Telcos Seek USF Voice Support in Remote Areas Not Yet Funded for Broadband
Large telcos are seeking renewed USF voice support in remote areas where funding was cut off but their obligations to provide phone service continue under a transition to broadband-oriented mechanisms. Representatives of AT&T, CenturyLink, Frontier Communications, Verizon, Windstream and USTelecom jointly discussed the issue with FCC officials in a series of recent meetings, and Frontier sought relief in separate meetings with two commissioners, according to filings in docket 14-192. “It will happen, with some sort of path to broadband,” USTelecom Senior Vice President Jon Banks told us.
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The price-cap carriers traditionally had received voice subsidies for the areas under FCC phone-oriented USF mechanisms, and more recently via “frozen support” in an agency migration to model-based Connect America Fund support for broadband networks also capable of providing voice service. After the carriers made their decisions on states where they would accept the CAF Phase II support in “high-cost” areas, the frozen support ended last year in the “extremely high cost” areas of states where the broadband-oriented funding was accepted, a telco official said. Frozen support continues in remote areas of states where carriers declined CAF Phase II funding, the official said.
In a forbearance petition, USTelecom asked the FCC to relieve the telcos of their duties as “eligible telecom carriers” (ETCs) to provide voice service in the remote areas where they no longer are subsidized. Absent that, the ILEC trade group proposed the commission reallocate a portion of the frozen support to remote areas -- an amount that telco officials said would have been in the $300 million to $400 million range.
But in a December order partially approving and partially denying the petition, the FCC rejected USTelecom's request for relief from ETC voice duty in the remote areas, and a commission majority declined to provide $100 million to $200 million in support that Chairman Tom Wheeler had proposed in a draft (see 1512170052). Commissioners voiced various concerns, including skepticism about providing additional voice support when the agency aim is broadband deployment. Near the end of its order, the FCC did acknowledge that “certain adjustments to legacy ETC designations” could be warranted once the CAF Phase II funding has been fully implemented, including through a planned reverse auction that is the subject of a draft order. But it declined to make “premature and sweeping changes that could lead to … unintended consequences.”
The telcos said they're now subject to an unfunded mandate to provide voice service in very costly remote areas. “We’re left holding the bag,” said Jeff Lanning, CenturyLink vice president, federal regulatory affairs. He told us his company is evaluating its options.
USTelecom’s Banks said the current situation isn't tenable. “It’s incumbent on all of us to put together a viable support mechanism so that the voice service keeps getting delivered, with a path to delivering broadband over time,” he said. "There's a need for an integrated plan."
Frontier asked the FCC to provide funding relief on an “interim basis." That would preserve essential voice service in extremely high-cost areas without undermining the “ultimate goal of universal broadband availability,” the company said in a filing. AJ Burton, Frontier director-federal regulatory affairs, told us that without support, carrier investment is limited and services are at risk in the event of natural disasters. “While we agree that broadband investment and deployment is the right end goal, in the interim, it is important for the FCC to continue providing support for critical voice services in these extremely rural, high-cost areas,” he emailed.
“The Communications Act and the FCC’s own rulings and cost model readily acknowledge the obvious -- high-cost areas are expensive to serve,” Eric Einhorn, Windstream senior vice present-government affairs, emailed us. “In this case we are talking about those the FCC has identified as the costliest of high-cost areas to serve. Windstream embraces its role in making sure consumers living in these rural and remote areas continue to have access to quality voice service, but the FCC must step up to provide adequate funding to support this Federal obligation. Whatever one might argue the level of support should be, it is clear that zero funding is not ‘sufficient’ as required by the law. For that reason alone we are optimistic the FCC will fill this gap soon.”
FCC staff recently circulated a revised draft of the CAF II reverse auction order, one telco official said. Wheeler said in December the auction is the “predicate” for dealing with the remote areas.