Ian Cohen

FCC Chairman Ajit Pai suggested Pennsylvania provide a match of Connect America Fund Phase II reverse auction of subsidies for fixed broadband and voice services beginning July 24. "If your state did this, such funds would increase the incentive for providers to invest in Pennsylvania and bring new service to those without -- likely increasing the quality of service as well as the federal funding for rural parts of the state," he said, in an exchange posted Friday in docket 18-5 with Rep. Lou Barletta, R-Pa., and other members of the state's congressional delegation. The lawmakers asked the FCC Jan. 25 to reverse a then-pending denial of a Pennsylvania petition for CAF II funding help. "Because the petition before the Commission did not explain why such matching efforts were insufficient to accomplish the Commonwealth's goals given our interest in maximizing the effectiveness of our universal service dollars for all Americans, the Commission denied the request in January," Pai wrote March 14. He noted the FCC also is looking at a subsequent "Remote Areas Fund" auction for areas still without high-speed broadband, giving Pennsylvania another opportunity.

The FCC set the pleading cycle on CenturyLink's planned sale of Level 3 fiber assets in the Boise and Albuquerque metropolitan areas to satisfy DOJ antitrust divestiture conditions in clearing CenturyLink's 2017 takeover of Level 3. Comments are due on April 5, replies on April 12 on Syringa Networks' proposed buy of the Boise assets and on Unite Private Networks' proposed buy of the Albuquerque assets, said Wireline Bureau public notices (here and here) in dockets 18-76 and 18-79 in Friday's Daily Digest. DOJ cleared the planned divestitures, CenturyLink said (see 1803130024 and 1803140023).

The wireline sector faced many obstacles in 2017, and some likely will continue this year and beyond, said an S&P Global Ratings release Thursday. The 2017 challenges included "secular industry declines, intense competitive pressures, and difficulties integrating mergers and acquisitions," it said. "These impediments led to dwindling revenue and cash flow," plus falling stock and bond prices. S&P Global Ratings expects some of the trends to continue in 2018 and beyond even as issuers consolidate and seek alternative avenues for growth, according to 'Credit FAQ: Why U.S. Wireline Companies Are Getting Few Calls With Good News'" (subscription required). "The drop-off in revenues has markedly constrained profitability and free cash flow generation because wireline companies have a high percentage of fixed costs," said S&P credit analyst Allyn Arden. "Many of them have elevated leverage, limiting financial flexibility and making it difficult to compete with cable and alternative telecommunications providers." S&P "believes wireline companies ultimately need to improve their capital structures to better reflect industry conditions, but their ability to do so is highly uncertain because of declining cash flow and limited financial flexibility."

Comments are due April 3 and replies April 10 on Broadsmart's planned buy of Nexxis under Communications Act Section 214, said an FCC Wireline Bureau public notice in docket 18-78 Tuesday, noting applicants sought presumptive streamlined review. The PN said applicants also filed an application to transfer international authorizations, and noted Broadsmart is a CLEC and long-distance provider in Florida, and Nexxis provides U.S.-based VoIP and other services.

The FCC approved Clemson BidCo's planned takeover of Spirit Communications and units under Communications Act Section 214, said a Wireline Bureau public notice Tuesday in docket 17-211. The PN noted no comments were filed in opposition and the transaction was cleared by the DOJ, Defense and Homeland Security departments ("Team Telecom"), which said they had no objections on national security, law enforcement and public safety grounds. Spirit owns licenses for CLEC and interstate services in South Carolina, North Carolina and Georgia.

Uniti Group's planned buy and leaseback of U.S. TelePacific (TPx) fiber assets gained antitrust approval under an FTC early termination notice made public Tuesday. "Uniti will acquire and leaseback to TPx, on a triple-net basis, 38,000 fiber strand miles located across California, Nevada, Texas, and Massachusetts," Uniti said in its March 1 earnings release. "Uniti will acquire and have exclusive use of 7,000 fiber strand miles located in Texas, which are adjacent to Uniti Fiber’s southern network footprint." TPx said the deal includes about 650 route miles of its metropolitan fiber assets in the four states. The parties recently filed an application and supplement in FCC docket 18-61 seeking approval to transfer related licenses.

FCC staff waived an invoice filing deadline for the Healthcare Connect Fund for parties associated with more than 100 funding request numbers (FRNs) the agency identified. "We allow the applicants and service providers associated with these FRNs to submit their funding year 2017 invoicing forms to the Universal Service Administrative Company (USAC) within six months from the issuance date of their funding commitment letters (FCLs)," said a Wireline Bureau order in docket 17-310. It said the parties weren't able to submit invoices on time due to processing delays. "These applicants submitted FCC Form 462 applications to USAC during the filing window period for funding year 2017 (i.e., March 1–June 30, 2017) and requested partial year funding commitments with services ending between July 2017 and March 2018. USAC only began to issue the associated FCLs on March 16, 2018, after reviewing an unprecedented number of applications."

An FCC order on a FairPoint Communications petition was sent to commissioners last week, said the agency's circulation list updated Friday. An agency spokesman said the draft order and declaratory ruling addresses a FairPoint petition from December 2015. FairPoint, bought by Consolidated Communications in 2017, sought to recover annual costs it said were being blocked by rules barring "duplicate recovery" of price-cap USF support and rate-of-return intercarrier compensation. FairPoint said there was no duplicate recovery, and $3.5 million in ICC transition support had been improperly deducted in 2015, with amounts edging down in subsequent years (see 1512110070 and 1703060046).

The FCC is now accepting applications for its Connect America Fund Phase II auction of subsidies for fixed broadband and voice services, an agency release noted Monday. The application window to bid on up to $198 million in annual CAF II support closes March 30. The reverse auction is to begin July 24.

Frontier Communications won a temporary restraining order against union strikers in the West Virginia Circuit Court in Kanawha County. The TRO is effective in there through 5 p.m. Monday, a Frontier spokesman emailed Friday. Frontier's request for injunction was “an overreaction by the company to the lawful activity of our striking members,” said Communications Workers of America Vice President-District 2-13 Ed Mooney. “The court has given the parties until Monday evening to come to an agreement on the parameters of that activity during this strike, and we will work to ensure that our members’ rights are protected.” Workers struck about two weeks ago over job cuts, untreated network problems and growing customer complaints (see 1803050051). “Frontier petitioned the court for injunctive relief because of dangerous, destructive and reckless behavior that some members of the CWA have engaged in since the inception of the work stoppage,” the telco's spokesman said. “We strongly disagree that Frontier’s response is an ‘overreaction.’ Our customers, employees and contractors have a right to work and co-exist in a safe and secure environment.” Frontier workers in Connecticut are supporting their West Virginia colleagues, Mooney said. CWA members in that state “have set up informational pickets at work locations and at Frontier's headquarters,” he said.