NCTA expressed “grave concern” about ILEC proposals to get access to Connect America Fund Phase I money without any corresponding obligation to extend broadband service to the 19 million Americans that lack it, in a meeting with an aide to FCC Chairman Julius Genachowski Thursday (http://bit.ly/10ARgzS). That approach, which would give the price cap LECs about $1.5 billion in support for 2013, is “fundamentally at odds” with the FCC’s USF reform goals, NCTA said. The ILEC proposals would classify as unserved about a million locations currently counted as served, and then make support available to upgrade the existing DSL service at those locations, NCTA said. Spending “limited resources” in such a manner “should not be a priority,” it said. NCTA also raised concerns about USTelecom proposals to eliminate the obligation to spend a third of its 2013 legacy high-cost support on broadband in areas currently unserved by any unsubsidized provider. “Enforcement of that requirement is critical to achieving the Commission’s goal of promoting broadband deployment,” NCTA said.
The FCC’s first reverse auction for USF monies last September under its new Mobility Fund must be considered a “qualified success,” Technology Policy Institute Vice President Scott Wallsten said in a paper released Friday. “Perhaps most importantly, it demonstrated that the FCC can run an effective reverse auction and demonstrated that allocating subsidies based on cost-effectiveness measures has the potential to dramatically increase the bang for the buck we get from universal service expenditures,” said Wallsten, a former FCC economist. Under the auction, the FCC ordered bids from lowest to highest based on dollars per road-mile covered and then granted awards until it reached its budget constraint of $300 million. “The results demonstrate how much more of a ‘bang for the buck’ it is possible to get when subsidies are ordered by cost-effectiveness rather than simply provided in all possible eligible areas,” the paper said (http://bit.ly/Z6Et5S). “By ordering subsidies in terms of cost-effectiveness, $300 million covered 83,500 road miles. Based on bids received in areas that were ultimately not awarded funding, covering the next 1,924 miles would have required an additional $144 million in subsidies.” It’s still unclear the extent to which the auction will mean service is ultimately rolled out to unserved areas, Wallsten wrote. “While this exercise demonstrated that the FCC can run an effective reverse auction, it also yields certain lessons,” the paper said. “Most notably, the auction highlighted the potential difficulty in generating participation. The FCC handled this problem well, but must continue to think hard about how to encourage participation in upcoming reverse auctions, most notably on the broadcaster side of the Incentive Auctions."
Wisconsin Gov. Scott Walker (R) emphasized a desire for deploying more broadband across the state, speaking at a press conference during the Wisconsin Public Service Commission’s two-day broadband symposium last week in Madison. He spoke of the significance of “high-speed Internet connections, both for uploads and downloads” for potential businesses in the state, citing competition from all over the world. The state rolled out multiple new tools to help achieve the broadband goals, part of a broader set of initiatives the state has launched to that end.
The federal government has failed in pioneering U.S. broadband deployment and thus prompts states and cities to lead, Gig.U Executive Director Blair Levin told Wisconsin broadband stakeholders Thursday. “As there is no reasonable expectation that the FCC will take any substantial action to change the investment equation in the near-term, states and cities must act to do so,” Levin said, according to his prepared remarks (http://bit.ly/Xs9g1D). The Wisconsin Public Service Commission is hosting a symposium on how to advance broadband adoption and deployment Thursday and Friday of this week in Madison, Wis. The PSC includes its own state broadband director, Tithi Chattopadhyay, who started last fall and has helped lead the PSC’s broadband efforts, which include a broadband playbook (1.usa.gov/XqhZvV) directed toward state legislators and policy officials. The playbook was formally released and presented in late March, although it was initially completed and went through a round of comments last fall. It “is a tool that all stakeholders need to study and explore to identify specific broadband actions and initiatives that can be considered for the state,” said the PSC commissioners in their March letter presenting the 15-page book. The symposium included a keynote from Levin, who helped manage the creation of the National Broadband Plan, and panels with industry and state officials. The National Broadband Plan struggled because “D.C. culture doesn’t lend itself to effective experimentation,” Levin said in his speech. “The Broadband Plan analysis demonstrated that the biggest problem for unserved areas stemmed from the lack of incentives to upgrade the networks in areas dominated by the three largest wireline phone companies.” Levin did credit the success of the $4 billion broadband stimulus program. He questioned the FCC’s USF reform and said the major companies “have indicated the reform package will not catalyze significant network deployments” and pointed to smaller companies that have stalled progress due to the uncertainty the reform created. The shortcomings of the reform “put it in a hole,” he said, noting it misses the impact of 4G and wireless and satellite on rural regions that need more bandwidth. “In sum, while the FCC shifted billions of dollars around, the combination of carrots and sticks created by the FCC actions has resulted in minimal deployments in the most problematic unserved areas identified in the Plan, a slowdown of deployment in other areas, consumers paying more, a failure to anticipate future needs and a punt of a central issue.” He praised local experimentation with broadband networks and noted how aware cities are of competing with one another. “Cities, and not the federal government, are leading in experimenting with new forms of mutual agreements that serve today and tomorrow’s needs,” Levin said, expressing confidence in municipal leadership and implicitly criticizing laws that restrict municipally owned networks: “We should also squarely look at the conflict that occurs when a state curtails a city’s ability to take control of its own bandwidth destiny.” The FCC disputed the characterization: “The Commission’s reform of USF to create the Connect America Fund is expanding broadband to rural Americans who lack access while for the first time putting the Fund on a budget, though we're still in the early innings,” an FCC spokesman said in response to Levin’s speech. “Last July, the Connect America Fund began connecting nearly 400,000 Americans unserved by broadband in 37 states. Last October, the Commission launched the Mobility Fund, providing $300 million to extend advanced mobile wireless service on up to 83,000 unserved road miles in 31 states, reaching areas where millions of Americans live, work, or travel. This October, the new Tribal Mobility Fund will provide $50 million to increase availability of advanced mobile services on Tribal Lands.” The spokesman emphasized broadband plans to come. “The Commission is also on track to launch, later this year, both the second phase of the Connect America Fund, which will distribute up to $1.8 billion a year to deploy broadband to millions of Americans across the country, and the second phase of the Mobility Fund, which will distribute $500 million annually to deploy mobile broadband to unserved areas,” he said. “The FCC has accomplished this entirely through savings from reforms, without increasing the size of the Fund or the cost to consumers and small businesses who pay into it. In fact, thanks to the Commission’s reforms of Lifeline, the overall size of USF -- and the USF contribution factor -- are both shrinking since reforms took effect. The contribution factor has decreased in each of the past two quarters, dropping nearly 15% from its high.” Intercarrier compensation reform will “unleash over $1.5 billion in annual benefits to consumers by eliminating hidden calling costs while removing major barriers to deployments of advanced IP-based broadband networks, such as AT&T’s announcement in November that it would substantially expand its U-Verse footprint,” the spokesman added. “Together, these reforms put the country on track to connect the 19 million Americans who lack service by the end of the decade.”
The state of Washington has moved House Bill 1971 forward from the House Finance Committee to Appropriations and received its first reading on Wednesday, substituting in a new version of the bill. The proposed legislation received a lengthy hearing, with a great show of support, in mid-March and would overhaul the way the state taxes telecom and creates a state USF (CD March 20 p8). The substitute (http://bit.ly/12jCul9) makes several clarifications on what certain terms mean and revises language in several instances, such as specifying how retailers must collect 911 excise taxes on prepaid wireless services.
The FCC Wireline Bureau has chosen a “greenfield” model for Phase II of the Connect America Fund, said industry and agency officials. A greenfield approach estimates the full cost of building and operating a network from scratch. The ABC Coalition, consisting of USTelecom and several ILECs, supports the greenfield approach. The American Cable Association, a primary proponent of the competing brownfield model (CD Jan 16 p3), criticized the choice of a greenfield model as a “wasteful” move that will hurt consumers and small cable operators.
The 2011 FCC USF order has spurred multiple Texas telcos to seek recovery of millions of dollars worth of lost federal support money from the state’s USF. Valley Telephone Cooperative petitioned the Texas PUC on Friday to allow it to hike rates and recover $613,903.69 from the Texas USF, citing the destructive impact of FCC reform. Valley is the latest among many companies that want state USF money for that reason. Valley and other telcos have asked to recover a total of more than $2.6 million in federal support losses from the Texas USF fund, with more companies potentially following suit despite some opposition.
Commenters differed on the proper speed proxy the FCC should use to ensure that recipients of Connect America Fund Phase II money provide broadband service of at least 4 Mbps downstream and 1 Mbps upstream. Commenters in WC docket 10-90 were responding to a Wireline Bureau request on how best to identify unserved areas eligible for CAF Phase II funding, and on how to measure broadband speed, latency and other metrics required of funding recipients.
Kansas lawmakers continued to advance a telecom deregulation bill last week. The Senate approved 36-4 an amended version of House Bill 2201 and returned it to the House, which had previously approved it 118-1. One proposed amendment was accepted, and one was canceled, but neither substantively proposed to change the industry-backed bill. The bill proposes the creation of a Telecom Study Committee, a request to the Kansas Corporation Commission to report on IP-to-IP interconnection issues, a change to how the state USF functions and the removal of certain carrier-of-last-resort obligations, among others, according to the bill’s latest supplemental note (http://bit.ly/YO3b0z).
The push to keep states from regulating Internet Protocol-enabled services goes strong in 2013. Legislators in more than half a dozen states introduced such IP bills this year. More than two dozen states had already passed laws before 2013 began, California prominent among them (CD Oct 2 p7). The IP transition’s urgency escalated when AT&T introduced an FCC petition urging transition trials last November, and it’s widely accepted that much voice traffic will shift to VoIP and IP-enabled frameworks in the next decade amid these transforming state roles. Proponents and observers told us these state laws will keep appearing, while NASUCA and AARP fear they'll create public safety and affordability risks.