Price Cap Carriers to Get One-Off $300M Injection for Broadband Under FCC Order, Officials Say
Price cap carriers would be given $300 million for broadband deployment in unserved areas in the first year of universal service and intercarrier compensation reform under a proposed order being circulated at the FCC, telecom officials told us Thursday. The money would come on top of the legacy universal service support the price cap companies are already receiving, the officials said. Having received the money, the price cap companies will have to meet minimum standards for broadband deployment within two years, they said.
Sign up for a free preview to unlock the rest of this article
Timely, relevant coverage of court proceedings and agency rulings involving tariffs, classification, valuation, origin and antidumping and countervailing duties. Each day, Trade Law Daily subscribers receive a daily headline email, in-depth PDF edition and access to all relevant documents via our trade law source document library and website.
The $300 million would come in part from ratcheting down support to competitive eligible telcos, telecom officials said. The money would come just as the commission launches a further rulemaking notice asking how it should build a cost model for the new Connect America Fund, the officials said. Once the cost model is built and deployed -- a process that FCC staff are saying will take between one and two years -- price cap companies could exercise a right of first refusal for broadband subsidies for up to five years, the officials said.
There are several caveats in the 400-plus-page order, the officials said. If price cap carriers elect to take broadband cash in a given state, they'll have to commit to building out broadband in every high-cost study area they serve in that state, they said. The money would not go to census blocks where unsubsidized competitors are already working, they said.
If the price cap companies run under rate-of-return regulations in any study area they serve and they receive Connect America money, they'll have to convert fully to price cap regulations within five years, the telecom officials said. Additionally, they'll have to offer broadband speeds of 6 Mbps down/1.5 Mbps up within five years, they said.
On intercarrier compensation system reforms, the order lowers intrastate rates over two years, moves to the “triple zero” pricing option within five years, and then moves finally to a bill-and-keep system, a telecom lobbyist told us.
Chairman Julius Genachowski’s order adopts most of the ABC plan as-is, telecom and FCC officials have said. But his departures are significant and the incumbents who backed the ABC plan and the rural complementary filing are now worried that they won’t be able to support the reforms in Genachowski’s order, a telecom lobbyist told us. No company has said categorically that it opposes the order, but each industry sector -- along with state regulators and consumer advocates -- has found plenty to complain about. Genachowski’s spokesman declined comment for this story.
Despite the apparent departures from the ABC plan, one of its architects said he was gratified that the FCC at least was focused on the larger goals of reform. “It would be premature for us to say whether we think the Chairman’s proposal is terrific, good or bad,” USTelecom President Walter McCormick said at a meeting with reporters Thursday. But “we are quite confident that the commission wants to move forward in a responsible way,” he said. He stressed that he and his colleagues “are not engaged in an adversarial process” with Genachowski. “I believe that our industry is completely aligned with the chairman and his goals. In fact, I think we're uniquely aligned with the chairman and his goals,” he said. McCormick added: “At the end of the day, this is a very exact science. It’s all about numbers. If the numbers don’t work, the plan won’t work.”