ACAIn comments filed with the FCC late last week, the American Cable Association voiced its concerns about changes proposed by the US Telecom Association to Universal Service reforms adopted in the Connect America Fund order late last year. The order aims to transition today’s voice-focused Universal Service program into a Connect America Fund (CAF) focused on broadband.

The ACA is particularly concerned about the impact of certain changes the USTA proposes to the FCC’s plan to conduct a reverse auction to bring broadband service to certain areas where broadband is not available today. This includes areas where the incumbent carrier is a large price cap carrier that declines to provide broadband using CAF funding based on a cost model.  The ACA represents small cable companies including some owned by rural telcos, and its members are likely candidates to bid in these reverse auctions.

The USTA, whose members include the larger price cap telcos, has demonstrated in the past that it has considerable influence with the FCC, whose Universal Service reform plans are based in large part on a proposal brokered by the USTA.

One of the ACA’s chief concerns is the USTA’s suggestion that there should not be a flash cut withdrawal of traditional voice service support when a reverse auction winner begins to receive broadband Universal Service/ CAF support for an area. In an announcement issued Friday, the ACA said the USTA’s proposal would “badly skew the competitive landscape in addition to causing the FCC to breach its budget.”

As an alternative, the ACA suggested that price cap carriers should continue to receive voice funding in a census block “only until it is determined that the census block is served by unsupported competition, an auction winner begins providing service to a majority of the locations in the census block, or a Remote Areas Fund recipient begins to provide service in the very high-cost area.” (The reference to a remote area fund applies only to those rural areas with the highest broadband deployment costs, where Universal Service support would be available only to satellite or broadband wireless providers.)

Because incumbent price cap carriers have a right of refusal to bring broadband to unserved areas at the target support level, there is a strong possibility that a considerable amount of CAF dollars will go to the price cap carriers. Accordingly the USTA’s proposal also has recommendations aimed at protecting the interests of those price cap carriers who opt to take Connect America funding on the condition that they will deploy broadband to unserved areas within five years.

For example, the USTA has asked the FCC for flexibility about broadband build-out deadlines for Connect America Fund recipients in cases where delays result from circumstances beyond the carrier’s control. The ACA said it agrees the FCC should have the ability to issue waivers, but argued that the FCC should require sufficient proof of the problem, as well as evidence that the supported carrier “exercised diligence to address the issue.”

In addition, the ACA said waivers should only apply to interim deployment coverage deadlines during the five-year term of support. “The FCC should not grant a waiver or extension of the five-year term since this would undermine the potential to ensure support is awarded efficiently and performance requirements meet relevant market conditions,” the ACA said.

Instead, the ACA suggests that if a CAF recipient has not brought broadband to all of the households it planned to cover within a service area within the five-year period, the FCC should determine whether further support for those areas is merited. If so, the FCC should determine the best competitive method to provide any additional support needed. Such methods could, for example, include auctions or vouchers, the ACA said. Here, too, ACA members would be likely candidates to bring broadband to the unserved areas through some sort of voucher or follow-on competitive bidding process.

The Connect America Fund offered small cable companies fewer opportunities to obtain Universal Service funding to deploy broadband than they had hoped. But the ACA clearly hasn’t given up on unearthing whatever such opportunities it can for its members.

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