An FCC revamp of broadband network overbuild terms it had put on Charter Communications' buys of Time Warner Cable and Bright House Networks likely points to the agency under Chairman Ajit Pai being far less likely to try to impose nontransaction-specific conditions in other cable ISP takeovers, experts told us. Overbuild conditions themselves might be somewhat unlikely, at least in cases when the fact pattern matches Charter/TWC, consultant and economist Hal Singer said.

The FCC approved an order setting a broad range of bid weights for a planned Connect America Fund Phase II reverse auction of almost $2 billion in subsidy support for fixed broadband/voice services over 10 years. The CAF II bid weights are designed to value "high speeds, higher usage allowances and low latency," balanced with "cost efficiencies" to deploy broadband widely, said a release Thursday. Chairman Ajit Pai and Commissioner Mignon Clyburn voted for the order; Commissioner Mike O'Rielly partially dissented.

ViaSat disputed American Cable Association arguments on the FCC's planned auction of Connect America Fund Phase II subsidies for fixed broadband/voice services. "ACA incorrectly asserts that 'no US satellite broadband provider currently publicly offers 25/3 Mbps with a data cap of at least 150 GB.' ViaSat is already providing satellite broadband service at 25/3 Mbps with a 150 GB monthly data allowance," ViaSat said in a filing posted Wednesday in docket 10-90. Commissioners are scheduled to vote on bid weights and some other rules at Thursday's meeting (see 1702170048). ACA "misrepresents" satellite broadband costs for CAF II, including by assuming total costs would be $200 per subscriber, which ViaSat said was based on another entity's comment that doesn't apply to ViaSat. "ACA flatly ignores ViaSat’s unrebutted record evidence of the substantial costs involved in providing satellite broadband service," said the filing. It also disputed ACA claims that incremental satellite broadband costs for serving new locations were effectively zero. "ACA's comparison of the results of different weighting methodologies and its predictions of how different technologies would fare in the auction is misleading," ViaSat wrote. "ACA’s weighting scheme, like that proposed by the Rural Coalition, is just that: a carefully constructed scheme designed to ensure that fiber and cable technologies win -- and satellite providers lose -- no matter what prices the fiber and cable providers bid." ViaSat said it was making the filing under FCC rules to answer ACA's late submission, including over 20 pages of new material. In response, ACA called for rules maximizing broadband provider participation, "including those offering satellite, DSL, fixed wireless, and fiber," and driving bids "to their most cost efficient levels" using limited funds for the greatest benefit. "ACA examined the proposed weightings from all parties and the FCC by applying both public and private data on costs to all eligible census blocks for all technologies," emailed Ross Lieberman, senior vice president-government affairs. "This analysis demonstrated that ACA’s proposed methodology treated all technologies fairly. In fact, under ACA’s proposed methodology, contrary to ViaSat’s claim, satellite could do very well, notwithstanding that consumers rarely choose satellite today. In seeking to rebut ACA’s analysis, ViaSat does not undertake a rigorous analysis. Instead, it again does nothing more than use hypothetical bids numbers to produce 'guesswork results.'"

The Wireless ISP Association objected to the broadband subsidy bidding proposals of a rural electric/telco coalition (see 1701230060) and New Shoreham, Rhode Island. WISPA said the proposed Connect America Fund Phase II bid-weighting tiers are at odds with the "cost-effective, technology-neutral" approach it advanced. It said the rural coalition's plan "contravenes" the view of now-Chairman Ajit Pai, who said in a May statement the aim was "to maximize the broadband bang we get for our universal service buck by establishing a flexible weighting system that should incentivize carriers to deploy faster service to rural America at the lowest possible price to the taxpayer." The rural coalition plan has two basic flaws, said a WISPA filing Wednesday in docket 10-90: It would prioritize a gigabit performance tier, and it based biding weights on reserve prices, not on the percentage of the bid, "which further exacerbates the one-sided nature of its thinly-veiled fiber-biased approach." "The Rural Coalition also inappropriately seeks to re-litigate application requirements and eligibility criteria that the Commission adopted ... for which reconsideration has not been sought," WISPA wrote. "New Shoreham’s ex parte letter suggests how the Commission can allocate CAF II support to those states where price cap carriers declined the model-based offer, an approach with which WISPA disagrees." An American Cable Association filing Tuesday proposed bid weights that would give a 60 percent discount -- the biggest in the reverse auction -- to the "Above Baseline" speed tier (more than 100/20 Mbps), and a 15 percent discount to the gigabit tier (more than 1 Gbps/500 Mbps). "ACA’s methodology reflects the fact that, based on market data and industry trends, the Minimum and Baseline tiers either do not or will not meet consumer needs, most urban consumers will be subscribing to the Above-Baseline tier in the next five years, and the Gigabit tier provides additional 'future-proof' value over a 10 year period," it wrote.

The FCC repurposed $170 million of Connect America Fund auction funds to help New York implement the next phase of the state's own broadband reverse auction targeting unserved rural areas, as expected (see 1701190060). The FCC money will be combined with at least $200 million in state funding, said an agency release Thursday, noting the federal money had been declined in New York by incumbent telco Verizon as part of CAF Phase II. It was the first commission action under new Chairman Ajit Pai, the release said.

New York welcomed backing from the American Cable Association for the state's request to use FCC Connect America Fund Phase II subsidy support for its own broadband reverse auction. ACA previously had concerns, but based on subsequent discussions with New York broadband officials, it "better appreciates the timing and funding challenges presented by the overlapping New York and CAF auction processes." Citing that understanding and other factors, the association called for rapidly granting a waiver for New York, said a recent filing in docket 10-90. An Empire State Development filing Tuesday called attention to the development: "ACA’s support for New York’s request is significant given that its members operate in small and rural markets across the country and deeply understand the many challenges providers face in deploying broadband networks in these markets. ACA clearly recognizes that the coordination of federal and New York state broadband funding made possible through the waiver would help to overcome these challenges and ensure that unserved communities in New York receive broadband. ACA’s support is also noteworthy as it further supplements the growing list of stakeholders who have endorsed New York’s Petition." It cited backing from Verizon, FairPoint and others.

Commissioners are close to approving an order that would extend the net neutrality transparency waiver for small ISPs, otherwise set to expire Thursday, FCC officials confirmed Wednesday. FCC Republicans and Democrats disagree on how big the exemption should be with Republicans pressing for a number that would exclude as many companies as possible -- with a cutoff no lower than ISPs serving up to 250,000 subscribers, agency officials said.

The FCC Wednesday pulled a draft emergency alert system order from the next day's commissioners' meeting agenda, after industry and agency officials said it was controversial. Five other agenda items also were pulled, though four were adopted on circulation.

Nexstar's $4.6 billion buy of Media General still is seen as likely to be approved despite the coming regime change at the FCC, said numerous broadcast attorneys in interviews. The question isn't if, but when, they said. Nexstar pushed for the commission to grant a waiver that would allow the deal to go through ( see 1607190058) despite the ongoing incentive auction. A company spokeswoman told us the TV station owner maintains its previous guidance to investors that the deal will be done by year-end.

The U.S. Court of Appeals for the D.C. Circuit surprised many on both sides of the fight over net neutrality rules and broadband reclassification when it upheld the FCC across the board. After Dec. 4, 2015, oral argument on industry challenges to the 2015 rules (see Part III of this Special Report, 1610130014), the D.C. Circuit issued its decision June 14. That ruling was the subject of two Communications Daily Bulletins that day (see 1606140010 and 1606140012) and many more later stories. This final Part IV of the net neutrality Special Report focuses on the court ruling and continuing challenges.