FCC Grants Co-Mo/United Appeal of CenturyLink CAF II Support in Parts of Missouri
The FCC ruled 997 Missouri census blocks served by CenturyLink are ineligible for broadband-oriented USF support because they’re also served by unsubsidized competitors. The commission unanimously approved and released an order Thursday granting a request from Co-Mo Comm and United Services to overturn a bureau decision that had found the census blocks were unserved by unsubsidized competitors and thus eligible for Connect America Fund Phase II support for CenturyLink. The decision was not a surprise as FCC Chairman Tom Wheeler had circulated a draft that had recommended granting the request (see 1509300049).
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CenturyLink estimates about $3.5 million in annual CAF II support is implicated by the decision. The company told us Friday it’s reviewing the order and had no further comment at this time. CenturyLink in August accepted $77.85 million in annual CAF II support for Missouri -- it’s largest state amount -- in agreeing to take $505.7 million overall annually from 2015 to 2020 (see 1508270068). Co-Mo Connect General Manager Randy Klindt told us: "With this distraction behind us, we will continue building and expanding our gigabit fiber to the home networks to our members and rural communities."
The bureau on March 30 had issued an order resolving dozens of challenges to the CAF II eligibility of 30,689 census blocks across the country, including by denying Co-Mo’s and United’s challenges to 551 and 446 census blocks in Missouri, respectively, served by CenturyLink. The bureau had found that Co-Mo’s supporting documentation failed to show it met all the service requirements, including for voice, for being a qualified unsubsidized competitor, and that United had not provided enough evidence that it served the challenged census blocks. Co-Mo and United than submitted a joint application for review asking the FCC to reverse the bureau decision.
The full commission Thursday concluded Co-Mo and United had demonstrated they met the unsubsidized voice and broadband service requirements in the targeted census blocks and the bureau erred in denying their CAF II challenges. The commission noted the bureau had said at the beginning of the challenge process that a broadband provider using a managed solution to provide voice would meet the voice requirements as long as it is responsible for dealing with customer problems and it guarantees quality of service to end users. CenturyLink had charged Co-Mo was simply “reselling an over-the-top VoIP service provided by Big River Telephone,” but the commission found Co-Mo offered broadband and voice service over “active fiber to the home plant,” including a managed voice offering that was no different than those offered by many other facilities-based providers.
The commission disagreed with CenturyLink’s argument that United “did not provide any pricing information” to support its assertions of meeting pricing requirements. The commission noted the bureau didn’t require competitors to list their prices; just to certify that their prices were reasonably comparable to urban service prices. It also noted that the bureau required price-cap incumbents opposing challenges to show that competitor lowest advertised non-promotional prices were above benchmark prices. “As United certified that it offers reasonably comparable prices to urban areas in its challenge, and CenturyLink failed to demonstrate that United’s advertised, non-promotional prices are above the benchmark price, we find that United’s challenge should have been granted,” the order said.
The commission also was unpersuaded by CenturyLink arguments that neither Co-Mo nor United submitted proof it had current or former customers in all of the challenged census blocks, and that approval of the application would be procedurally defective. The FCC said it was overruling the bureau decision because “CenturyLink failed to provide sufficient evidence in its reply to the challenges” to the 997 census blocks. “We do not rely on any new information included in the Application for Review, although we observe that it does support our findings,” the order said.