Ian Cohen

Windstream's Chapter 11 bankruptcy filing is "concerning," given its status as a large internet and voice service provider, said FCC Commissioner Geoffrey Starks Tuesday. "I will be monitoring the situation closely to ensure that there are no disruptions," he said, citing Windstream's provision of 911 and broadband services, and receipt of USF support. He's thankful Windstream "took immediate steps to ensure that it can continue to operate." Wireline Bureau Chief Kris Monteith made similar comments Monday (see 1902250058). The Communications Workers of America plan "to take an active part" in the bankruptcy proceeding to reorganize the telco's debt. "We are assessing the details as they emerge and have retained an experienced law firm to help protect the interests of our members and retirees," said a release posted Tuesday, noting CWA represents about 1,200 active members at Windstream locations. Windstream sought bankruptcy protection Monday after a recent court reversal in a bondholder dispute. The U.S. District Court of Southern New York awarded bondholder Aurelius Capital Management a $310 million judgment over the telco's spinoff of telecom network assets into Uniti Group (ticker: UNIT), a real estate investment trust, and their leaseback arrangements (see 1902190043). "While we are one pivotal event through the decision tree, and at current levels there are various upside opportunities for UNIT shares, there is simply too much process risk, too little visibility, and outcome variance far too wide (i.e. payment cut can range) to recommend the stock," Cowen analyst Gregory Williams wrote investors Tuesday. "What’s ultimately at stake for UNIT shares is the level of rental cuts, if any, that the company could incur through the Windstream restructuring process." Uniti's proposed deal related to Bluebird Network (see 1901150052) involving Otto Maly was granted antitrust clearance under an FTC early termination notice posted Monday. Maly is chairman of Maly Commercial Realty. Moody's downgraded Windstream's probability of default rating to "D-PD from Caa3-PD" Tuesday and said it subsequently will withdraw its ratings for the company due to the Chapter 11 filing.

The FCC offered $67 million in additional annual support to rural telcos it said could bring improved service to nearly 110,000 residences and businesses in 43 states. RLEC representatives welcomed the Monday announcement, which flowed from a December order (see 1812120039). Carriers have until March 27 to decide whether to accept the offers, which would require them to "significantly expand" the availability of 25/3 Mbps in their high-cost areas, said a release and public notice in docket 10-90 (both here). The FCC made 262 revised offers to 207 rate-of-return carriers receiving alternative connect America cost model (A-CAM) support, noting locations with monthly costs above $52.50 will be funded up to a per-location cap of $200 per month. The PN links to a file showing revised state-level offers of support and associated deployment obligations. "We worked really hard to get the commission to adopt additional funding for the A-CAM program, and we’re really pleased the FCC has released the public notice to get the revised program up and running," ITTA President Genny Morelli told us. "I’m glad the revised ACAM offers have been released," emailed Derrick Owens, WTA senior vice president-government and industry affairs, noting some members previously took A-CAM support even though it "was reduced from $200/line to $146.10/line" due to widespread interest that diluted per-carrier funding. Companies "now have the data they need to make a decision" on whether to accept the additional support and obligations, he said. NTCA CEO Shirley Bloomfield said it's "a critical first step in a process" adopted in the December order "that should help to restore regulatory certainty and sufficiency within cost recovery mechanisms that had been lacking ... for many years." “USTelecom is pleased the Commission has moved quickly so that companies that elect A-CAM can begin getting funding and deploying broadband to rural America in the near-term," emailed a spokesperson.

The 7th U.S. Circuit Court of Appeals overturned much of a district court ruling that sided with Peerless Network on claims Verizon breached tariffs by withholding payments in an intercarrier compensation dispute. The U.S. Northern District of Illinois erred in granting partial final judgment to Peerless, under federal civil procedure rule 54(b), on its claims that also included state tariffs "despite their significant factual overlap with pending claims," wrote Judge Amy St. Eve Wednesday, joined by Chief Judge Diane Wood and Judge Michael Brennan, in Peerless v. MCI Communications and Verizon, No. 18-2747. "A genuine issue of fact persists with respect to certain breach-of-contract claims. We therefore vacate the Rule 54(b) judgment on certain counts, dismiss in part for lack of jurisdiction, and otherwise reverse and remand." Peerless sued Verizon long-distance operations for withholding payment, which Verizon said was justified because Peerless was an "access stimulator." The district court sided with some Peerless claims and found it would be "unjust" to make it wait to collect until the FCC resolved issues referred to it. The 7th Circuit found claims before them and those stayed in district court "are factually and legally intertwined," ruling the lower court erred in granting partial final judgment on four tariff counts. They concluded it erred in "its liability determination and improperly granted" Peerless summary judgment on two counts alleging tandem service agreement breach. The companies didn't comment Friday.

Moody's downgraded Windstream's corporate family rating Friday to Caa3 from Caa1 and its probability of default rating to Caa3-PD from Caa1-PD. Moody's cited a Feb. 15 federal court reversal Windstream suffered in a dispute with Aurelius Capital Management that awarded the bondholder relief, including about $310 million (see 1902190043). "This legal outcome for Windstream [is] a negative that increases default risk and impairs refinancing actions that might have further strengthened its balance sheet in the intermediate term," Moody's said. "While the ongoing dispute remains unresolved, Windstream may encounter difficulties accessing funds to refinance its debt maturities, most notably the company's $1.03 billion drawn revolving credit facility expiring April 24, 2020 and $78 million unsecured notes maturing October 15, 2020." The telco didn't comment.

Pennsylvania is the last state commission OK Securus needs to acquire Inmate Calling Solutions from TKC Holdings, following clearance earlier this month by the Hawaii Public Utilities Commission, the companies notified the FCC in a Thursday letter in docket 18-193. The FCC's nonbinding 180-day shot clock resumed at Day 85 on Feb. 1 (see 1902010033).

Google Fiber's departure from Louisville carries both direct and larger lessons for innovators, CCG Consulting President Doug Dawson blogged Thursday. The company cut tiny slits in roads, but the buried fiber "is popping out of the micro-trenches all over the city," probably due to "ice heaving," he said. He said both AT&T and Charter "fought tooth and nail to block" Google Fiber from attaching lines to utility poles in the city, leading to the micro-trenching alternative. "The AT&T suit was resolved in Google’s favor, with the Charter one is still in court," he said. "Perhaps Google Fiber should have just waited out the lawsuits ... Unfortunately, the big ISPs are being rewarded for their intransigence." An "obvious lesson" is "not to launch a new network using an untried and untested construction technique," he said. "The micro-trenches didn’t just fail, they failed spectacularly, in the worst way imaginable. Google Fiber says the only fix for the problem would be to build the network again from scratch, which makes no financial sense." More broadly, several small ISPs say they're "ready to leap into the 5G game and build networks using millimeter wave radios installed on poles," another "new and untested technology," he wrote. "I’m not predicting that anybody pursuing that business plan will fail -- but I can assuredly promise that they will run into unanticipated problems ... I can’t think of a single example where an ISP that took a chance on a cutting-edge technology didn’t have big problems."

Comments are due March 5, replies March 12 on an application to transfer indirect control of West Telecom Services and West IP Communications within their parent company, said a Wireline Bureau public notice in docket 19-19 and Wednesday's Daily Digest. Applicants state the West wireline licensees are wholly owned subsidiaries of West Corp., which is wholly owned by Olympus Holdings, whose voting interests are indirectly held by AP VIII Olympus VoteCo and equity interests indirectly owned by investment funds managed by Apollo Global Management affiliates, the PN said. It said Joshua Harris holds 51 percent of the voting interest and 33.3 percent of the equity interest in Olympus VoteCo, and Matthew Nord and Robert Kalsow-Ramos each hold 24.5 percent of the voting and 33.3 percent of the equity interests. Under the deal, the PN said, Harris would transfer his interests in Olympus VoteCo to Nord and Kalsow-Ramos, who each will receive additional 20.55 percent voting and 11.75 percent equity interests, with Mount Olympus to receive 9.9 percent voting and equity interests. That would leave Nord and Kalsow-Ramos with 45.05 percent voting and equity interests in Olympus VoteCo, which will indirectly control all voting interests in the West companies. West Telecom provides telecom services to other providers in 47 states. West IP provides interconnected VoIP to business customers in all 50 states. Both also serve the District of Columbia. The parties have also sought transfer of wireless and international service authorizations.

An FCC order, offering rural telcos more USF support in exchange for deploying 25/3 Mbps broadband, partially takes effect March 21, said a rule from docket 10-90 in Tuesday's Federal Register. It noted some rule changes in the order adopted Dec. 12 with an NPRM (see 1812120039) will take effect Jan. 1. OMB must approve other, associated reporting requirements, which will be the subject of a future FCC document in the FR, the PN said.

The FCC provided guidance on complying with USF rural healthcare program rules, with applications due through May 1 for the 2019 funding year beginning July 1. A telecom or broadband "service provider should determine the rural rate before it responds to a health care provider’s request for bids (FCC Form 465) and ensure that the rate is sufficiently documented at that time," said a Wireline Bureau public notice in docket 02-60 and Tuesday's Daily Digest. "Once the health care provider selects a winning bid and service provider, and enters into a commitment, any attempt to change the rates or other contract terms could violate the program’s competitive bidding rules. ... [H]ealth care providers must have program-compliant rural rates supported by documentation in hand before they file their FCC Form 466 funding applications." The PN noted three methods that service and healthcare providers can use to determine rural rates.

The FCC Wireline Bureau noted a March 1 inmate calling service provider deadline for filing responses to a mandatory data collection. A 2015 order charged the bureau with overseeing collection of data to help monitor rates, fees and practices of ICS providers, said a public notice in docket 12-375 and Friday's Daily Digest.