Reply Comments of TCA

Transcription

1 Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C In the Matter of ) ) Connect America Fund ) WC Docket No ) Reply Comments of TCA I. Introduction On June 17, 2013 the Federal Communications Commission ( FCC or Commission ) received initial comments on its Public Notice ( PN ) inquiring into options to promote rural broadband in rate-of-return areas. 1 The Commission seeks comment on the Rural Association s proposal for standalone broadband lines and voluntary election of Connect America Fund ( CAF ) Phase II model-based support. The majority of commenters support the FCC s proposals to provide Universal Service Fund ( USF ) support for standalone broadband in areas served by rate-of-return local exchange carriers ( RLECs ) and to adopt policies that will make the CAF Phase II model-based support attractive to some RLECs. The Rural Associations provided additional information on their plan to support stand alone broadband service, which the FCC should adopt in whole. 2 The FCC should also disregard comments of the National Cable & Telecommunications Association ( NCTA ) opposing the establishment of a standalone broadband support mechanism, as its 1 Connect America Fund, WC Docket No , Public Notice, DA (rel. May 16, 2013) ( PN ). 2 Comments of NTCA the Rural Broadband Association, the National Exchange Carriers Association, Inc., Western Telecommunications Alliance and the Eastern Rural Telecom Association, WC Docket No (filed June 17, 2013) ( Rural Association Comments ).

2 arguments ignore the realities faced by RLECs in providing broadband service in sparselypopulated high cost areas. 3 Finally, the FCC should continue exploring a voluntary CAF Phase II model-based support election process that fits RLEC business models. TCA is a national consulting firm that performs financial, regulatory and marketing services for over one-hundred rural LECs and their affiliates. The vast majority of TCA clients are rate-ofreturn regulated in the federal jurisdiction and offer traditional voice and broadband services to their customers. Because of their sparsely-populated, high-cost service areas, they are heavily dependent upon federal and state high-cost support and access revenues. II. The FCC should immediately adopt in whole the Rural Association Plan for supporting broadband in RLEC service areas. In their initial comments, the Rural Associations provide a framework to permit RLECs to receive support for standalone (i.e., data-only) broadband lines via a new Data-Only Broadband ( DOBB ) loop support mechanism. 4 DOBB loop support would be calculated based on the actual loop-related costs to provide standalone broadband service less a $26 broadband subscriber line charge. 5 Loops that are supported through the DOBB mechanism would be excluded from High Cost Loop Support ( HCLS ) and Interstate Common Line Support ( ICLS ) mechanisms, meaning that the DOBB support for an RLEC will increase while its HCLS and ICLS support will 3 Comments of the National Cable & Telecommunications Association, WC Docket (filed June 17, 2013) ( NCTA Comments ). 4 Rural Association Comments at p Id. at p

3 decrease as customers adopt DOBB services. 6 This proposal provides the FCC with a simple, straight-forward method of providing support for standalone broadband in areas served by RLECs. Also, due to the small number of current DOBB lines, TCA does not anticipate the inclusion of the DOBB loops support to significantly impact the size of the RLEC portion of the high-cost support budget. 7 Further, it accomplishes the FCC s policy vision of promoting the IP network transition by eliminating the discrimination between customers that choose to subscribe to plain old telephone service ( POTS ) and those that would prefer to have voice and other services provided as an over the top broadband application. 8 In other words, it eliminates the disincentives for customers to adopt forward-looking services ensuring that customers in areas served by RLECs will not find themselves on the wrong side of a rural-rural divide in the future. The FCC also received Comments from NCTA opposing the provision of legacy highcost support for broadband only lines. 9 NCTA argues that RLECs would receive support without regard to the services purchased by the customer and seemingly implies that this is a double standard in that it allows RLECs to obtain support even if the customers do not adopt the RLEC s voice service. However, as NCTA acknowledges, price cap LECs had their legacy support levels frozen at 2011 levels and receive CAF support without regard to whether customers purchase those services. 10 CAF recipients have an obligation to ensure their networks can provide 6 Id. at p Id. at p.9. The Rural Associations point out that less than three percent of total lines provided by RLECs are dataonly lines. Further, once the DOBB is in place, DOBB support will replace not add to the current funding an RLEC receives for that loop when a customer chooses to adopt standalone broadband services. 8 See Comment Sought on the Technological Transition of the Nations Communications Infrastructure, GN Docket No , and Technology Transitions Policy Task Force, GN Docket No NCTA Comments at p Id. at p

4 broadband at speeds as determined by the FCC and that the network has latency low enough to support VoIP. 11 No requirement exists that requires a CAF recipient s support to be dependent upon customers adopting voice service. Therefore, NCTA s argument is baseless and should be disregarded by the FCC. NCTA also objects to supporting broadband networks regardless of the presence of unsubsidized providers. However, the FCC is addressing CAF funding in areas with unsubsidized competitors and, accordingly, this argument has no relevance in this proceeding. 12 As a general matter, TCA reiterates its long held position that reducing support in areas with unsubsidized competition is inappropriate in RLEC service areas because competitors rarely serve outside of the towns, where the costs of serving customers dramatically increases. 13 The FCC must be careful to not craft policies that would disrupt network design efficiencies enjoyed by serving relatively lower cost and adjacent very high cost areas. III. The FCC Should Consider Policies to Create a Voluntary CAF Phase II Election Process for RLECs. The majority of Commenters agree with TCA that there could be potential for the CAF Phase II model-based support to be attractive to some RLECs, if the FCC adopts policies that 11 Report and Order and Further Notice of Proposed Rulemaking, FCC (rel. Nov.18, 2011); Connect America Fund, WC Docket No , A National Broadband Plan for Our Future, GN Docket No , Establishing Just and Reasonable Rates for Local Exchange Carriers, WC Docket No , High-Cost Universal Service Support, WC Docket No , Developing an Unified Intercarrier Compensation Regime, CC Docket No , Federal- State Joint Board on Universal Service, CC Docket No , Lifeline and Link-Up, WC Docket No , Universal Service Reform Mobility Fund, WT Docket No , ( USF/ICC Transformation Order )at para Id. at Comments of TCA, WC Docket No et al. (filed January 18, 2012) at p

5 recognize the differences between RLECs and Price Cap LECs. 14 Therefore, if the FCC desires RLECs to participate in CAF Phase II, it should consider whether the policies it adopts in CAF Phase II would be suitable for smaller carriers and continue to seek comment on ways to hone the Connect America Cost Model to fit RLEC business models. 15 IV. Conclusion TCA urges the FCC to adopt in whole the Rural Association Plan, which will achieve universal voice and broadband service. This plan recognizes the importance of sufficient and predictable support to RLECs deploying stand alone broadband in rural areas and will seek to ensure that consumers in these areas are not treated as second class citizens but are provided with the opportunity to enjoy broadband service at the same level as consumers in other parts of the country. [electronically filed] July 15, 2013 TCA, Inc. 526 Chapel Hills Drive, Suite 100 Colorado Springs, CO (719) Such as economies of scale, purchasing power, loan repayment schedules, among others. 15 Comments of TCA, WC Docket (filed June 17, 2013) ( TCA Comments ), at p. 5.; Rural Associations Comments at p