More collaboration is needed to achieve the broadband speeds of 10 Mbps downstream/5 Mbps upstream across Minnesota by 2015, as mandated by a 2010 state statute, said those at a Connect Minnesota conference Wednesday. Officials of state telecom associations, state legislators and members of Gov. Mark Dayton’s task force on broadband debated the progress of broadband adoption in the state and the next steps to further its development. In taped video address, Sen. Al Franken, D-Minn., said he will continue to ensure that any changes to the federal USF don’t harm small rural providers in the state, and will “protect the programs that provide broadband to all of Minnesota."
A new Senate bill proposing changes to the FCC USF is “confusing” on first glance, NARUC General Counsel Brad Ramsay told us, giving his personal take on S-1766, the USF Equitable Distribution Act of 2013. Sen. Kelly Ayotte, R-N.H., introduced the bill before the Thanksgiving recess, prompting praise from FairPoint in a statement last week (CD Dec 2 p10). The bill would make sure that rural states keep at least 75 cents for every dollar of USF contribution. Ramsay said the states that would be benefit are the rural ones that are net donors to the USF, but the states that are not designated as rural -- which the bill defines as ones in which “the total population density is not more than 200 people per square mile” -- will have to pay the difference, whether they are net donors or recipients to the USF. Most states -- 35 -- have fewer than 200 people per square mile, according to the 2010 census. Ramsay doubted it would be “politically palatable to come up with differing [USF] surcharges for different states,” leading him to speculate that there might be a hike in surcharges across the board if such a bill is passed. But an aide to Ayotte last week told us the bill would not increase the size of the USF, and the bill text contains language specifying that nothing should be construed as “requiring an increase in amounts collected by providers of interstate telecommunications from consumers for the purpose of making contributions.” Ramsay noted this language and suggested the FCC might only be able to make changes on the allocation of USF funds rather than the collection, which would still mean that non-rural states fund the difference. He questioned how the FCC would actually implement the language, saying that’s open to various possibilities.
A Republican Senate bill would change how the FCC’s USF doles money out to rural states. Sen. Kelly Ayotte, R-N.H., introduced the USF Equitable Distribution Act of 2013, S-1766, on Nov. 21, and the text of the bill appeared online last week. Ayotte has on multiple occasions in the past year criticized the USF, in particular the amount of money New Hampshire receives relative to its contributions to the fund. The bill’s purpose, according to its text, is “to provide for the equitable distribution of Universal Service funds to rural States.” The short piece of legislation provides for changes to the Communications Act of 1934, proposing the following language be added: “Not less than 75 percent of all amounts collected by providers of interstate telecommunications from consumers in a rural State for the purpose of making contributions … shall be allocated to the provision of universal service to consumers in that rural State.” An aide to Ayotte told us Friday that New Hampshire is a huge net-donor to the USF, receiving fewer than 40 cents for every dollar it contributes, whereas most other rural states are big net-recipients of the USF. The Ayotte bill won’t increase the size of the USF, the aide added. A rural state is defined as one in which “the total population density is not more than 200 people per square mile,” according to the bill. The FCC declined comment on the legislation. FairPoint applauds Ayotte’s efforts “to raise awareness” of areas that don’t see a good return on their USF contributions as well as the bill’s efforts to “remedy the situation” and help create “a fair distribution of USF-based funds,” a spokeswoman for the telco told us. FairPoint offers service in many rural markets across 17 states and serves New Hampshire. S-1766 lists no co-sponsors and is referred to the Commerce Committee.
Several industry voices backed changes to the wholesale reseller certification form of the FCC Wireline Bureau. AT&T, BT, CenturyLink, Orange, Sprint, Verizon and XO Communications filed joint comments with the FCC last week outlining several proposed edits to the Draft 499-A Instructions, which the Wireline Bureau had released as a redline document open for comments. “If a wholesale provider’s customer (or another entity in the downstream chain of resellers) actually contributed to the Universal Service Fund ('USF') on revenues from offerings incorporating particular services, there should be no double collection of USF contributions from the wholesale provider, even if the wholesale provider cannot demonstrate that it had a reasonable expectation that the customer would contribute when it filed its Form 499-A for the relevant calendar year,” the industry filing said (http://bit.ly/1c1dIW6). The joint comments ask for a footnote added to the form to clarify this point. It also asked for language “explaining how providers should account for services purchased after the date that the annual certificate is signed,” among other changes.
Connect America Fund Phase I incremental support should go only to areas where a price cap LEC demonstrates that a competitive provider is not providing broadband service, said NCTA, Charter Communications, Comcast, Cox Communications and Time Warner Cable in an ex parte filing Tuesday (http://bit.ly/1aZ4trQ). The CAF Phase 1 incremental support challenge process is a burden “imposed on cable operators that have nothing to gain from the process other than protecting their service areas from universal service fund-subsidized competition,” said the filing. When conflicting evidence is submitted by both an LEC seeking funding from USF and a provider, CAF Phase I incremental support shouldn’t be awarded, said the filing. “The [Wireline] Bureau should focus on the availability of service, not the provision of service.” LEC evidence that shows only that a portion of a census block is not served by a provider shouldn’t be given weight, said the filing. “The Commission has denied price cap carriers’ attempts to receive CAF Phase I incremental support in partially served census blocks based on evidence that some locations are unserved."
The challenge process for the latest round of Connect America Fund Phase I support has been burdensome for cable companies, Cox, Comcast, Time Warner Cable and NCTA representatives told FCC Wireline Bureau officials Monday (http://bit.ly/1aZ4trP). Cable operators “have nothing to gain” from the process except “protecting their service areas” from USF-subsidized competition, they said in an ex parte filing. The cable companies asked the bureau to focus on availability of service, not provision of service, because a provider may have no customers in a particular census block even if it offers service there. The companies also asked the bureau to not award support to a price cap LEC to overbuild a competitor “based on the title or status of the individual that certifies an area is served.”
The FCC should grant a permanent waiver of rules requiring the Oregon Public Utility Commission to provide a copy of a Lifeline subscriber’s certification form to eligible telecom carriers before that ETC can claim reimbursement from the federal USF, said the OPUC and the Oregon Telecommunications Association in a FCC petition Monday (http://bit.ly/1bSqPsA). The FCC Aug. 30 granted a limited waiver to California, Colorado, Florida, Idaho, Nebraska, Oregon, Utah and Vermont to allow more time for those states to implement a process to share copies of consumer eligibility certifications for Lifeline support with ETCs (http://bit.ly/1aRhRz3). The rules to require state Lifeline administrators provide subscriber certification forms to the ETCs are “unnecessary and cost prohibitive in Oregon,” said the petition. “Requiring the OPUC to provide copies of the certification forms to the ETCs does nothing to enhance the validity of the subscriber’s eligibility for Lifeline, but adds to the burden and costs to both the OPUC and the ETCs.” In turn, this will result in an “unnecessary lag” in the delivery of Lifeline benefits to eligible consumers, it said. The OPUC’s policy to verify ETC eligibility and perform checks to eliminate duplicate Lifeline benefits presents a “special case” compared to states where the ETCs are solely responsible for the same functions, said the petition. A weekly report of all Lifeline consumers approved by the OPUC is electronically transmitted to the applicant’s respective ETC, said the OPUC. This electronic notification is comparable to the certification form and it provides “sufficient safeguards” for the ETC to begin providing Lifeline benefits and apply for reimbursement from the federal USF, said the petition.
Adak Eagle Enterprises and its subsidiary, Windy City Cellular, made an impassioned plea to FCC Commissioner Michael O'Rielly in a meeting Wednesday, said an ex parte filing posted Friday (http://bit.ly/1h7JCHJ). “With winter fast approaching and the already harsh weather on Adak Island [Alaska] becoming even more severe, it is crucial that the remote Adak community be able to continue relying on the essential services provided by AEE and WCC,” the filing said. The telco and carrier have only six more weeks until their interim funding runs out. “It is up to the Commission to make clear that it did not intend for the USF/[intercarrier compensation] Transformation Order to result in remote communities losing wireline service (service built with tax payer-funded RUS loans), losing broadband service, losing 911 service, and losing most of their wireless service,” the filing said. “The Commission did not intend to discourage investment” or “intend for communities that have working communications systems go dark.” AEE and WCC understand that “O'Rielly was not responsible for the 84% flash-cut to WCC’s funding and the rapid phasedown of AEE’s funding that took effect in early 2012,” they said. They are merely “hopeful that he will take this opportunity to help correct the Commission’s course before the companies are forced into bankruptcy and the remote Adak community is left without its only broadband service, only wireline service, only working 911 service, and most comprehensive wireless service -- a service that regularly saves lives."
The FCC’s 2010 net neutrality rules are having no effect to date on how USTelecom members do business, President Walter McCormick said during a taping of C-SPAN’s The Communicators, eventually scheduled to be telecast on the network. “I haven’t seen them have any effect, whatsoever, on either competition or on our members or on the way in which we do business,” McCormick said.
Judges in the 10th U.S. Circuit Court of Appeals are likely to uphold the FCC Connect America Fund order, wrote Stifel Nicolaus analysts Christopher King and David Kaut in a research note Thursday. Based on what they have “heard and read so far” about Tuesday’s oral argument (CD Nov 20 p2, Nov 21 p6), the analysts expect the judges to issue their ruling in Q2 or Q3, generally upholding the revamp of the $4.5 billion USF and the intercarrier compensation framework. King and Kaut said the panel could be “more skeptical” about agency reforms limiting broadband USF subsidies for rate-of-return rural telcos. The ruling will be “generally helpful to ‘midsize’ price-cap wireline telcos” that gain access to broadband USF support, the analysts said. It could also be helpful to AT&T, Verizon and Sprint, which all stand to gain from reductions in long-distance and wireless intercarrier compensation payments to LECs, they said. “We note oral arguments can be a shaky barometer of court sentiment, and we believe particular caution is in order here, due to the complexity of the case and its fallout, and the fact that we did not attend the all-day session in Denver,” the analysts said. “So the court could still come out any number of ways, with murky ramifications."