Rural telcos are taking different tactical approaches as the FCC looks to overhaul rate-of-return USF subsidies for the broadband era. NTCA this week suggested a two-step path for giving rate-of-return carriers the option of receiving high-cost funding support based on a broadband cost model. The small-carrier RLEC group said the FCC could “adopt the concept of a model-based support option in relatively short order” that defines "key parameters" -- along with a standalone-broadband fix and other changes -- while taking more time to fine-tune the model. But ITTA, representing midsize carriers, said the FCC should soon approve a model-based mechanism in one order.
The partisan divide on net neutrality complicates congressional funding of the FCC and has made the annual task of appropriating much harder over the past several years, veteran appropriators of both parties on Capitol Hill told us in recent conversations. The appropriations process for the agency is now intensely political, they said, citing the very different perceptions among Republicans and Democrats of the agency and its missions.
The FCC solicited comments on a petition for rulemaking from the Schools, Health & Libraries Broadband Coalition (SHLB) and others seeking to revise the agency's rural healthcare USF program. Initial comments are due Jan. 14, replies Jan. 29, a Wireline Bureau public notice in docket 02-06 said Tuesday. The program needs to be modernized to "address disparities in health[care] availability and health outcomes between rural and non-rural areas," said a recent joint filing by SHLB and several regional telehealth organizations (see 1512080051). The groups proposed an increase in the discount percentage in the Healthcare Connect Fund for rural healthcare providers, the establishment of mechanisms for short-term relief if program demand exceeds the set cap, and an expanded definition of the word "rural."
The FCC found just one rural telco market is ineligible for continued USF support based on a rule requiring subsidies to be eliminated where there's 100 percent overlap with an unsubsidized competitor. Pineville Telephone Co. faces unsubsidized competition in all of its “study area” in North Carolina and will have its USF support phased out over the next three years, the Wireline Bureau said in an order Monday in docket 10-90.
FairPoint Communications asked the FCC to allow it to recover $4.2 million in annual costs that it said it currently couldn't under USF and intercarrier compensation (ICC) transformation rules. FairPoint, which receives USF support as a price-cap telco but is regulated as a rate-of-return carrier under the ICC transition, is the only telco being penalized by the rules, which were designed to prevent duplicate recovery, the company said in a petition for declaratory ruling Thursday in dockets 10-90 and 01-92. "There is no duplicate recovery," FairPoint said, but it's only receiving part of what it is due. "FairPoint should not be paid twice for the funding formerly received as [local switching support], but it should be paid once."
The FCC proposed a USF contribution factor for Q1 of 18.2 percent of interstate and international telecom revenue, the Office of Managing Director said in a public notice Friday in docket 96-45. That was as projected by industry analyst Billy Jack Gregg (see 1512040003). The proposed contribution factor will be deemed approved if the agency doesn't act on it within 14 days, the PN said. U.S. interstate and international (long-distance) revenue from end-users was projected to be $14.9 billion next quarter, continuing a long-term downward trend. Total USF support is projected to be $2.2 billion next quarter, with high-cost, rural support at $1.25 billion, followed by school and library E-rate discounts at $603 million, low-income (mainly Lifeline) support at $396 million and rural healthcare at $73 million. FCC Commissioner Mike O'Rielly voiced concern about the rising USF assessments on telecom carriers, and issued a warning about assessing broadband. "After hovering around the 16% mark throughout 2014 and 17% this year, the USF contribution factor tacked onto a portion of everyone’s telecom bills jumps past 18% to kick off 2016," he said in a statement Friday. "And with an unrestrained expansion of Lifeline plus an expansion of USF fees to broadband consumers at the top of many wish lists, who knows how much deeper Americans will have to dig into their pockets by next December? The entire situation is clearly unsustainable but the solution cannot be to capture broadband services in this morass."
Level 3, Sprint and Verizon are pressing the FCC to act on a longstanding intercarrier compensation fight between LECs and interexchange carriers (IXCs) over “intraMTA” (major trading area) wireline-wireless traffic. Representatives of the three met with various FCC officials Tuesday to press their case, especially in light of a November decision by Judge Sidney Fitzwater of the U.S. District Court for the Northern District of Texas, Dallas Division, siding with LECs (see 1511200070).
TracFone resisted AT&T Lifeline proposals for the FCC to overhaul the USF support program for low-income consumers. TracFone opposed AT&T suggestions that carriers be removed from all Lifeline enrollment functions and that eligibility be initially tied solely to the federal food stamps program, which TracFone said would have a “devastating impact on Lifeline availability.” The comments came in a response posted Tuesday to a Nov. 23 AT&T filing flowing from an NPRM (see 1506180029). Other parties filing recently in docket 11-42 included the Cherokee Nation, Incompas, Lifeline Connects Coalition and Smith Bagley, with many comments addressing proposed minimum service standards for Lifeline broadband/voice coverage.
The regulatory fee battle raged as the American Cable Association and ITTA urged the FCC to shift some fees from wireline to wireless companies, while CTIA opposed that. CTIA also opposed NAB’s proposal to reapportion regulatory fees to the wireless sector because of the planned incentive auction, which will allow wireless providers to bid for broadcast TV spectrum. ACA and CTIA filed reply comments (here and here), while ITTA made an ex parte filing this week in docket 15-121 on a recent meeting with FCC officials. NAB met with officials last week to discuss its proposal (see 1512030061).
The FCC Wireline Bureau gave an interim USF waiver extension to Allband Communications Cooperative. In an order released Monday and included in Tuesday's Daily Digest, the bureau extended by six months Allband's waiver to continue to receive the lesser of high-cost USF support based on its actual costs or the annualized total high-cost support that it received in the first six months of 2012. The bureau gave Allband a three-year waiver in July 2012, and in December 2014 Allband filed a petition for a further, 12-year waiver. In June of this year, the bureau extended the original waiver until the earlier of Dec. 31 or until action is taken on its 12-year waiver request.