CTIA, O'Rielly Concerned About Possible FCC Fiber Bias in USF Reverse Auction
The FCC shouldn’t prefer fiber over wireless in its planned USF reverse auction to allocate high-cost subsidies in areas where large telcos declined support going forward, CTIA and an aide to Commissioner Mike O'Rielly said this week. Another agency official told us Tuesday that an FCC draft order to set a USF reverse auction framework would favor fiber solutions, but said “everything is up in the air.” Others have concerns FCC eligibility requirements could discourage participation by smaller providers. An FCC spokesman declined to comment Tuesday.
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CTIA lobbied FCC officials recently to institute neutral criteria for bidder participation, and to encourage use of “efficient technologies to serve high-cost areas” in the reverse auction in which industry parties will bid for remaining Connect America Fund Phase II subsidies. “CTIA urged the Commission not to adopt bidding categories or criteria that explicitly favor providers using a specific technology -- particularly a wireline technology such as fiber,” the wireless group said in a filing posted Tuesday in docket 10-90. “Instead, all bidders that are able to meet the basic criteria for participation should compete on equal footing in the auction. And the criteria for participation in the auction must be technologically and competitively neutral. In particular, the criteria should not include latency or capacity requirements that categorically exclude spectrum-based services.”
Hughes Network Systems also expressed concerns about potential FCC fiber bias in the auction, according to a company filing in the docket in October.
Amy Bender, wireline counsel to O’Rielly, said Monday that her boss had concerns the upcoming CAF II reverse auction might have a bias toward fiber deployment. As good as fiber is, O’Rielly believes such a bias could hurt consumers in those areas that could be better served through wireless or satellite technologies, said Bender, speaking at an NTCA conference (see 1511160043). The reverse auction could help narrow the broadband gap in rural areas if it’s not skewed too much toward fiber, she said.
Another O’Rielly aide Tuesday noted the commissioner addressed the issue in an October speech to the Competitive Carriers Association (see 1510070060). “I have been pushing to ensure that the auction is structured in a technologically neutral way, with the goal of maximizing coverage in a cost-effective manner,” O'Rielly said. “But if the rural broadband experiments are a preview of things to come, then wireless providers could find themselves on the sidelines while wireline providers get the first shot -- and maybe even the second shot -- in the CAF Phase II auction. That auction was supposed to use competition to drive down the required subsidies, spreading the available funding to ensure that the greatest number of consumers get served. The way to do that is to let all providers that can meet the universal service speed and other performance requirements compete directly against each other."
"Giving an artificial leg up to certain providers reduces competition, guaranteeing we will overspend in many areas while leaving others behind. Why would the Commission do that? Because it has developed a view that fiber is the only way to guarantee 'future proof' networks," O'Rielly added. "And to be clear: fiber is a great technology. But I’ve also spoken with consumers in more rural parts of America that think their local [wireless Internet service provider] provides outstanding service, and I’ve also seen reports of what 5G could deliver. The Commission should not tip the scales based on outdated information and assumptions.”
Rebecca Goodheart, wireline counsel to Commissioner Mignon Clyburn, said Monday her boss wants to encourage the broadest participation possible. Goodheart said at the NTCA conference the FCC shouldn’t erect “unnecessary” barriers, noting Clyburn’s disagreement with a commission order upholding a bureau decision to reject a rural broadband experiment bid by a small telco based on financial auditing requirements she believed were too inflexible (see 1508270031). Goodheart also said the FCC should prioritize CAF II auction support for broadband deployment in unserved areas.
Based on its understanding of the draft, the American Cable Association is concerned the FCC’s proposed financial requirements for the auction could be “needlessly onerous for smaller providers, particularly when there are less burdensome options available that also could ensure applicants are ‘serious,'” an ACA filing Friday said.