Petitions for Reconsideration of USF Order Come From All Corners

October’s order “unjustifiably compromises a number of principles and policy objectives that have long governed” universal service “while at the same time reversing the sound policy determinations” in the rulemaking notice that launched the proceeding, ViaSat said in its petition. “Instead, the Order places the interests of inefficient incumbents over those of consumers by summarily diverting the lion’s share of limited CAF [Connect America Fund] support to those incumbents, despite ample record evidence demonstrating that competitive providers -- including satellite broadband providers -- could extend service to ‘unserved’ households far more efficiently and far more effectively, at a fraction of the cost to the public,” ViaSat said (http://xrl.us/bmnboa). The FCC ought therefore to abandon the first refusal option given to ILECs “and instead utilize reverse auctions or other suitable market-based mechanisms to distribute CAF funds to the lowest-cost provider(s) in any given geographic area, consistent with the overwhelming record evidence in support of such approaches,” ViaSat said.

In the absence of such a drastic overhaul, the FCC should rethink “its decision to categorically preclude satellite” companies as potential competitors, should “impose strong accountability measures on ILECs” before handing out any new cash, should “demand ‘reasonable comparability’ of usage limits instead of reasonable comparability of broadband access in general,” and shouldn’t delay handing out cash to remote areas, ViaSat said.

Sprint said the FCC “was entirely correct” in its assessment of the damage done by traffic pumping, but said the commission should clarify or reconsider several of the rules adopted to address the problem. On matters for clarification, Sprint said (http://xrl.us/bmnbq5) questions remain because: (1) The October order “does not overturn previous Commission rulings or standards for determining whether a LEC’s free service provider partner is a legitimate end user/customer.” (2) The order also “does not overturn the statutory requirements that telecommunication services be offered ‘for a fee.'” (3) It’s uncertain whether the FCC is retaining its price cap LEC rate benchmark remedy, which would allow a CLEC “engaged in traffic pumping” to “include in its rate benchmark only those price cap LEC rate elements associated with functions the CLEC actually performs.” (4) Because current rules say “a CLEC must use the price cap LEC’s average local transport miles, or the CLEC’s actual local transport miles, whichever is less."

Meanwhile, the FCC ought to reconsider four aspects of the new rules, Sprint said. First, the FCC ought to rethink the use “of price cap LEC rate benchmarks” for carriers “that meet the traffic pumping triggers,” Sprint said. “Instead the Commission should mandate use of a rate of .0007 for all LECs that meet the triggers. Second, the FCC should say clearly that it “will,” instead of “may,” consider rate reductions when it finds that “a CLEC’s stimulate traffic volume exceeds the price cap LEC’s traffic volume,” Sprint said. Third, the FCC ought to allow LECs that end their traffic pumping ways to “revert back to the old way of establishing rates,” Sprint said. “Here again, a true-up mechanism must be incorporated into the revised ratemaking process,” Sprint said. Finally, the FCC should give local exchange carriers “45 days after meeting the triggers to file a revised access tariff,” Sprint said.

The Independent Telephone & Telecommunications Alliance urged the FCC to reconsider rules that limit the areas that are eligible for new broadband funding under Phase I of the new Connect America Fund. Price cap carriers represented by ITTA are worried that the rules are based on data in the National Broadband Map (NBM), ITTA said (http://xrl.us/bmnbrh). The map “overstates fixed broadband coverage” and its conclusions “cannot be rebutted,” ITTA said.

"It would seem that, if a provider must certify that an area is unserved when the NBM says it is unserved, a provider should also have the opportunity to rebut the NBM and show that an area is unserved and eligible for CAF Phase I support,” ITTA said. “Simply put, the NBM is not infallible and, consequently, its use should be limited to evidence, but not proof, that an area is served and therefore ineligible for CAF Phase I support."

Price cap carriers are also worried that the test used to identify unserved areas under Phase I of the new plan is different than the test for Phase II, “even though the concerns should be the same,” ITTA said. ITTA said it found “two salient differences” between the two tests “that, taken together, will produce substantially different sets of eligible areas.” The first was “the speed threshold for the competing service is much lower for Phase I -- 768/200 kbps as opposed to 4/1 Mbps,” ITTA said. The second was that “the burden of proof is much lower for Phase I” because the broadband map is “presumptively true and cannot be rebutted, whereas the CAF Phase II analysis apparently will offer the opportunity to demonstrate that an area is, in fact, unserved,” ITTA said.

The Blooston-represented Rural Carriers took aim at several parts of the USF order, mainly in the provisions for reverse auctions and its creation a mobility fund, the record showed. Rate of return carriers are worried that reverse auctions will “create a race to the bottom,” the Blooston group said. “Construction and equipment quality short-cuts and other gaming strategies can result in deceptively low ‘winning bids’ and are likely to require larger disbursements of high-cost support in the long term to replace inferior facilities,” the Blooston carriers said (http://xrl.us/bmnbsc). “Further, reverse auction proceedings are susceptible to anti-competitive bidding practices by large carriers that do not need the funds to expand service."

If the FCC carries out its plans for reverse auctions, it should find “a mechanism” that “assures that a significant portion of the Mobility Fund goes to the small rural wireless carriers that already serve or hold spectrum to serve the sparsely populated areas found to be unprofitable by the nationwide carriers, particularly those areas that are in or adjacent to the rural carriers’ certificated telephone service area,” the Blooston carriers said.

The Blooston group said the FCC should exclude Tier 1 carriers from the Mobility Fund. “USF funds are still limited, and the Mobility Fund rules must recognize that no Tier One carrier requires financial assistance in order to complete its buildout,” Blooston said. “On reconsideration, the Commission should prevent this form of ‘corporate welfare’ by banning

Tier I carriers from participating in the Mobility Fund.”

The Wyoming Public Service Commission wants the FCC to reconsider a requirement for a state eligible telecommunications carrier (ETC) certification process in the order. A state commission should be authorized to gather evidence to determine whether high-cost support and ETC status are warranted, even when such pricing exceeds the benchmark, it said.

Under the order, the FCC requires every recipient of high-cost support to self-certify annually that the pricing of its voice service is no more than two standard deviations above the applicable national average urban rate for voice services. “This is essentially a requirement that a company certify that its rates are reasonably comparable to the national average urban rate,” the Wyoming commission said in its filing. Such a certification for Wyoming ETCs would be factually incorrect and inconsistent with previous rulings, it said. Federal support in Wyoming has never reached reasonable comparability with urban rates, it said. Through the proposed changes in the order, the reasonable comparability issue would be extinguished and never substantively addressed, it said. This would be “arbitrary and capricious.”