Rural telcos will have to provide more broadband, often with less federal support, said Fletcher Heald attorney James Troup, who represents RLECs and examined recent FCC actions overhauling high-cost USF subsidies for rate-of-return carriers (see 1603300065 and 1603310039). The commission is "imposing numerous additional obligations upon rate-of-return regulated incumbent local exchange carriers (ILECs), while leaving many rural ILECs with the same or even less compensation to satisfy the significant broadband build-out expenditures mandated by the new regulations," Troup said in a blog post Wednesday. The FCC is phasing down the authorized rate of return from 11.25 percent to 9.75 percent over six years and giving carriers two options: shifting to model-based support or staying with legacy mechanisms, with one revamped as Connect America Fund Broadband Loop Support (CAF BLS) and providing stand-alone broadband support. In both cases, ILECs "will have new broadband construction obligations entailing additional costs," Troup wrote. "The FCC did not allocate additional funds to recover the increase in construction expenditures for those ILECs that elect to receive CAF BLS and high cost loop support. The FCC only provided $150 million more to pay for all the new broadband construction it is mandating for those ILECs that select model-based support. The funds within the current budget will first be distributed to those that elect model-based USF, and what is left within the current budget will be available for those that receive CAF BLS and high cost loop support." Many RLECs will receive less funds under a "regression analysis" that limits operating and corporate expenses, and due to capital budget constraints, he said. The changes create substantial uncertainty for those choosing legacy support, Troup told us Thursday. He said rural telcos will be forced to bear the burden of broadband construction that benefits long-distance providers, wireless carriers and Internet edge players using those networks.
Frontier Communications gained access to $48.6 million in Connect America Fund subsidies for serving 114,610 locations in areas of two states covered by wireline systems it recently acquired from Verizon (see 1604010036), said an FCC Wireline Bureau order in Tuesday's Daily Digest. Frontier was authorized to receive $32 million for California and $16.6 million for Texas that Verizon had accepted in broadband-oriented CAF Phase II support. The bureau directed Universal Service Administrative Co. to disburse to Frontier the USF subsidy amounts, which included some deferred amounts and other adjustments not previously disbursed to Verizon.
The FCC OK'd Birch Communications' planned buy of certain assets from Primus Telecommunications, debtor-in-possession (Primus has filed a petition under Chapter 15 of the U.S. Bankruptcy Code), said a Wireline Bureau order Monday. A public notice outlined the proposed CLEC transaction (see 1603100045).
About 40,000 Communications Workers of America (CWA) and International Brotherhood of Electrical Workers (IBEW) members in eight states and the District of Columbia plan to go on strike against Verizon starting at 6 a.m. Wednesday, they said. Major strikes have become a rarity, with only 12 strikes involving 1,000 or more employees last year, compared with 22 a decade earlier and hundreds annually being common before the 1980s, according to U.S. Bureau of Labor Statistics data. "We have tried everything, and I do mean everything," CWA President Chris Shelton said on a conference call with journalists Monday. "Verizon has forced us there. They have no regard for anybody but themselves." IBEW President Lonnie Stephenson said the union has proposed alternatives to the company's proposed health and retirement benefit changes, but Verizon CEO Lowell McAdam "has refused anything less than his full agenda of cuts." Union officials tied many of their complaints to Verizon's failure to build out its Fios network. "It's greed, just greed, plain and simple," said Ed Mooney, CWA District 2-13 vice president. The union has in the past pointed to Fios plans as an example of the company not living up to obligations (see 1601220013). Verizon has been preparing for more than a year in the event of a strike, with nonunion workers trained to handle job duties from repairs on poles to handling call center inquiries, it said in a statement Monday. “We’ve tried to work with union leaders to reach a deal,” Chief Administrative Officer Marc Reed said. “Verizon has been moving the bargaining process forward, but now union leaders would rather make strike threats than constructively engage at the bargaining table.” Verizon said the company's contract proposal includes a 6.5 percent wage increase over the life of the contract and a 401(k) with company match, along with "structural changes" to its legacy healthcare plans that would bring them in line with what it offers its non-union U.S. workforce. The current contract expired Aug. 1, according to the unions.
BT Americas disputed AT&T statements that Ethernet prices are lower in the U.S. than elsewhere due to less regulation here. BT cited data it said showed metro Ethernet services in the U.S. are clearly pricier than elsewhere in 94 percent of cases. "AT&T arrives at the demonstrably false conclusion that Ethernet prices in the US are in fact 'overall lower' and that the correlation between responsible regulation of economic bottlenecks and better outcomes for consumers has magically disappeared. AT&T does this by conveniently ignoring the facts," BT said in a filing Friday responding to a recent AT&T filing in docket 05-25 (see 1603290063).
FCC special access regulation is needed to ensure competitors can lease access to incumbent telco facilities on reasonable wholesale terms, Windstream CEO Tony Thomas said at the Incompas Show Monday. About 77 percent of business buildings have just one facilities-based provider, 20 percent have two, and 2 percent have three or more, he said in Oxon Hill, Maryland: "That is the state of competition and it's not going to change overnight" due to the economics. Windstream is investing heavily to deploy fiber and upgrade its networks, but it's a "drop in the bucket," given the challenge of serving business customers with multilocation offices across the country, he said. Incumbent telcos said competitive fiber runs close to the vast majority of buildings and could be connected to them, and Thomas said long-haul connections are "pretty easy," but the "last half-mile" is "really hard and really expensive on both ends" of communications transmissions. Installing fiber underground in major cities such as Washington or Los Angeles is costly and difficult, particularly without existing rights of way, he said: "That's why we need a robust wholesale market." Thomas said the Ethernet market, which has been deregulated by FCC forbearance decisions, is "fundamentally flawed" with "staggering" problems, such as higher wholesale prices than retail prices and frequent "special construction charges" that constitute "back-door price increases meant to impede competition." Without more reasonable wholesale prices and related terms and conditions, business customers will often be left with just one provider, he said.
The Wholesale Voice Line Coalition urged the FCC to change the trigger for ending a wholesale platform service requirement for incumbent telcos in the transition from legacy TDM networks to IP-based systems. Backing a Granite Telecom request in docket 13-5, the coalition said the commission should tie the sunset of the "regulatory backstop for wholesale platform services to the conclusion of an examination of the relevant market for wholesale platform services, rather than the special access market." Coalition members "serve business customers across the United States, primarily focusing on providing voice lines to national companies and other entities that need a small number of voice lines at a large number of disparate, often suburban, rural and remote locations where facilities-based competition with the ILEC is uneconomical," said a filing posted Thursday. It was from Access Point, Birch Communications, BullsEye Telecom, Manhattan Telecommunications, Matrix Telecom, New Horizon Communications and Xchange Telecom. Without competitive service from the wholesale platform, customers would have no alternative to the ILEC, they said.
Stakeholders in the planned local number portability administrator (LNPA) transition from Neustar to Telcordia/iconectiv can participate in a couple of "outreach and education events" being held by PwC, the transition oversight manager, said an FCC Wireline Bureau public notice Thursday in docket 95-116. Stakeholders can attend an in-person event on Monday and Tuesday 10 a.m. to 5 p.m. at the Hampton Inn & Suites National Harbor, Oxon Hill, Maryland, said the PN. PwC will also host its next webcast April 20 at 3 p.m., it said.
The new version of the Alternative Connect America Cost Model (A-CAM, v2.2) incorporates inputs and changes from the FCC's recent rate-of-return USF overhaul order (see 1603300065), said a Wireline Bureau public notice Friday in the Daily Digest, posted in docket 10-90. The bureau released illustrative results showing support amounts for carriers to assist their decisions on whether to opt in to the model-based support, but it said the model hasn't been finalized. The PN invited unsubsidized rural telco competitors to update information on their broadband-oriented deployments, which can be used to deny incumbent carriers new Connect America Fund support. Comments challenging competitor coverage data are due April 28.
The FCC asked a court to suspend its review of a Telephone Consumer Protection Act case so the agency can rule on the regulatory definition of a "residential telephone line," which is central to the litigation. The FCC filed an amicus brief in response to a request from the 2nd U.S. Circuit Court of Appeals that it weigh in on Todd Bank v. Independence Energy Group and Independence Energy Alliance, No. 15-2391. Bank sued the Independence defendants under the TCPA for a call they made to his home "without his consent and using an artificial or prerecorded voice," said the brief, posted on the FCC's website Thursday. The TCPA restricts such calls to residential telephone lines, but the U.S. District Court for the Eastern District of New York said the restrictions didn't apply to Bank's home phone because it was held out for business purposes. The FCC said neither it nor the TCPA had defined the term "residential telephone line," including the extent to which a home line can support business uses and remain "residential." Bank petitioned the FCC to clarify that the TCPA restrictions apply to phone lines used for business purposes if they're registered with the service provider as a residential line, prompting an agency public notice with a comment period ending May 17 (see 1603310045). He also asked the 2nd Circuit to stay his appeal of the lower court ruling pending FCC resolution of the issue. The agency agreed: "The proper course is for this Court to grant Bank’s motion for a stay and, consistent with the doctrine of primary jurisdiction, hold this case in abeyance pending the Commission’s disposition of the petition. The term 'residential telephone line' is a fundamental element of the restrictions on artificial or prerecorded voice calls contained in the TCPA, a statute that the Commission implements and administers. It is accordingly appropriate for this Court to stay its hand to give the Commission an opportunity to address the meaning and scope of the term (as Bank has now requested) in the first instance."