Cable Offers Ideas for Universal Service Reform for National Broadband Plan

In comments filed at the Federal Communications Commission, the cable industry weighed in how universal service policies can impact the national goal of universal broadband.

The National Cable & Telecommunications Association (NCTA) -- which represents large cable operators who are also the largest providers of broadband service and are emerging as competitive voice service providers -- said the FCC must strive to eliminate the "Universal Service Fund Gaps" without placing additional financial burdens on American consumers. in a previous filing, NCTA called on the FCC to establish a two-step process by which any party may request that the FCC reassess the level of high-cost support provided to a particular study area. In the first step, the burden would be on the petitioner to demonstrate that the area meets one of two competition-based triggers. If one or both of those triggers is satisfied, the Commission would initiate the second step of the proceeding. In that step, the burden would be on a recipient of high-cost support to demonstrate the minimum amount of support necessary to ensure that non-competitive portions of the area will continue to be served. This process would identify those incumbent telephone company costs that cannot be recovered through any of the services (regulated and unregulated) provided in the non-competitive portion of the study area, including costs associated with any clearly defined carrier of last resort (COLR) obligations.

The American Cable Association, which represents smaller cable operators, is also supportive of a Universal Service mechanism to fund broadband -- but only if it is competitively and technologically neutral and is precisely targeted to users that lack access in areas that are unserved or underserved. The ACA has its own proposal for USF reform; the main components of the ACA proposal are:

1. Cap the Entire Universal Service Fund and the High Cost Portion of the Fund at 12/31/09 Level;

2. Create a New Broadband Fund for Unserved and Underserved Areas (Last Mile Wireline & Wireless, and Middle Mile);

   a. The amount of funding for the Broadband Fund would be the difference between the capped high-cost fund amount as of 12/31/09 and the level of the high cost fund as it is reduced through the mechanisms described in Section 3.
   b. Funding would be awarded separately for last-mile wireline and wireless providers and for middle-mile providers with the FCC determining the appropriate allocation. Funding would be awarded on a first-come, first-served basis, with unserved areas being funded first; if multiple last-mile providers seek capital funding in unserved areas or multiple middle-mile providers seek capital funding, reverse auctions (or another neutral selection method) would be used.
   c. For unserved areas, last-mile funding would be in the form of (1) capital grants for the construction of infrastructure to provide eligible broadband services (unless such funding has been obtained from other government programs), and (2) operating funds ($X/line/month) conditioned on serving the customer. The amount of the operating fund subsidy would be calculated based on the cost of providing broadband service (either wireline or wireless) in the unserved area versus the average nationwide cost of providing broadband service. For purposes of administrability, the FCC would calculate the cost by examining costs in representative (census block) areas which then could be linked to the level of density or other factors closely-linked to costs.
   d. For households in underserved areas, last-mile funding would be in the form of operating funds ($X/line/month) conditioned on serving the customer. The amount of the operating fund subsidy would be calculated based on the cost of providing broadband service (either wireline or wireless) in the underserved area versus the average nationwide cost of providing broadband service. For purposes of administration, the FCC would calculate the cost by examining costs in representative (census block) areas, which would be linked to the level of density.
   e. For middle-mile infrastructure for unserved and underserved areas, funding would be in the form of capital grants for the construction of infrastructure to provide eligible broadband services.
   f. The FCC would evaluate operating support at regular intervals to determine the level of such support and whether such support continues to be necessary.
   g. The FCC would make additional and separate funds available for lowincome households to subscribe to broadband service.

3. Transition the High Cost (Voice) Fund Using Savings to Fund Broadband;
   a. Provide Smaller Eligible Telecommunications Carriers ("ETCs") with continuing support for their provision of traditional voice service and eliminate funding where competition is present.
   b. Current wireline ETCs (Eligible Telecom Carrier) with fewer than 100,000 access lines would continue to draw from the fund as they draw today (by area) for the provision of voice service unless they choose to access funding from the new Broadband Fund to serve that area (other than access to the fund for purposes of funding middle-mile infrastructure), in which case the funding mechanism in the new Fund replaces the current mechanism.
   c. Current wireline ETCs with more than 100,000 access lines would draw from the fund based on the "current high cost differential" per access line multiplied by the number of voice access lines in service annually. No such wireline ETC would draw from the fund for an access line if (1) the user can obtain voice service from another wireline provider who is able to serve the user without drawing from the fund, (2) the state regulator has deregulated the wireline ETC's provision of voice telephone service for the user, or (3) the wireline ETC accesses funding from the Broadband Fund to serve the user (other than access to the fund for purposes of funding middle-mile infrastructure).
   d. A wireline competitive ETC ("CETC") would draw from the fund based on the number of voice access lines served, except that (1) no funds would be awarded if another competitive wireline provider was able to serve the same customer without drawing from the fund, and (2) no funds would be awarded if the CETC accesses funding from the Broadband Fund to serve that customer (other than access to the fund for purposes of funding middle-mile infrastructure).
   e. A wireless competitive ETC ("CETC") would draw from the fund based on the number of voice access lines served, except that (1) no funds would be awarded if another wireless provider was able to serve the same customer without drawing from the fund, and (2) no funds would be awarded if the CETC accesses funding from the Broadband Fund to serve that customer (other than access to the fund for purposes of funding middle mile infrastructure).
   f. No high-cost voice funds would be provided to areas or customers not currently receiving funding.
   g. Maintain the CETC "interim" cap during the transition to use of the Broadband Fund. No new funding would be awarded to a CETC entering a new service area after 12/31/09.

4. Contribution Methodology
    a. Move from the current contribution mechanism of placing an assessment on interstate telecommunications revenues to hybrid numbers/connections based approach -- with a cap on revenue at current level of total USF.