The FCC Wireline Bureau partially granted Lifeline USF appeals by AT&T and Qwest, saying eligible telecom carriers (ETCs) were permitted but not required to seek pro-rata support for subscribers enrolled in the low-income support program for less than a month. After the FCC announced and then backed off plans to require ETCs to seek pro-rata support for partial-month subscribers in 2003 and 2004, AT&T and Qwest (now CenturyLink) in 2008 and 2009 appealed decisions by Universal Service Administrative Co. that said they weren't in compliance because they didn't seek pro-rata reimbursement on FCC Form 497 for months in which they had partial month subscribers. In its order Wednesday, the bureau sided with AT&T and Qwest in finding the pro-rata reporting wasn't required. The bureau said "during the times relevant to the appeals," the commission's rules said USF support to ETCs was to be provided "based on the number of qualifying low-income consumers" they serve. "By basing reimbursement on the number of subscribers served, as opposed to how many days each customer has been a subscriber, section 54.407(a) of the Commission’s rules in effect at the time of the period audited does not clearly require pro-rata reporting," the bureau said.
The 4Q USF contribution rate for carriers will drop to 16.7 percent (from 17.1 percent) of interstate and international telecom revenue, said industry consultant Billy Jack Gregg in his quarterly update Tuesday. Despite projections by Universal Service Administrative Co. that the interstate/international telecom revenue base will decline from $15.046 billion to $15 billion in 4Q, the contribution factor is expected to dip because the previously announced USF demand for the quarter also declined from $2.17 billion to $2.12 billion, said Gregg of Universal Consulting.
State public utilities commissions will encourage build-out of rural broadband networks, after telcos accepted $1.5 billion annually for six years in FCC Connect America Fund money (see 1508280026), said PUC members in recent interviews. South Dakota is a state with a large number of high-cost and ultra-high cost areas, as is Nebraska. Georgia has no ultra-high cost areas, so the build-out will address most of its connectivity issues. Those states all have different approaches to dealing with the areas that remain after the high-cost census blocks are built out. South Dakota isn’t going to intervene, but hopes the companies will get on a roll with the high-cost areas and continue to build out the ultra-high cost areas. Nebraska plans to use the state high-cost fund to build-out the ultra-high cost blocks.
Commenters voiced substantial support for FCC proposals to extend Lifeline USF subsidies to broadband and restructure oversight, with differences over some priorities and many implementation details, including among the Bells. Expanding Lifeline support would boost broadband adoption and shifting administrative responsibility away from telecom providers would increase efficiency, many said in comments in docket 11-42 responding to a Further NPRM (see 1506180029). Some said the FCC should proceed carefully and focus on enforcing budget discipline and streamlining program administration. Monday was the filing deadline for initial comments, but some comments hadn't been posted on the commission’s website Tuesday, while some parties filed comments early (see 1508180069).
The Missouri Public Service Commission expressed concern over the growing burden of the federal USF contribution level, in comments on the FCC NPRM in dockets including 10-90. The state commission recommended the FCC reconsider the income-based eligibility criteria and let states have the discretion to maintain or discontinue the requirements. On FCC consideration of streamlining the eligible telecom carrier designation process, the Missouri commission recommends the process stay the same because of fraud. The Public Service Commission of Wisconsin said the carrier access of Lifeline eligibility requests (CALER) portal, which lets the PSC staff and phone company representatives determine Lifeline program eligibility status electronically, has major limitations that need to be fixed to help with eligibility verification issues in the state. First, verification is possible when the only Wisconsin Department of Health Services database is online and it's reliably online only during normal business hours, the comments said. Second, the CALER interface doesn't allow providers to verify eligibility based on income level or qualification for the Wisconsin Homestead Tax Credit, the PSC said. The deadline for comments was Monday.
A revised Alternative Connect America Cost Model (A-CAM) is available, the FCC Wireline Bureau said Monday in a public notice in docket 10-90. The revised A-CAM contains broadband deployment data from the latest Form 477 filed by broadband providers. The A-CAM is being considered for use by the commission to help determine future USF support under the Connect America Fund for at least some rate-of-return carriers, mostly small RLECs. The bureau also released "results that illustrate how different per-location funding caps used in calculating support impact the potential support calculated for a particular study [coverage] area" served by rate-of-return telcos. The three scenarios the bureau looked at -- all using a funding benchmark of $52.50 -- had per-location funding caps of $200, $215 and $230. A-CAM information is available at a commission webpage.
The FCC will generally calculate price-cap telco transitional USF support using the same time period, regardless of when the carriers made their Connect America Fund Phase II decisions, the Wireline Bureau said Monday in a public notice in docket 10-90. The bureau said under commission rules carriers electing CAF Phase II support in states where that support is less than their CAF Phase I frozen support will transition to model-based support over several years. In addition to their Phase II support, carriers are to receive 75 percent of the difference between Phase I frozen support and model-based support in the first year, 50 percent of the difference in the second year and 25 percent of the difference in the third year, the bureau said. For administrative convenience, the bureau directed the Universal Service Administrative Co. to calculate the transition funding years, starting this year, as running from Aug. 1 through July 31 of the next year, whether the carriers made their Phase II acceptance decisions on the deadline date of Aug. 28 or before (see 1508270068) -- except USAC was directed to make adjustments if necessary for the two carriers that were authorized to being receiving Phase II support prior to its August processing deadline (Frontier Communications and Windstream were the first two).
Various rural LECs disputed preliminary FCC findings that they face 100 percent overlap from unsubsidized broadband/voice competitors, which if they do, will lead to their high-cost USF support being phased out under commission rules. Cable companies and other RLEC rivals said they were providing overlapping competition in a number of areas. NTCA, which represents many RLECs, urged the commission to require the competitors to provide specific evidence beyond assertions of previously reported deployment data submitted by broadband providers on Form 477.
Some regulators and telcos want state and federal USF contribution revisions, while others representing wireless ISPs would rather see the entire system shut down and overhauled, said speakers during a National Regulatory Research Institute tele-seminar. Speaking Thursday, the deadline day for telcos to accept FCC Connect America Fund Phase II offers (see 1508270068), experts said the funds wouldn't cover building out all networks to FCC standards, so it’s up to states to try to supplement that spending to improve the networks' reach to rural areas. The companies are aware the investment needed will be more than the funding, so they're ready to work with each state on how far it will go and whether other assistance is available, telco representatives said.
The FCC affirmed Wireline Bureau denial of petitions by three small companies seeking to participate in the agency’s rural broadband experiment program. In an order Thursday, the full commission denied applications for review filed by Last Mile Broadband, Lennon Telephone Co. and Rural Broadband Service Corp. (RBSC), which sought waivers of financial qualification requirements. The companies were among the provisionally selected bidders that the bureau removed from consideration after they didn't provide three years of audited financial statements and/or a credit commitment letter from an acceptable bank. The full commission said the bureau’s strict enforcement of the filing duties was appropriate to ensure the experiments didn't delay offers of model-based Connect America Fund Phase II USF support to price-cap carriers. “Contrary to the suggestion of the petitioners, it was not arbitrary and capricious for the Bureau to apply those requirements evenly to all applicants, particularly given that there were so many other applicants that were able to meet the financial and technical information requirements without waiver,” the order said. “We find that it was appropriate for the Bureau to act expeditiously in order to finalize the list of areas that would be included and excluded from the Phase II offer of support.” The deadline for price-cap carrier CAF Phase II decisions was Thursday (see 1508270068). Commissioner Mignon Clyburn partially dissented, criticizing the “unnecessarily unyielding” denial of the Lennon application. She said Lennon submitted reviewed financial statements consistent with those it uses to receive high-cost USF support. “So, reviewed financial statements are sufficient for rate-of-return carriers to receive approximately $2,000,000,000 in universal service annually, but not sufficient to provide $60,000 in support to the same carrier for a rural broadband experiment?” Clyburn asked. She said the FCC had the means to address any concerns through Lennon’s USF participation. She also said the regulatory "inflexibility" could discourage small entities from participating in USF Phase II competitive bidding and leave some consumers in hard-to-serve areas without broadband. “While I appreciate that strict adherence to the rules may be appropriate for entities that do not currently receive universal service support because the Commission may be unable to recoup funding, that is not the case here,” she said. But the commission said Lennon mistakenly believed the reviewed financial statements were sufficient and didn't even seek a timely waiver. "Applicants were expected to familiarize themselves fully with the Commission's rules and requirements," the order said.