Four major rural telecoms industry groups, along with 30 state and regional counterparts, have filed a proposal for “responsible USF/ICC reform” with the FCC that would avoid dramatically damaging universal service in rural areas served by rural rate-of-return carriers, while still accomplishing the fundamental principles of reform identified” in the FCC’s recent Notice of Proposed Rulemaking (NPRM).

The National Exchange Carrier Association (NECA), the National Telecommunications Cooperative Association (NTCA), the Organization for the Promotion and Advancement of Small Telecommunications Companies (OPASTCO) and the Western Telecommunications Alliance (WTA) announced the filing.

“The broadband-capable networks built and maintained by small, rural communications providers are the product of years of public-private partnerships undertaken by those determined to keep their customers in the hardest-to-serve parts of the country connected to the latest communications technologies,” stated NTCA CEO Shirley Bloomfield. “To meet changing consumer demands-and to ensure our nation’s continued economic development-these networks require ongoing investment and stable opportunities for cost recovery. Our proposed reforms will help ensure that affordable broadband connectivity is available-and remains available for the long term-in rural America.”

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Key aspects of the proposal are:

  • Immediately address long-standing disputes involving application of ICC rules to all traffic originating from or terminating to switched networks (regardless of technology), call signaling requirements, access stimulation, and non-payment issues.
  • Adopt several carefully-targeted measures reasonably designed to constrain the recovery of capital investments and operational expenditures from federal universal service mechanisms on a prospective basis, without harming rural consumers, hampering broadband deployment efforts, hindering the ability to recover costs associated with prior investment under existing rules, or undermining the continuing availability and affordability of services in rural America.
  • Set up a process to unify intrastate switched access rates with interstate rates by company. A critical component of this transition is that any such ICC rate reductions be coupled with an appropriately-designed restructure mechanism that enables rural local exchange carriers to recover the lost access revenues.
  • Avoid arbitrary and artificially designed long-term rate-setting goals like “bill and keep” or a uniform rate applicable to all carriers. Instead, the FCC should pursue ICC reform in sensible, well-defined stages, starting with unification of access charges, followed by subsequent evaluation of market developments, technological advances, and regulatory needs that will inform how further reforms should be structured and implemented.

To accomplish the latter, the FCC should “develop a cost-based, ‘evolved’ Rate of Return-based broadband funding mechanism that:

  • phases out legacy USF support mechanisms over a reasonable transition period,
  • ensures the opportunity to recover existing investment,
  • promotes responsible new investment,
  • supports reasonably comparable rates and services, and recognizes the importance of carriers of last resort in rural America, and
  • operates as a separate but complementary component of a more far-reaching Connect America Fun aimed at supporting broadband-capable networks throughout rural America.

“The rural associations’ plan satisfies the commission’s near- and long-term reform principles by encouraging fiscal responsibility, demanding accountability, reasonably constraining growth in USF, and modernizing the existing mechanisms– all without the disruptive impacts that would arise under other reform proposals currently under consideration,” according to the press release.

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