The FCC revised rules for rural telco consumer broadband-only loop (CBOL) services adopted in a 2016 rate-of-return USF overhaul order. The commission replaced a "surrogate cost method for determining the cost of CBOLs with rules employing existing separations and cost allocation procedures," said a reconsideration order in docket 10-90 in Tuesday's Daily Digest responding to an NTCA petition. It modified a "rule requiring rate-of-return carriers to impute on CBOLs an amount equal to the Access Recovery Charge (ARC) that could have been assessed on a voice or voice/broadband line to better implement our intent to maintain the balance between end user charges and universal service adopted" in a 2011 USF and intercarrier-compensation transformation order. The commission clarified "two matters pertaining to reductions in Connect America Fund Broadband Loop Support (CAF BLS) due to competitive overlap": affecting reduction amounts associated with a "second disaggregation method" and declaring a transition "schedule applies where the CAF BLS subject to competitive overlap is 25 percent or more of total CAF BLS." The various adjustments provide "more certainty and stability for carriers investing for the future, thereby ensuring that all consumers have access to advanced telecommunications and information services," the order said. Senior Vice President Mike Romano said Tuesday NTCA is pleased the FCC acted on the ARC and surrogate-cost issues raised in its petition. "The order represents a few more important steps in addressing the ‘punchlist’ of items flagged in our petition, and we are eager to keep working with the FCC to address the outstanding items on that list to put the high cost mechanisms in a better position to truly deliver on the mission of universal service."
Ian Cohen
Ian Cohen, Deputy Managing Editor, is a reporter with Export Compliance Daily and its sister publications International Trade Today and Trade Law Daily, where he covers export controls, sanctions and international trade issues. He previously worked as a local government reporter in South Florida. Ian graduated with a journalism degree from the University of Florida in 2017 and lives in Washington, D.C. He joined the staff of Warren Communications News in 2019.
Sorenson Communications disputed FCC defense of video relay service rate tiers based on its desire to preserve consumer choice under the Communications Act. "That sweeping argument -- which would justify maintaining the tiers in perpetuity so long as cost differentials remain and which thus is new to the 2017 order -- is irreconcilable with both Section 225's unambiguous command that service be delivered in the 'most efficient manner' and the FCC's own long-standing construction of the statute," said the VRS provider's reply brief (in Pacer) Friday to the U.S. Court of Appeals for the D.C. Circuit in Sorenson v. FCC, No. 17-1198. Because the FCC's "newly minted construction" is contrary to law and an "unexplained departure" from its previous position, it's "entitled to no deference," the company said. It called the order arbitrary and capricious because it subsidizes "inefficient providers indefinitely" despite the agency's previous declarations indicating that shouldn't happen. An FCC/DOJ brief argued "well-settled principles of claim preclusion" barred Sorenson's statutory-preclusion case against the VRS tiers in the "reasonable" 2017 order, because it hadn't made that argument against FCC tiers set in 2010 and 2013 (see 1801240009). The government also said the Video Relay Services Consumer Association lacked standing to challenge the order separately because it didn't show its members have standing. The VRSCA reply (in Pacer) said the FCC argument has no merit because the record showed, at the very least, Director Sharon Hayes has standing to seek court review.
A federal court panel denied Sandwich Isles Communications' request for urgent relief to order the FCC to disburse withheld USF subsidies. "Petitioner has not shown a 'clear and indisputable right' to mandamus relief" under the Supreme Court's 1988 Gulfstream Aerospace precedent, said the order (in Pacer) Friday of Judges Judith Rogers, Thomas Griffith and Brett Kavanaugh of the U.S. Court of Appeals for the D.C. Circuit (In re: Sandwich Isles Communications, No. 17-1248). FCC opposition argued it had "ample" legal discretion "to deny subsidies to companies like SIC that engage in fraud, waste, or abuse" in USF (see 1801250018). The FCC also disputed Sandwich Isles' bid to recover more than an estimated $1.9 million in annual costs from a National Exchange Carrier Association pooling mechanism (see 1801190059).
FCC Connect America Fund broadband efforts should "aim higher," said telecom consultant Carol Mattey. "We shouldn’t be satisfied if the net result of billions of dollars of expenditures is that 8 million or more consumers in CAF-eligible areas are assured access to only 10 Mbps fixed broadband at some future date -- that’s markedly lower than what is widely available in urban areas today," she blogged Tuesday. "If all the companies currently required to deploy broadband meet their obligations, about 70,000 consumers will gain access to 25 Mbps or better broadband by 2020, and an additional 750,000 consumers or so will newly gain access to 25 Mbps or better by 2026. That’s only 820,000 in total that will newly gain service meeting the FCC’s definition of broadband. Meanwhile, other CAF recipients must offer 10 Mbps service to about 7.3 million consumers by 2020, and another group of CAF companies must newly offer this service to 765,000 consumers by 2026." She said CAF deployment numbers are "hard to figure out, because the FCC hasn't published a national summary" of its programs. "With the current interest in data and transparency, it's important for the FCC publicly to track the progress achieved with the Connect America Fund as a whole," she emailed us Thursday. "The public doesn't care whether their area is served through Phase II, A-CAM, or any of the other components of the Connect America Fund -- they just want to know when they'll get service. That's why it's important to take a step back and ask, big picture, what are we accomplishing."
In CenturyLink's first quarter after buying Level 3, sales fell about 2 percent to $6.1 billion from the year-ago Q4. Results left analysts with some cautious optimism and concerns. The stock closed up 8.8 percent to $19.13 Thursday, after the previous day's after-regular-trading-hours report. "We are confident in our 2018 financial outlook," said Chief Financial Officer Sunit Patel, expecting adjusted EBITDA of up to $8.95 billion and free cash flow up to $3.35 billion, excluding Level 3 integration costs. "At first blush, the company's 2018 guidance looks terrific," wrote MoffettNathanson's Nick Del Deo. "But first blushes can fade." The telco/ISP/fiber backbone company expects $975 million in annual savings, said CEO Glen Post. "In its first quarter as a combined company, CenturyLink-Level 3 demonstrated signs of operational turnaround, glimmers of growth, and confidence in its outlook," Macquarie Research's Amy Yong wrote investors in a note, with the subject line "Better Together," and the "consumer business still faces stiff competition while growth in low-band/legacy is stale." Calling this year's revenue "vulnerable," Raymond James' Frank Louthan said the company is following the "path" of Time Warner Telecom, which CenturyLink bought previously, "whereby nothing changed for sales into the close of the year, leaving investors with a good print and appearance of strong selling exit to the year. Beginning in January, however, all the changes ... are deployed, and as the targets shift we believe the Q4 ’17 results are not indicative of current momentum." Thursday, the combined company expanded duties of executives overseeing sales to clients including government agencies (see the personals section of this publication's issue).
Parties to the local number portability administrator transition were silent Thursday, the eve of a deadline set by FCC Chairman Ajit Pai. He asked stakeholders to resolve by Friday a dispute over a North American Portability Management plan for a manual contingency rollback of operations to LNPA incumbent Neustar's systems if incoming administrator iconectiv's new systems initially fail (see 1802020070). Monday, a Neustar official voiced concern that time was short for an agreed solution, but NAPM and its transition oversight manager played down prospects of a "catastrophic failure," and voiced confidence in the manual rollback plan (see 1802130025).
The FCC invited pleadings on a South Dakota Network request that the agency rule on issues from state litigation with Northern Valley Communications. Comments are due March 14, replies March 29 on SDN's petition for expedited declaratory ruling on questions raised in the state court proceeding on an agreement under which the company provides transport service for AT&T access traffic, said a Wireline Bureau public notice in docket 18-41 in Tuesday's Daily Digest.
Unions urged the FCC to ensure worker safety and system reliability in any new pole-attachment rules. International Brotherhood of Electrical Workers members "are literally on the front lines of network maintenance and development," so "any changes to pole networks should protect the safety and reliability of the grid and communications network, and those who work on it," said a filing posted Friday in docket 17-108 (that's the net neutrality docket, but the letter addressed the wireline infrastructure deployment proceeding, which is docket 17-84). IBEW noted concerns about "pole congestion, safe access to perform pole work and the effect of RF radiation on linemen working on poles." It urged the FCC maintain national utility standards on the "distance between communications equipment and utility space for high voltage wires and devices." It backed one-touch, make-ready (OTMR) solutions to streamline pole attachments, "but only outside the utility space," and urged the Broadband Deployment Advisory Committee to consider the issues. Communications Workers of America said in docket 17-84 BDAC OTMR recommendations "appropriately exclude 'complex' make-ready work in the communications space and all work in the utilities space from mandated third-party OTMR," in a meeting with an aide to Commissioner Jessica Rosenworcel. "However, the BDAC OTMR recommendation overreaches by authorizing third-party contractors to perform 'simple' make-ready work in the communications space without advance notice to all existing attachers, without providing existing attachers the opportunity to move their equipment in a timely manner, and by giving new attachers’ contractors the authority to determine whether make-ready work is 'simple' or 'complex.'" CWA cited similar concerns to an aide to Commissioner Mignon Clyburn.
FCC enforcement staff cleared a protective order CenturyLink and Verizon proposed for a proceeding involving the companies. Finding the proposal "based largely upon" an FCC model protective order, the order "will ensure that, in addition to Commission staff, only the parties' counsel and authorized representatives will have access to privileged or confidential information," the bureau said in a letter to company representatives in docket 18-33 Friday from Lisa Saks, Enforcement Bureau Market Disputes Resolution Division assistant chief. "This involves a commercial dispute between the parties," said a CenturyLink spokeswoman Monday. Neither she, the FCC nor Verizon identified the dispute.
The North American Numbering Council meets March 16 at 9:30 a.m. in the FCC Commission Meeting Room, said a public notice in docket 92-237 in Wednesday's Daily Digest. It said working groups will report on efforts to develop recommendations for consideration by NANC, which also will "continue its discussions on how to modernize and foster more efficient number administration." Debate, meanwhile, continues on the nationwide number portability administrator handoff (see 1802070003).