NTCA Had Last-Minute Meetings with FCC Before Appeal, Record Shows

NTCA Vice President Mike Romano said the group is focused on the further rulemaking on the caps. The appeal his group filed last week was directed at the caps for two reasons: one, they were retroactive and two, they change every year, Romano said. “We still have to stay engaged with” the FCC as it contemplates further rules on the cap, Romano said. The FCC meetings were occurring even as NTCA was contemplating its appeal, Romano acknowledged. “We signaled it strongly,” he said of the eventual appeal. “Their response was, essentially, ‘We understand but we think these are well-grounded decisions.'” FCC staff have nonetheless been responsive on concerns for the further rulemaking, Romano said.

In the meetings on broadband speed standards, the rural executives said it would be difficult and expensive to deliver heightened speeds to remote areas, according to an ex parte notice. “They also highlighted the tension and potential confusion that could result from the interaction of the investment and operating expense caps and other support reductions adopted in the recently released Order and the desire of the Federal Communications Commission ... for consumers to receive certain speeds,” Romano said in his notice. “The Rural Representatives urged the Federal Communications Commission ... to ensure that there is sufficient and predictable support and clear guidelines so that network providers can carry out build-out plans and deliver services in rural areas as contemplated by the Order.”

Turning to problems with exchanges, the rural executives “explained that switches would need to be upgraded and programmed to perform several dips on each and every outbound long distance call from a landline telephone customer,” Romano said in one of his ex parte notices. Rural telcos also have “significant concerns” about local calls made from cell phones to landlines and routed through bigger carriers, Romano said. In such cases, rural carriers have no way of knowing whether the call is actually local and “the Commission should make clear that the IXC is subject to access charges,” Romano said.

In the second set of meetings with OPASTCO and NECA, Romano and his colleagues said they were worried about high-cost loop support being affected by the regression analysis-based caps on operating and capital expenses, according to the second ex parte notice. “The Rural Representatives urged the Federal Communications Commission ... and the Bureau to ensure that all support reductions resulting from application of these investment and operating expense caps to individual carriers will flow back into the total calculation of HCLS; the Rural Representatives also recommended that such recalculated support be made available to all eligible carriers,” the notice said. “This is justified because the mechanism is already subject to an overall cap and the costs that are not recovered through such support will flow back to the state jurisdictions for potential cost recovery (i.e., through local service rate increases), if any such cost recovery can be had."

The caps were also on the mind of the Rural Broadband Alliance, according to an ex parte notice filed by the alliance. The group said it was joined at a meeting by Wireline Bureau Deputy Chief Carol Mattey. Group members pressed her about the caps and the regression analysis, the group said (http://xrl.us/bmks9d). Group members also said they were worried about “the viability” of rural telcos because of the USF order’s lowered access rates and the new reporting and administrative requirements in the order, the ex parte notice said. It’s not clear what Mattey’s responses were.

In separate meetings last Wednesday, executives of Alaska Communications Systems Group met with several FCC staffers, ACS said in an ex parte notice. “In these meetings, ACS noted that it is still calculating the impact of the [Connect America Fund] Order on the company’s infrastructure investment budget for the coming year, but it believes the CAF Order will result in a net revenue decrease for ACS, and ultimately may result in decreased infrastructure investment in Alaska, unless the Commission modifies or waives some of its rules,” the company said. Even “if incremental support is made available to the ACS local exchange carriers ('LECs') in 2012 through the Phase I CAF mechanism, which may not be announced before the end of March 2012, ACS is uncertain about its ability to meet aggressive build-out deadlines adopted in the CAF Order, and thus is uncertain whether it will accept all or any of that support. One significant constraint, which affects the ACS LECs more than any other price cap carriers, is the significantly foreshortened Alaska construction season. Even if ACS were able by second quarter 2012 to make a determination how much incremental CAF Phase I support to accept, there still would remain a significant amount of network engineering, ordering of materials, and other work to be completed by ACS before construction could begin; thus any broadband deployment using Phase I CAF incremental support would not likely begin until second quarter 2013, at the earliest.”