Capital investments by broadband providers could decline by as much as nearly a third over the next five years if the FCC bases net neutrality rules on Communications Act Title II, said a study released Wednesday by USTelecom, which has said it would challenge reclassification in court. In an ex parte letter USTelecom also asked Wednesday for the commission to review the study. Title II proponents Free Press and Public Knowledge quickly dismissed the study. “This is another example of a made-to-order industry study, with predictions giving them the result they want, facts be damned,” said Free Press Policy Director Matt Wood. The study’s authors, Kevin Hassett and Robert Shapiro, said they had devised a new model that measures investment trends for services covered under Title II and not covered by the classification, then estimates the impact reclassification to Title II would have for both wireline and wireless. The study estimates that under the current regulatory structure, broadband providers are expected to make about $218.8 billion in new capital investments over the next five years. If the commission opts for reclassification, investments by ISPs would drop over the next five years to as low as $173.4 billion. Additional regulation, as well as the current regulatory uncertainty over net neutrality, and whether other aspects of the Internet will fall under Title II, would reduce the rate of return on the investments and deter spending, said Hassett, director of economic policy studies at the American Enterprise Institute. He was chief economic adviser to Republican presidential candidate John McCain during the 2000 primaries. Responding to a question, Shapiro said it’s not possible to factor how forbearance from Title II, as reclassification’s proponents advocate, would affect their projections. “To what level [there will be forbearance], how long it would take, what the legal process would be are all in a state of uncertainty,” said Shapiro, chairman of Sonecon, and chief economic adviser to President Bill Clinton’s 1992 presidential campaign. A reduction in investment would be significant, Shapiro said, because “the Internet plays such a critical role in the economic, social and political life” of the U.S. “Reclassification of broadband as Title II would be contrary to the national interest of broadband deployment and investment,” USTelecom President Walter McCormick said during a call with reporters. Wood called the study “absurd,” and said telecom investment reached its peak while still under Title II. “USTA's flimsy study is nothing more than a cynical attempt to scare Washington policymakers,” Wood said. The study didn’t factor in that the same infrastructure is used for voice, video and data, which are regulated differently, said Free Press Research Director Derek Turner. It also measured all capital investments, when nine “out of every 10 capital dollars spent by cable companies goes to set-top boxes and modems, not to the network,” Turner emailed. Turner's criticisms "unfortunately do not advance the debate," Hassett and Shapiro said in a statement to us. The economists said they included "reasonable assumptions" to account for the use of the same infrastructure by various services. The researchers said they did not examine cable, and stood by measuring capital investments, calling that the "the best metric for the overall impact of Title II regulation." Public Knowledge Senior Vice President Harold Feld also criticized USTelecom’s request for the study to be considered. “Of course the FCC will 'review' it, just like they review any other submission," Feld said. Of USTelecom, he said, "What do they want, a gold star?”

House and Senate Commerce Committee staffers coordinated informally to create what is the latest Satellite Television Extension and Localism Act reauthorization draft, as expected (see 1410150090). House lawmakers introduced the 22-page five-year STELA Reauthorization Act Tuesday. The draft still includes what may be its most controversial provision, at least in the Senate -- repeal of the set-top box integration ban.

The FCC should move ahead with Connect America Found Phase II by providing adequate funding “to bring robust broadband service to 4.2 million residential and small business locations in the hardest to serve parts" of the country. That's what Steve Davis, CenturyLink executive vice president and USTelecom chairman; Melissa Newman, CenturyLink senior vice president-federal regulatory affairs; Walter McCormick, USTelecom president; and Jonathan Banks, USTelecom senior vice president-law and policy, told commissioners Ajit Pai and Mike O’Rielly and an aide to Commissioner Jessica Rosenworcel in separate meetings on Wednesday, according to ex parte filings posted Monday. The minimum broadband speeds required under the program should be increased from 4 Mbps to 10 Mbps under certain conditions to make it economically feasible, they said. A number of factors should be considered in increasing speeds, including a requirement “to serve all very high-cost locations,” to eliminate “the cherry picking likely in auctions” and to create “a path to bringing broadband to the greatest number of locations within CAF Phase II’s limited budget,” the filing in docket 14-28 said. The “sooner the program is implemented, the sooner this massive infrastructure deployment can begin, bringing investment, jobs, and economic development to the approximately 18 percent of the land mass of country that stands to benefit from this program," the filing said.

FCC commissioners dismissed four petitions for reconsideration of its rural call completion order, saying reconsideration would “impair the Commission’s ability to monitor, and take enforcement action against call completion problems,” in an order released Thursday. The commission granted one request filed by USTelecom and ITTA and eased some of the order’s record keeping requirements on intraLATA toll calls. The order was adopted Nov. 4. Commissioner Mike O’Rielly concurred. Denied was Comptel’s petition that more smaller providers be excused from record-keeping and reporting requirements. The rural call completion order had only required compliance from long-distance voice providers with more than 100,000 domestic retail subscriber lines. Also denied were Sprint’s motion for reconsideration of the commission’s decision to use the call completion reports collected as the basis for subsequent enforcement action. Sprint also requested surveys by rural local exchange carriers used in the call completion orders be made available for independent review, and said the commission’s estimates on the regulatory burdens of the order were too low. Denied as well was Transcom’s petition to exempt intermediate providers that aren't common carriers from a rule barring originating providers from sending an audible ringing sound to callers before the terminating provider has signaled the called party is being alerted. The granted exemption for USTelecom and ITTA covers intraLATA toll calls that are carried entirely over the covered provider’s network. O’Rielly in a statement said the FCC “should root out call completion problems, [but] it should not take procedural and legal shortcuts along the way that undermine the agency’s credibility across proceedings.” He cited the denial of Sprint’s petition to make the RLEC surveys available, saying the commission should have made them available under protective order if necessary. He also called the order’s cost-benefit analysis “cursory,” saying they make “no attempt to quantify the costs of the rules or to quantify and compare the benefits.” Chairman Tom Wheeler said in a statement that Thursday’s order “paves the way” for data collection requirements “to become fully effective” and said he has directed commission staff to seek Office of Management and Budget approval to proceed within three business days. Commissioner Mignon Clyburn said the data collection effort isn’t enough. “Analyzing data will help isolate and investigate the issue, but it will not completely solve the problem,” she said in a statement, saying she hoped the commission will “take permanent action to address rural call completion issues as expeditiously as possible.” Commissioner Jessica Rosenworcel said the decision “resolves several pending petitions for reconsideration that will allow us to move forward with putting these rules into effect. Going forward, I hope we can move faster to bring an end to this persistent problem.”

The Internet Tax Freedom Act Coalition urged congressional leaders in a letter Thursday to make ITFA permanent. The coalition includes the American Cable Association, Competitive Carriers Association, CTIA and USTelecom. They said it’s imperative for Congress to pass ITFA, which prohibits Internet access taxes, before it expires Dec. 11. The letter was sent to Senate Majority Leader Harry Reid, D-Nev.; Senate Minority Leader Mitch McConnell, R-Ky.; House Speaker John Boehner, R-Ohio; and House Minority Leader Nancy Pelosi, D-Calif.

House Minority Leader Nancy Pelosi, D-Calif., dismissed the idea of seniority in endorsing Rep. Anna Eshoo, D-Calif., to be top Democrat on the Commerce Committee in a Dear Colleague letter issued Tuesday, the third such letter sent this year. Pelosi first endorsed Eshoo, now ranking member for the Communications Subcommittee, for that position months ago. The committee leadership race is heating up as Congress returned for the lame-duck session Wednesday.

Following President Barack Obama’s backing Monday of reclassification, (see 1411100033) it was unclear how Chairman Tom Wheeler would proceed. In at least two meetings Monday with those involved in the net neutrality debate, Wheeler focused on some difficult issues involved in a Title II Communications Act approach, officials involved in the meetings told us. One said Wheeler said the agency was grappling with how to deal with the issues. But he “seems dug in” with his focus on Title II’s problems “as opposed to the obvious benefits,” said a public interest official involved in one of the meetings.

Several rural carriers associations are “frustrated” rural call completion record-keeping and reporting rules still aren’t in effect, more than a year after they were approved in an FCC order, representatives from NTCA, the National Exchange Carrier Association and WTA told an aide to Commissioner Jessica Rosenworcel Thursday, said an ex parte filing posted Friday. “The record is replete with data and anecdotal information describing the extent of the problem and the serious public safety and financial ramifications of call failure,” the groups said. “Family members have been unable to contact loved ones, rural businesses have lost opportunities and customers, doctors have been unable to reach patients, hospitals have been unable to reach on-call emergency surgeons and there is a reported instance in which a 911 call center was unable to make emergency call backs.” The aide said Rosenworcel is committed to addressing the issue, said the filing, in docket 13-39. The agency said last month it’s awaiting the approval of a circulating order on the Independent Telephone and Telecommunications Alliance and USTelecom's petition to reconsider parts of the order, before sending necessary paperwork to the Office of Management and Budget (see 1409260039). The commission is expected to release the order "very soon," which would clear the way for seeking OMB approval, an FCC spokesman said. Representing the groups, according to the filing, were Jill Canfield, NTCA vice president-legal and industry; Colin Sandy, NECA senior regulatory attorney; and Derrick Owens, WTA vice president-government affairs.

Granting USTelecom’s petition to forbear from several regulatory requirements on LECs would be a “concrete action” the FCC could take “in the immediate future to increase competition where Chairman [Tom] Wheeler has said it is most needed -- in fiber-based broadband,” said the group’s president Walter McCormick in a statement Thursday. “The petition calls for removing long outdated rules, such as those requiring companies to separate local and long-distance business, that prevent carriers from investing in the kind of advanced communications services that consumers want today. ... We believe action on this petition will lead to greater broadband opportunities for American consumers.” Comments on the petition are due Dec. 5, replies Dec. 22 in docket 14-192 (see 1411050047).

Questions FCC Chairman Tom Wheeler is raising to lay out a clearer procedure for retiring copper -- in the draft NPRM he’s circulating -- probably won’t be opposed in concept by carriers, said industry and public interest officials. Details of how stringent the agency should be in determining whether there’s a sufficient alternative in place before approving retirement likely will be controversial, they said.