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September 26, 2017 by Tom Cohen

Regulatory Update: Find Your Opportunity for Broadband Expansion


I do not expect many of you keep up with speeches by the FCC Chairman or Commissioners, but two recent ones are worth reading. 

First, on September 19, Commissioner Michael O’Rielly appeared before WTA’s Fall Conference in Idaho and said a number noteworthy things about universal service:

Rate-of-Return CAF Reform – “I continue to hear from providers and associations that the rate-of-return framework is sound and not unduly complicated. At the same time, providers and their associations identified a handful of technical matters, known as the “punch list,” that require further clarification…I supported the Commission’s decision to make clear that rate-of-return carriers may undertake additional investments to deploy broadband in a cost-effective manner without fear that they will lose support…We also have an item currently under consideration that, among other things, would revise the ARC imputation rule. I hope that the Commission resolves this and other pending issues soon, including specifying in more detail which expenses are not recoverable through universal service or allowable in the rate base.”

Additional Rate-of-Return CAF Support – “It does appear that some amount of reserve funding could be available, particularly in the short-term. While it may not provide all the relief sought by affected carriers, it could benefit consumers and carriers in areas more difficult to serve, including those areas that tend to be in rural America.”

Overall USF Budget – “I have consistently advocated for firm budgets on each of the USF programs as well as an overall budget across all of USF…Even more broadly, the Commission needs to examine the overall budget for universal service, across all four distribution programs, and how the programs interact with each other…Some have suggested that the Commission find more dollars by broadening the base of those who pay in to USF to include broadband users.  Having worked for years on Internet tax freedom, now enshrined in the Permanent Internet Tax Freedom Act, that is something I cannot entertain absent Congressional direction. While I am willing to look at solutions that do not impose additional fees on broadband, this must be paired with a real effort to review and control USF spending.” 

Then on September 21, Chairman Ajit Pai spoke at the Kansas Broadband Conference, where he highlighted his concerns with the digital divide: “Rural Americans too often find themselves on the wrong side of the digital divide. In rural America, 28% of households lack access to high-speed, fixed service. In urban areas, only 2% go without.” He then spoke about the FCC’s CAF programs: “To spur network deployment in sparsely populated areas where the economic incentives for private investment don’t exist, the FCC is providing direct funding that leverages—not displaces—private capital expenditures. Through our Mobility Fund, a successful public-private partnership, the FCC will invest $4.53 billion over the next decade to bring 4G LTE service to rural Americans who don’t have it today. In addition, we approved $2 billion through our Connect America Fund to boost fixed broadband in currently unserved locations.”

We plan to discuss all of these and other public policy issues in a month at 2017 Calix Connections. At 1 pm on 10/30, Geoff Burke of Calix will moderate a breakout discussion with me and Larry Thompson, CEO of Vantage Point Solutions entitled “From Auctions to Incentives: Leveraging Government Programs.” We have lots to talk about – I look forward to seeing you there. You can still register here for 2017 Calix ConneXions. 

By the way, you can access the two speeches at:

O’Rielly: https://www.fcc.gov/document/comm-orielly-remarks-wtas-fall-conference-coeur-dalene-id

Pai: https://www.fcc.gov/document/chairman-pai-remarks-kansas-broadband-conference