The expectation by price cap LECs that the Connect America Fund should be responsible for paying pre-CAF expenses is “baseless and arbitrary,” the American Cable Association wrote the FCC Friday (http://xrl.us/bn5b8t). It responded to a Nov. 20 USTelecom filing describing ACA’s approach to the Phase II cost model -- limiting recovery for investments made prior to adoption of the CAF -- as “legally indefensible.” Price cap LECs’ expectation for recovery for prior investments is unreasonable because those investments served locations never supported by the high-cost USF fund, ACA said. Many of those investments in the voice network were likely made years ago, and may be fully depreciated, it said. “There is no economic rationale for providing recovery anew for already depreciated assets.” On USF-supported investments in networks where price cap LECs also deployed broadband capabilities, “the price cap LECs were under no regulatory obligation to use pre-CAF high-cost support for this additional purpose,” and they should have “no expectation of receiving guaranteed government support,” ACA said. “The price cap LECs have failed to demonstrate they are deserving of any capital recovery of legacy copper plant investment under the Phase II regime.” Ross Lieberman, ACA vice president of government affairs, told us the price cap proposal was “not really grounded in reality."

FCC staff delayed by a year and a half the date when cable operators must begin including Internet Protocol outputs on interactive HD set-top boxes they deploy. A Media Bureau order Wednesday partly granted TiVo’s waiver request, as expected (CD Nov 16 p4). The order came three days before an interoperability deadline that makers of consumer electronics, cable operators large and small and Verizon backed extending. The new deadline is June 2, 2014, for all but small operators, which get an additional three months. That was half the extra time the American Cable Association sought, though the ACA said it was happy to get the accommodation.

The FCC is meeting with stakeholders to decide what to do with the unallocated Connect America Fund Phase I money, according to industry officials and ex parte filings. Carriers accepted only $115 million of the original $300 million, leaving about $185 million still available (CD July 26 p3). The commission is teeing up several questions for a potential rulemaking about how to use that money, industry officials said. The notice, circulating on the eighth floor, proposes adding the unused money into another Phase I round of funding that could dole out $485 million for broadband buildout, an agency official said. As an alternative the notice also contemplates rolling the unused money into Phase II, the official said.

After months of delay, the FCC released an order that will let cable operators fully encrypt their services in all-digital systems. The order, published Friday (http://xrl.us/bnuci7), had been expected as far back as February (CD Jan 26 p6). But a presentation by Boxee, which introduced a device designed to use cable operators’ unencrypted basic tier signals, slowed its approval (CD Feb 8 p4). The order is largely consistent with what an earlier draft proposed, but adopts a series of commitments by the six largest cable operators for accommodating devices like Boxee’s. The commission concluded that a limited number of customers will be affected by the rule change. Communications industry attorneys following the rulemaking said they don’t expect the order to be challenged.

Cable associations and wireless ISPs opposed FairPoint’s petition for a waiver of the FCC’s requirement that recipients of Connect America Fund Phase I money wire unserved locations for $775 each in subsidy. The telco was offered nearly $5 million to accelerate broadband buildout to Vermont and Maine, but accepted less than half the offer, saying in July it was unable to meet funding conditions (CD July 24 p20). FairPoint last month sought a waiver to allow it to accept the full amount, “conditioned on the favorable disposition of litigation currently pending with the Maine Public Utilities Commission” (CD Sept 12 p14). The Maine PUC believes FairPoint is already obligated to extend broadband service to locations throughout the state, pursuant to its prior merger commitments.

Online video distributors don’t completely replace multichannel video programming distributor service, MVPDs and a top OVD told the FCC. Both industries outlined product improvements, in comments on a notice of inquiry for an upcoming commission report to Congress on MVPD competition covering the 52 weeks through June 30. Public Knowledge wants the agency to allow OVDs to operate as MVPDs, which some pay-TV companies oppose. The last, 14th MVPD competition report -- covering four years because annual documents weren’t released as the Telecom Act required -- for the first time reviewed OVDs, and the NOI asked questions about it (http://xrl.us/bnpcgy) for the 15th report (CD July 23 p6).

The FCC Public Safety Bureau has pressed for emergency alert system rule compliance after getting waiver requests in past months from rural cable operators and TV stations, some of those seeking exemptions told us. The requests claimed insufficient broadband availability prevented them from upgrading EAS for a new format that requires Internet connectivity (CD July 2 p9) by a June 30 deadline. One radio station’s waiver request was denied, while the bureau wanted more details about others’ efforts to acquire broadband service before ruling on waivers, industry officials said. They said some inquiries inspired EAS participants to find innovative ways to connect rural stations and cable headends to broadband.

Comcast asked the FCC for a six-month reprieve from complying with new emergency alert system (EAS) rules taking effect at month’s end “for a handful of its smallest, most remote cable systems ... serving less than two tenths of one percent” of its subscribership (http://xrl.us/bncgdp). The systems can’t receive messages formatted in common alerting protocol (CAP) because they lack broadband connections, but the company is “aggressively pursuing an innovative plan” to comply through a “satellite-based delivery mechanism, and it is doing so notwithstanding the substantial ‘per subscriber’ implementation costs associated with that plan,” Comcast said. “Subscribers to Comcast’s Remote Systems already have access to timely and effective emergency warnings through legacy EAS equipment, and Comcast will continue to operate its legacy EAS equipment at the Remote Systems” while it works on CAP compliance. Public Safety and Homeland Security Bureau Chief David Turetsky separately granted (http://xrl.us/bncgd7) the American Cable Association’s request for withdrawal of its petition for reconsideration of the new EAS rules. The group had proposed a streamlined waiver process for cable systems that serve less than 501 subscribers, but in its withdrawal petition noted that the comment cycle for that proposal would end on July 3 -- after the new rules take effect (CD June 14 pX) -- and thus deprive ACA members of “meaningful relief."

The FCC sought comment on an American Cable Association petition (CD April 24 p13) to change some emergency alert system rules so small operators without broadband connections have a streamlined waiver process. The commission also sought comment on parts of the January emergency alert system order on Common Alerting Protocol, a new format using the Internet in which all EAS participants, which include all cable systems and radio and TV stations, must be able to get alerts in by June 30. “Nowhere” does the order say “a wireline broadband connection is necessary to comply with the Commission’s requirement,” an FCC public notice released late last week said. “We seek comment whether any presumption in favor of granting a waiver based on lack of physical access to broadband should be limited to an EAS Participant’s lack of physical access to a wireline broadband connection, as ACA requests.” The agency wants to know if it should consider costs of getting broadband in reviewing waiver requests, as the association asked. “If so, how should the Commission weigh such cost in this assessment?” the notice said (http://xrl.us/bm9p2f). “Should such an assessment be dependent on the financial condition of the petitioner? If so, what standard should we use for assessing whether a waiver is warranted based on financial condition? How much and what kind of information about a petitioner’s financial condition should be submitted in support of a waiver request? Should information as to where the waiver applicant is in its EAS equipment replacement cycle be a factor in the Commission’s analysis?” Comments on the notice, which posed other questions on the ACA request, are due, in docket 04-296, 15 days after the item’s publication in the Federal Register, replies 10 days later.

The American Cable Association’s assertion that blanket relief from certain buyout restrictions is necessary to allow cable companies to compete with much larger incumbent wireline carriers “represents a gross mischaracterization of the current domestic telecommunications environment,” the Independent Telephone and Telecommunications Alliance told the FCC in a letter Monday (http://xrl.us/bm5vq8). ACA made the statement in a joint letter with NCTA and CompTel supporting NCTA’s petition for relief from buyout restrictions between cable operators and certain CLECs, contained in Section 652 of the Communications Act. ITTA argued that ILECs are “hardly the ‘dominant’ providers of local exchange service,” as they face ever-rising non-ILEC VoIP subscriptions that had accounted for 28 percent of local wireline residential connections as of Dec. 2010, and a trend of consumers who “cut the cord” and subscribe exclusively to mobile telephone services. “It takes enormous audacity for ACA, et al. to argue that cable companies should be given a regulatory hand-out that would permit them to enter into cable-CLEC transactions without having to satisfy the statute’s public interest requirements as a means to ‘rekindle’ competition for local exchange service,” ITTA wrote. “The commission should refrain from taking action that would essentially provide wholesale approval of transactions that would eliminate a competitor from the market and create further disparities in regulatory treatment among service providers."