The FCC Friday took steps to increase broadband deployment in rural areas. These actions include reducing, refining, and clarifying existing rules for its Connect America Fund (CAF), and providing additional support in return for increased broadband deployment obligations. The order establishes “just and reasonable” rates for local exchange carriers, according to the agency, and discusses developing a unified intercarrier compensation scheme.
In voting for the item, FCC Chairman Ajit Pai said the action means rate-of-return carriers serving rural areas that want high-speed connectivity will have more than $500 million in funding to expand rural broadband deployment.
In its order, the agency says its rules governing smaller, community-based providers—rate-of-return carriers—appear to make it more difficult for these providers to serve rural areas. “As a result, approximately 11 percent of the housing units in areas served by rate-of-return carriers lack access to 10 Mbps downstream/1 Mbps upstream (10/1 Mbps) terrestrial fixed broadband service while 34 percent lack access to 25 Mbps downstream/3 Mbps upstream (25/3 Mbps),” states the Commission.
The agency has taken steps to codify existing rules that protect the high-cost universal service support program from waste, fraud, and abuse by spelling out that such funds cannot be used to provide, maintain or upgrade services for which the funds are not intended. And the item tees up an examination of how to ensure the FCC provides sufficient and predictable support over the long term so that communities served by small carriers aren’t stuck on the wrong side of the digital divide, according to the Chairman.
In the short-term, the agency provides $180 million in one-time funding to mitigate the effect of the budget control mechanism for the current funding year. Pai says parties have told him the large cuts or uncertain funding levels resulting from that mechanism, adopted by the prior Commission, made it difficult for many carries to make investment decisions.
In a Notice of Proposed Rulemaking, the Commission considers further reforms to establish a budget to enable robust broadband deployment in rate-of-return areas while minimizing the burden that contributions to the Universal Service Fund place on ratepayers; the agency hopes the action will stabilize rate-of-return high-cost funding.
The agency seeks comment on ways to improve and simplify the funding system so that carriers have predictable support and the right incentives to efficiently invest in broadband connectivity. One proposal is to let more carriers elect model-based support; the FCC also asks about incorporating a Tribal broadband factor into the funding model to recognize the unique challenges of deploying broadband on rural tribal lands. Also up for discussion are other reforms, such as exploring the need for caps on capital and operating expenses and using an auction process to address substantial competitive overlaps.
NTCA–The Rural Broadband Association, said it has been actively engaged in the effort to secure “bright-line” clarity in determining what is and is not recoverable through universal service. While still reviewing the decision, the association generally welcomes such efforts.
NTCA CEO Shirley Bloomfield calls the FCC action “to address an immediate USF budget crisis a much-needed ‘shot in the arm’ for rural broadband. Budgets may be a ‘fact of life’ in today’s universal service programs, but those budgets must be sufficient and predictable to comply with law. As the decision today recognizes in providing additional resources, the current levels of high-cost USF support are not sufficient.”
While Pai, and Commissioners Michael O’Rielly and Brendan Carr voted for the item, Commissioner Mignon Clyburn opposed it and Jessica Rosenworcel split her vote. Rosenworcel supports changes to adjust limitations on support allowances and bringing clarity to permissible expenses. But the item fails to discuss how to protect rural customers who lack service options “if they find they are on the losing end of discriminatory network practices in the wake of the FCC’s net neutrality repeal,” she said. Saying that’s wrong, Rosenworcel partially opposed the item.
Clyburn said her requests to include several questions, including having more ways to remove “bad actors” from the rate pool, were denied. Pai suggested the request for changes from both Commissioners came at the last minute, which is “not a serious attempt to work towards consensus, and smacks of a calculated delay tactic.”
Clyburn fired back that “disingenuously characterizes” the fact that she had made her requests weeks before the voting deadline.
March 26, 2018
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