of locations within a very aggressive timeframe," it said. "With no guarantee of federal funding, PRTC is currently implementing a build‐out plan that effectively replaces the legacy copper distribution network that was destroyed by the hurricanes with fiber and fixed wireless service that is capable of up to 1 gigabit." PRTC met with Commissioners Jessica Rosenworcel and Brendan Carr and aides to all four commissioners, and with Wireline Bureau staffers, said filings posted Friday and Monday (here, here). Competitors opposed giving the ILEC right of first refusal (see 1808090021).
Industry groups are renewing their fight against an FCC policy statement that triples damages for amounts owed to USF and other funds. In a docket 16-330 ex parte posting Thursday, CTIA, NCTA, USTelecom and Incompas recapped a meeting with FCC Chief of Staff Matthew Berry at which they said the agency's way of defining a continuing violation in recent years runs contrary to the one-year statute of limitations for nonbroadcast notices of apparent liability contained in the Communications Act. The groups argued that four particular categories shouldn't be considering continuing violations, repeating an argument made to the Enforcement Bureau (see 1802010021). The groups petitioned in 2015, challenging the policy statement (see 1503060066).
The FCC said the Lifeline national verifier will launch in five more states and one territory Monday: Hawaii, Idaho, New Hampshire, North Dakota, South Dakota and Guam. During the soft launch, Lifeline-eligible telecom carriers are allowed but not required to use the national verifier of consumer eligibility for the low-income USF subsidy program, said a Wireline Bureau public notice Thursday in docket 11-42. It said a hard launch requiring NV use will come later. An initial six states in a soft launch period are scheduled to go to a hard launch Nov. 2 -- Colorado, Mississippi, Montana, New Mexico, Utah and Wyoming -- drawing some concerns (see 1810040045).
A hold Sen. Dan Sullivan, R-Alaska, placed on FCC Commissioner Brendan Carr's reconfirmation remained in place Thursday night despite the commission's bid to fund payments to a top Alaska USF Rural Health Care (RHC) Program participant. The FCC Wireline Bureau said Wednesday evening it cleared Alaska telco General Communication Inc. to receive $77.8 million in RHC payments for FY 2017. Sullivan and Sen. Lisa Murkowski, R-Alaska, told us that action alone won't fully resolve their concerns with FCC handling of the program, which led Sullivan to place the hold on Carr's confirmation to a full five-year term ending in 2023 (see 1809120056). Sullivan worries FCC handling of RHC negatively affected constituents (see 1809130059). The approved GCI payment figure is 26 percent less than the $105 million it sought. The agency required GCI and other RHC participants to substantiate rural telecom rates after finding two non-Alaska carriers apparently falsified documentation to inflate their rural rates, which the program subsidizes based on their differential with typically lower urban rates. The FCC proposed $40 million in fines against the two carriers. GCI didn't comment. Senate Commerce Committee Chairman John Thune, R-S.D., told reporters he's aware of an FCC proposal “that addresses” concerns Sullivan and Murkowski raised about RHC “and we hope that this satisfies” them. The senators were still “getting feedback” on the proposal Thursday, Thune said. He said he hopes the FCC's actions might end Sullivan's hold so the Senate can confirm Carr and Democratic FCC nominee Geoffrey Starks as part of a pre-election package of nominees, though that appeared to be unlikely. Senate leaders were negotiating at our deadline on a deal that would leave the chamber in recess until after the November elections. Sullivan later told reporters he plans to meet with FCC Chairman Ajit Pai “next week” to follow up on his RHC concerns. Murkowski believes the FCC needs to address how it will provide “certainty” on processing Alaska providers' RHC applications in the future.
An FCC business data service deregulatory draft isn't looking very contentious as commissioners head toward a planned vote at their Oct. 23 meeting. Stakeholders aren't expecting major changes to the order and two Further NPRMs, though tweaks are possible. Rural telco representatives are largely supportive and no opposition has surfaced so far in the draft's docket.
Sen. Dan Sullivan, R-Alaska, told us he had a phone call set for later Wednesday or Thursday with FCC Chairman Ajit Pai on his concerns about FCC handling of the USF Rural Health Care (RHC) Program that led Sullivan to place a hold on Commissioner Brendan Carr’s reconfirmation to a full five-year term ending in 2023 (see 1809120056). Sullivan worries the FCC's handling of RHC negatively affected Alaska constituents, and says Pai didn't adequately respond (see 1809130059). Sullivan is maintaining his hold but “certainly would hope” the call with Pai results in progress. “I've only been talking to these guys about [RHC] for seven months now,” Sullivan said. The Senate Commerce Committee's August FCC oversight hearing showed the commission is “running a really important program in a haphazard way that nobody seems to understand,” Sullivan said in a late September interview. The FCC didn't comment. Confirmation of Carr and FCC nominee Geoffrey Starks has stalled repeatedly since Senate Commerce Committee Chairman John Thune, R-S.D., first tried to fast-track the two in June (see 1808230040).
AT&T and cable providers raised doubts about Oregon Public Utility Commission authority to make interconnected VoIP providers pay into the state USF. The PUC at a teleconferenced workshop Wednesday took feedback on a preliminary proposal in docket AR-615 to require VoIP contribution. The agency is exploring the idea despite a recent 8th U.S. Circuit Court of Appeals ruling -- contested by states -- that VoIP is an information service (see 1809280057). A few other states are also weighing changes.
The Trump administration is exploring ways to restart its infrastructure legislative push after the next Congress begins in January, and the proposal's contours will depend substantially on November's election outcome, lawmakers and lobbyists told us. A shift to a Democratic majority in either chamber would increase pressure on administration officials to include at least some elements of that caucus' infrastructure proposals, most notably dedicated broadband funding, industry officials said. The White House faces potential hurdles, including Democratic resistance to giving Donald Trump a bipartisan legislative win ahead of the 2020 presidential election and GOP appropriations woes.
A coming FCC draft order would extend operations expense relief to more tribal carriers, including Mescalero Apache Telecom and Sacred Wind Communications, said Chairman Ajit Pai. He responded to Sen. Tom Udall, D-N.M., who wrote to support the two carriers' petitions to reconsider (see 1805310032) an April order that allowed tribal-oriented carriers to recover higher opex costs from USF but excluded carriers that had deployed 10/1 Mbps broadband to 90 percent or more of locations (see 1804050028). Pai agrees the relief "did not go far enough" and believes "it was inappropriate to exclude carriers" such as Mescalero and Sacred Wind, which argue their actual deployment levels are below the threshold. "I have directed staff to circulate an order in the near future to fix this mistake," he wrote, hoping colleagues will be supportive. "The letter is very encouraging" because the two carriers "need this relief" and "the sooner the better," emailed consultant Randy Tyree Friday. Tyree, who represents Mescalero and the National Tribal Telecommunications Association, said the entire New Mexico congressional delegation is supportive.