Cox, Rural Telco Groups Dispute Opposition to E-rate Reconsideration Bids
Cox Communications, rural telecom groups and their cable and telco allies pushed back against opposition to their petitions for reconsideration of parts of the FCC December E-rate overhaul, in comments posted in docket 13-184 Tuesday. Cox urged the FCC to provide "robust safeguards" overseeing school and library E-rate applicants seeking to self-provision broadband or to light up dark fiber. The National Exchange Carrier Association, NTCA and WTA cited procedural concerns in calling on the FCC to back off imposing mandatory bidding requirements on rural telcos for providing broadband to anchor institutions with support they fear could be inadequate. USTelecom also recently backed Cox (see 1504300056), while T-Mobile this week, backed by other wireless parties, urged the FCC to make wireless-friendly changes to the E-rate rules that it said were unopposed (see 1505120020).
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Geoffrey Feiss, general manager of the Montana Telecommunications Association, which backed Cox and the rural groups, voiced hope for FCC changes while recognizing it was “swimming upstream” to ask the agency to reconsider its decisions. “I think the odds are stacked against us, but it’s something a lot of parties believe is appropriate and necessary,” he told us Wednesday.
Cox wants the FCC to limit the self-construction and dark-fiber options to applicants that can’t meet their broadband needs with finished services or to set a $200 million annual cap on such expenditures. Contrary to the “suggestions” of the American Library Association (ALA) and the Schools, Health & Libraries Broadband Coalition (SHLBC), Cox said it has “no interest in restricting” school and library options if they truly need to use dark fiber or self-construction to meet connectivity needs. “Rather, Cox’s proposals are designed to target finite E-Rate funding to maximize its benefits for all schools and libraries not just those in high density urban and suburban areas,” it said. Backing Cox, NCTA said the FCC should limit the availability of funding to areas without broadband or cap E-rate funding for that purpose.
The FCC recently said $3.9 billion would be available for E-rate discounts in FY 2015 (July 1, 2015, to June 30, 2016), with demand projected at $3.92 billion by Universal Service Administrative Co. “If you reform it, they will come,” noted FCC Chairman Tom Wheeler in a Monday blog post (see 1505110061).
Disputing SHLBC and ALA opposition arguments, the rural telco groups said the FCC hadn't followed proper notice-and-comment procedures in requiring rural telcos to bid on providing fixed broadband to anchor institutions at “yet-to-be-determined national reasonable comparability benchmark(s) -- and certify that they have done so as a condition of receiving support.” They said the FCC should properly seek public comment on the proposal and revisit the issue, or at least clarify Wireline Bureau procedures for establishing the reasonable comparability benchmarks for providing the services and the timing of the new duty.
NTCA "hopes that the FCC will reconsider an order in which it adopted a requirement to bid to provide broadband services at reasonably comparable rates to schools and libraries with neither any indication yet of how such rates will be established nor sufficient tools by which to achieve such compliance,” said Senior Vice President Michael Romano in a statement. “Because of the standalone broadband problem, the high-cost rules specifically all but preclude an RLEC [a rural incumbent local exchange carrier] from bidding in such a manner unless the school or library in question also wants voice services. Seeking more specific comment on the potential scope of this obligation, its impacts and the means by which it may be satisfied are all things that should be done prior to adoption and implementation -- and none has happened yet.”
The Montana Telecommunications Association said the rural groups were justifiably concerned the benchmark rate could result in “diminished investment” by rural telcos, and said that could hurt schools and libraries, plus consumers and businesses. “I hope they will listen to us because the consequences in a state like Montana are significant,” MTA’s Feiss told us. He said much uncertainty remained about the development of the benchmark and whether it would cover the actual costs “for getting bandwidth to areas such as rural Montana.” He also questioned why the E-rate should fund broadband “overbuilding” by schools and libraries. “How do you compete with that?” he said.
SHLBC appreciates that rural telcos were often the only broadband providers to institutions in their communities, Executive Director John Windhausen told us. But he said the E-rate's statutory language "specifically requires providers to offer service to schools and libraries," and he said his group has pressed the FCC for stronger enforcement of that language. As for the Cox petition, the E-rate order gave schools and libraries additional dark-fiber and self-construction options that could lower their costs and save the E-rate program money, he emailed. "There is no reason for the Commission to backtrack on these changes that will help make the E-rate program operate more efficiently."