National Plan Expected to Set Up More Questions on USF, Intercarrier Comp

FCC and industry officials said they expect the plan to pave the way for rulemaking notices on changes in universal service and intercarrier compensation. “I think they'll approach it very comprehensively,” said a wireline source. “I think they'll have NPRMs based on the record on how to reform USF distribution in a broadband world. I think there'll be an NPRM on the USF contribution methodology to be reformed for a broadband world. And I think there'll be intercarrier compensation reform as part of a broadband plan to help fund the ubiquitous network that meets the goal and targets that the FCC adopts.”

TIA noted that Section 254 of the Communications Act says consumers in high-cost areas should receive service “reasonably comparable to those services provided in urban areas,” at prices “reasonably comparable to rates charged for similar services in urban areas.” Danielle Coffey, TIA vice president for government affairs, said, “If the Commission is to fulfill this goal, it should permit support for the deployment and operation of new broadband networks, as well as the upgrade of broadband service in areas where it is not reasonably comparable to urban areas.”

TIA said any changes should be technologically neutral, raising a major theme of wireless carriers. “Given the wide distribution of broadband-capable spectrum and facilities among diverse providers, funds should be awarded to those high-speed broadband network providers that can provide the supported service in the most efficient manner -- regardless of the technology used to provide that service -- so that we can reach our universal broadband goal cost-effectively,” Coffey said. ’ Local incumbent exchange carriers CenturyLink, Consolidated Communications, Frontier Communications, Iowa Telecom, and Windstream, called their proposal the Broadband Now Plan. They said they have in total more than 12 million voice lines and 4 million broadband connections, mostly rural.

“While some would argue the Commission should first create new broadband-based policy and rules from whole cloth, such extensive reform would require new rounds of notice and comment, resulting in a substantial delay in transitioning the Universal Service Fund from a mainly voice-oriented model to one that can support both broadband and voice,” the carriers said. “The Commission is not limited to such a binary choice. Rather, the Broadband Now Plan offers a framework of reforms to the Commission’s universal service and intercarrier compensation regimes for the near term as a way to make quick progress on deploying extensive broadband networks at speeds of 6 Mbps or higher, while embarking on the longer and more difficult journey to further modernize the universal service and intercarrier compensation systems.” They acknowledged their plan doesn’t deal with every question that the commission faces: “Rather, our goal is to present a reasonable and achievable framework that will rapidly modernize the existing universal service and intercarrier compensation regimes in a way that will support achievement of the Commission’s broadband goals.”

Under the proposal, the USF would provide “targeted, incremental support” in high-cost areas now unserved by broadband or without service faster than 6 Mbps. To get support, a carrier would have to first make an investment equal to at least $800 for each home without access to broadband and $50 for each home with it. The plan calls for calculating USF support “on a more granular wire center level and awarding that wire center support in a competitively neutral manner that would permit a provider that required less targeted support to step forward and receive support in place of the incumbent.” It would base USF contributions on all connections, broadband and voice.

USTelecom said the FCC should take up USF and intercarrier compensation in the national plan. “While some may discount the impact of current regulations and regulatory certainty on future investment, provision of broadband service requires a high level of long-term fixed-cost investment,” the group said. “Investors will be unwilling to fund such investment without an expectation of an opportunity for a reasonable future return. In highly regulated industries such as the provision of voice service by ILECs, uncertainties created by the marketplace and technological changes are multiplied by the regulatory uncertainty.” USTelecom said the Broadband Now proposal is “an example of constructive proposals that make clear the unequivocal connection between doing the hard work of stabilizing and modernizing intercarrier compensation and universal service and our nation’s ability to succeed in its critical efforts to advance America’s broadband investment and deployment.”

CompTel said the broadband plan should include a commitment to fix USF rules: “The Commission must take advantage of the opportunity before it to implement comprehensive USF reform. Continued inaction is not an option.” The Independent Telephone & Telecommunications Alliance agreed: “The Public Notice evinces an approach that ITTA has advocated previously: a viable National Broadband Plan can neither exist nor be created in a vacuum apart from meaningful reformation of Universal Service Fund and Intercarrier Compensation mechanisms. … Nor can the goals of the NBP, as articulated thus far by Congress and Commissioners, be realized in the absence of policy-makers’ commitment to stand firmly in support of mechanisms that will be commensurate with National goals.”

Verizon and Verizon Wireless said a fix is in order. “Merely layering broadband onto the existing, broken universal service infrastructure without more fundamental reform of the universal service system (and necessary related reform of existing intercarrier compensation systems), however, is not a viable option,” Verizon said. “The high cost fund is already struggling and at a tipping point even without adding broadband to the mix.”

AT&T said “one of the most potent tools that the Commission has available to help it reach this goal is its universal service support mechanisms.” The carrier said it has already laid out its vision for an overhaul. “While the task may seem daunting, AT&T has been urging comprehensive universal service reform for a number of years and has filed detailed blueprints with the Commission on how it could modernize both its distribution and contribution mechanisms for the 21st Century,” the carrier said. NTCA said the FCC could act quickly by adopting its previously proposed revamp plan. “NTCA offers a National Broadband Plan that addresses much of the substance of this Public Notice,” the group said.

CTIA and individual wireless carriers asked the FCC to use the plan to revamp the USF and intercarrier comp systems. “Broadband and mobility are the services that consumers require today, yet the current universal service and intercarrier compensation mechanisms are not designed to support these Services,” CTIA said. “Wireless carriers and their customers now foot the bill for an increasingly large portion of the universal service fund, yet are artificially restricted from receiving support.” T-Mobile said: “The Commission cannot adequately promote the ubiquitous deployment and availability of broadband services unless certain key aspects of USF reform are implemented. … Specifically, the existing USF mechanism -- a remnant of the old wireline-centric regulatory framework that was designed to support monopoly circuit-switched voice networks -- distorts incentives for investment and is woefully outdated in light of today’s broadband and Internet-based technologies and services, including wireless services.”

“One of the central challenges faced by the Commission with respect to its universal service policies is how to go about redesigning universal service mechanisms so that they can be used effectively to promote the Commission’s broadband goals,” the Rural Cellular Association said. “The core of this challenge is to shift the focus of universal service support away from a copper wire, voice-centric telecommunications infrastructure, and toward a broadband, IP-based network.”