FCC Unveils List of Carriers Picked For Rural Broadband Support
CenturyLink will get up to $90 million in Connect America Fund money, Frontier $72 million, Windstream $60 million, AT&T $48 million and Verizon $20 million, if they agree within 90 days to deploy broadband to unserved areas, the FCC announced late Wednesday (http://xrl.us/bm455q). Carriers accepting the incremental support must certify that their current capital improvement plan did not already include plans to complete broadband deployment to those locations within the next three years. Based on rules adopted in the USF/intercarrier compensation order, the number of new broadband deployments must be equal to the amount of support each carrier accepts, divided by $775, and they'll have three years to do it. FairPoint, Alaska Communications Systems, Consolidated, Hawaiian Telcom and Vitelco were offered about $10 million among them.
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Also Wednesday, the commission implemented reforms adopted as part of the USF/ICC order regarding high cost loop support, hammering out some previously unsettled details about how the quantile regression formula to limit reimbursements of capital and operating expenses.
The Phase I funding will be targeted to unserved Census blocks, senior commission officials told us. The Independent Telephone & Telecommunications Alliance, CenturyLink, Frontier and Windstream had proposed last month that the FCC expand eligibility for the incremental support funding to include partially served census blocks (CD March 8 p10). The NCTA and the American Cable Association were against this “mission creep,” arguing partially served areas were best dealt with in Phase II (CD April 20 p17).
"Phase I is an interim measure intended to accelerate deployment to those unserved locations that can be reached in the near term,” the commission-level second order on reconsideration said (http://xrl.us/bm457b). “Given our goal of deploying new funding quickly, we believe it is reasonable to focus deployment on areas where it is clear that no broadband exists, rather than to create a potentially burdensome and time-consuming process to identify other areas without service."
The commission also made three main changes to the HCLS benchmark methodology: It increased the accuracy of the regression formula by using more variables; updated the methodology to account for recent investment in setting the benchmarks to compare companies against peer groups; and changed the time frame to phase in the caps between now and 2014. The regression formula now takes into account whatever data is available, such as soil issues, road miles and loop length. The agency’s goal was to increase accuracy and fairness, the officials said. The cutoff will remain at the 90th percentile, they said.
In contrast to the old system, which “lacked benchmarks for judging whether subsidies were warranted, while fully subsidizing high expense levels and punishing efficient operations,” the new reforms “impose reasonable limits on subsidized expenses by comparing spending among similarly situated companies and setting benchmarks,” the FCC statement said. The new system is much more fair than the existing system, and will redistribute support to those companies that are operating most efficiently, the officials said. About 500 carriers serving over 2 million lines across the country will get more funding for broadband, while 100 carriers with “unusually high expenses” will have to “take steps to bring their operations more in line with their peers,” the statement said.
Several rate-of-return carriers notified the FCC last week that they planned to file for waivers if the quantile regression formula was adopted (CD April 18 p6). Some carriers and legislators have pleaded for waivers, arguing that communications could be “shut off” over large swaths of land (CD April 6 p1). The FCC said Wednesday that “a rigorous but fair waiver process will ensure that consumers do not lose service."
"Last year, the Commission adopted once-in-a-generation reform of the Universal Service Fund, modernizing it to help connect every American to the jobs and economic growth that high-speed Internet provides,” Chairman Julius Genachowski said. “Today, we continue our work to unleash the benefits of broadband for all Americans, regardless of where they live, and consistent with fiscal responsibility. By cutting waste, we are saving hundreds of millions of dollars -- and those savings will now provide an immediate boost to broadband deployment in unserved areas. All Americans will benefit while our nation’s global competitiveness is strengthened.”