Sandwich Isles Asks FCC To OK Plan To Reduce Cost Recovery, End NECA Dispute
Sandwich Isles Communications asked the FCC to approve a new plan that SIC said would reduce the amount of cost recovery it needs from a National Exchange Carrier Association mechanism, which has been the subject of a protracted fight. SIC floated the plan Thursday as parties responded to a Wireline Bureau invitation to refresh the record in the proceeding, the deadlines for which were recently extended at the company's request (see 1604180032). NECA is evaluating the plan and trying to understand precisely what Sandwich Isles is proposing and what its impact would be, Jeff Dupree, the association's vice president-government relations, told us Friday. The FCC had no comment.
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Sandwich Isles, NECA and others continued to dispute the extent to which SIC was entitled to recover costs from NECA's traffic-sensitive pool for an undersea cable network it built connecting its facilities on various Hawaiian Islands. In its comments in docket 09-133, Sandwich Isles said it was clearly eligible to recover costs from NECA's pool for lease costs of its Paniolo network, but the only question was the proper method for calculating that cost recovery. A 2010 bureau declaratory ruling partially granting an SIC petition "significantly understated" the amount, the company said.
But Sandwich Isles said it has found a path to refinance the Paniolo network, reducing its NECA funding need by $16 million while still meeting present and future demand. To pave the way, SIC said the FCC should direct NECA to release funding in such a way as to generate $8.1 million in annual SIC cost recovery, with the understanding that a portion of the Paniolo lease costs will be removed from the company's rate base and used for other purposes. Sandwich Isles said FCC approval would moot the company's petition for reconsideration of the bureau's ruling along with conflicting NECA and AT&T requests, "bringing this decades long proceeding to a final definitive end."
NECA said costs and capacity of the Paniolo cable system "are far in excess of what is reasonably required to serve SIC broadband customers from 2010 through the near future." Sandwich Isles shouldn't be allowed to include lease expenses in its cost recovery because it hasn't paid the full costs of the lease, with no signs it will, NECA said in its comments, which didn't address the new SIC plan. It urged the FCC to resolve challenges to the 2010 ruling and NECA's petition for a clarification.
The FCC should approve AT&T's appeal of the bureau ruling or NECA's petition for clarification, said AT&T and USTelecom (here and here). Robin Puanani Danner, chair of the Sovereign Councils of the Hawaiian Homeland Assembly, urged the FCC to reject any reduction of critical services for current and future residents of the Hawaiian Home Lands.