FCC Chairman Tom Wheeler suggested the agency isn't holding off on regulatory actions while its net neutrality and broadband reclassification order is being litigated in court. Asked by a reporter Thursday about such possible delays, Wheeler said, "No, we think that we're on strong grounds in the court." Speaking at the agency's press conference, he said FCC General Counsel Jonathan Sallet and agency attorney Jacob Lewis "did exemplary jobs" at the Dec. 4 oral argument in the case. He said he listened to an audio recording of the argument and is "confident that the open Internet rules have a good future ahead of them." Wheeler also said he hopes the FCC can approve a Lifeline USF modernization order early next year. The agency has proposed to extend Lifeline low-income support to broadband and to revamp program administration. Asked if he was open to making permanent the net neutrality order's temporary small-business exemption from broadband provider enhanced disclosure rules, which the FCC just extended by one year, Wheeler said: "Let's base it on facts, rather than on suppositions; so let's see what we get in terms of the data." At their news conference, Commissioners Ajit Pai and Mike O'Rielly criticized the FCC's one-year extension order on both substantive and process grounds. Pai said there wasn't evidence in the record to justify imposing the enhanced rules on small broadband providers.
The FCC gave incumbent telcos relief from “obsolete” phone regulations while preserving others it said are needed to protect consumers and competition. The commission approved an order at Thursday’s meeting granting several USTelecom requests that the agency forbear from requiring ILECs to meet certain requirements on wholesale network access (including to some conduits), stand-alone residential long-distance service, and “enhanced services.” But it denied ILECs relief from duties to provide voice service in certain rural areas, safeguards for “enterprise” stand-alone long-distance service, and a prohibition against “contract tariffs” for business data services in some areas.
The FCC Wireline Bureau received generally good marks on its productivity from communications industry representatives we interviewed for this Communications Daily Special Report, even amid gradually declining budgets and staff sizes at the agency overall (see 1512150011). The bureau is seen by most as working hard to generate a large number of regulatory actions on a wide array of complex and contentious issues, with progress in addressing some backlogs. “I can’t think of any specific areas where the Wireline Competition Bureau is lagging,” said Micah Caldwell, ITTA vice president-regulatory affairs. Caldwell was the only person interviewed for this article willing to be cited by name; the rest either requested anonymity or declined to comment altogether on the bureau’s output and performance.
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).