NTCA Urges Prudent, Reasonable, and Lawful ICC/USF Reform to Enhance Broadband Availability

Proposes new set of investment-focused reforms for affordable, universal broadband

November 26, 2008, Arlington, Va. - In comments to the FCC on the comprehensive intercarrier compensation (IC) and universal service reform proposals, the National Telecommunications Cooperative Association (NTCA) said the commission should adopt reform measures NTCA has developed which focus on providing sufficient, sustainable and predictable USF support for broadband services in America's rural and high cost areas.

In the comments, NTCA said the reforms currently out for public comment will not make broadband available, affordable or comparable to all Americans, but will stifle efforts to extend and maintain broadband to the most rural, high-cost parts of the country-while providing windfall cost savings to the nation's large interexchange and wireless carriers.

NTCA said engineering estimates can exceed $100,000 per residential location to provide universal broadband service to the last 10% of the population in extremely rural study areas-a burden rural ILECs cannot bear. Adoption of the FNPRM proposal to cap and freeze high-cost USF support will be …devastating to rural consumers.

"It is unrealistic to believe that broadband infrastructure can be built and maintained in high-cost, rural areas by limiting universal service support to the amount received now or two years from now," the comments said. "Absent continuous high-cost USF support, there is no business case to be made for the provision of communications and broadband in these areas."

NTCA's recommendations allow for additional regulatory scrutiny concerning additional federal high-cost voice and broadband USF support while creating a regulatory contract between broadband providers and the commission. Among NTCA's 12 recommended reform proposals:

  1. Allow state commissions to reduce voluntarily, on a company-by-company basis, intrastate originating and terminating tariffed access rates to interstate tariffed access rate levels over a reasonable period of time (5 years) and at the same time freeze interstate originating and terminating access rates in order to keep interstate access rates from increasing.

  2. Establish and implement a Restructure Mechanism (RM) to allow rate-of-return (RoR) carriers to recover lost access revenues not recovered in end-user rates through supplemental Interstate Common Line Support (ICLS) and price-cap carriers to recover lost access revenues not recovered in end-user rates through supplemental Interstate Access Support (IAS).

  3. RoR carriers seeking to receive additional supplemental universal service support through the ICLS mechanism, and price-cap carriers seeking to receive additional supplemental universal service support through the IAS mechanism, would voluntarily choose to have their broadband services regulated under Title II and voluntarily provide their total company regulated Title II costs, revenues, and earnings to be used when determining their future broadband high-cost USF support disbursements.

  4. Implement a rule that IP/PSTN traffic, specifically interconnected VoIP traffic, is required to pay applicable tariffed terminating interstate access rates, terminating intrastate access rates, and reciprocal compensation rates, until such time as there is no longer a PSTN.

  5. Maintain the current interconnection environment, dismiss the AT&T Edge proposal, and consider any future changes to the existing interconnection rules in a FNPRM.

  6. Eliminate the identical support rule and move over a reasonable period of time (5 years) towards USF support based on each company's own cost.

  7. Include broadband in the definition of universal service and expand the USF contribution base to include all broadband service providers and retain revenues as the basis for assessing the USF contributions.

  8. Reject reverse auctions for rate of return RoR carriers and maintain the current universal service mechanisms for rural carriers. The existing mechanisms have been successful in facilitating the deployment of broadband to rural customers.

  9. Refrain from capping and/or freeze high-cost USF support to RoR carriers. Capping or freezing USF will halt broadband deployment in high cost areas served by rural companies and leave many rural consumers with substandard broadband service or without broadband service.

  10. Require tandem switching rates and special access transport rates to be cost-based.

  11. Refrain from adopting access rate reform beyond that described in Item 1 above without a further notice and comment to study the implications of adopting a different rate methodology, such as the TELRIC standard or the Faulhaber additional cost standard.

  12. Refrain from ruling and seek further comment on whether the commission has legal authority to include all voice traffic under Section 251(b)(5) of the Act, particularly when Section 152(b) grants state commissions with exclusive authority to regulate and set intrastate access rates, as well as the authority to set reciprocal compensation rates. The Proposed Orders in the FNPRM would unlawfully preempt state commission jurisdiction.

"Regulators and Congress are asking carriers to build a national broadband network. Rural LECs are attempting to do their part in the rural high-cost areas they serve. Carriers operating in rural, high-cost areas should neither be expected nor required to commit resources without a reasonable expectation of a return on their investment," the comments said. "Likewise, the commission, Congress, and the American public are entitled to know that federal USF dollars are being used to support this national broadband network and that these USF dollars are being used prudently."

NTCA says its proposed reform measures will help the commission achieve several objectives outlined in a joint statement by Commissioners Copps, Adelstein, Tate and McDowell November 5 including an emphasis on the importance of broadband to the future of universal service.

View NTCA's comments.

The National Telecommunications Cooperative Association is the premier association representing more than 580 locally owned and controlled telecommunications cooperatives and commercial companies throughout rural and small-town America. NTCA provides its members with legislative, regulatory and industry representation; meetings; publications and educational programs; and an array of employee benefit programs. Visit us at www.ntca.org.Contact Caitlin Colligan at 703-351-2086