The Never-Ending Job of Fixing Universal Service Support for Rural ILECs

December 6, 2018 | by Andrew Regitsky

The Never-Ending Job of Fixing Universal Service Support for Rural ILECs

Who knew that when the FCC began the job of implementing the 1996 Telecom Act’s creation of an explicit universal service fund that babies born that year would have their own opportunity to finish the universal service job? But to the Commission’s credit, it is forever trying! Its latest effort will come at its December 12, 2018 meeting when it plans on taking steps to provide more funding for rural rate-of-return (ROR) ILECs in exchange for increased broadband deployment. Specifically, the agency plans on approving the following:

A Report and Order in Docket 10-90 that would:

I. Offer additional funding of up to $200 per location per month to rural carriers that currently receive model-based universal service support through the Alternative Connect America Fund Cost Model (A-CAM) if they expand the availability of high-speed 25/3 Mbps broadband service in their service areas while deploying at least 10/1 Mbps broadband service to new locations in their service areas. 

Specifically, carriers receiving A-CAM under the existing offers currently must deploy 25/3 Mbps service to the number of eligible locations equal to at least 25 percent, 50 percent, or 75 percent of the number of fully funded locations, depending on the density of the population in the carrier’s service territory. The Commission increases these requirements. Under the new rules, the 25/3 Mbps service requirement applies to 50 percent of fully funded locations for low-density carriers, 65 percent of fully funded locations for medium density carriers, and 85 percent of fully funded locations for high-density carriers. 

The term of the revised offer will be ten years, beginning January 1, 2019, and running until December 31, 2028. Effectively, this revised term extends A-CAM by two years for carriers that elect this revised offer. Carriers electing this revised offer will be obligated to meet the deployment milestones to which they previously agreed with respect to 10/1 Mbps service. In addition, they will be required to meet similar milestones to deploy 25/3 Mbps service to the required number of eligible locations on a ten-year schedule beginning January 1, 2019. 

II. Provide an opportunity for carriers to transition to A-CAM based universal service support, in return for specifically tailored obligations, promoting efficiency, stability and spurring high speed 25/3 Mbps broadband deployment. 

Consistent with the original A-CAM offer, the support per location, per month, is capped at $200.

The offer is available to all carriers still receiving legacy support.

The Commission adopts a ten-year term of support for carriers that elect the new model offer, beginning January 1, 2019.

Carriers accepting this offer must maintain voice and existing broadband service as of December 31, 2018, and to offer 25/3 Mbps or higher service to at least the number of locations fully funded by the model by the end of the support term.

III. Authorize additional support for carriers remaining on the legacy rate-of-return support mechanism in exchange for the additional buildout of high speed 25/3 Mbps broadband service.

The Commission adopts a new budget for legacy carriers based on 2018 uncapped claims— approximately $1.42 billion—increased annually by inflation.

To ensure that consumers in rural areas enjoy the same quality of broadband as those in urban areas, the Commission revises the deployment obligations to require recipients of CAF BLS to offer broadband service at actual speeds of at least 25/3 Mbps.

The deployment term for this increased support and deployment obligations will run from the effective date of this Report and Order until December 31, 2023. 

The Commission amends its rules to reduce the monthly per-line limit on support from $250 to $225, effective July 1, 2019, and then to $200, effective July 1, 2021.

A Further Notice of Proposed Rulemaking (FNPRM) that seeks industry comments on:

How to implement an auction mechanism for legacy rate-of-return areas that are overlapped or almost entirely overlapped by an unsubsidized provider. 

How to address budgetary impacts resulting from carriers transitioning from voice or voice and broadband lines to broadband-only lines. 

Comments are due 30 days after the FNPRM appears in the Federal Register.

An Order on Reconsideration that denies petitions from three rural ILECs that sought reconsideration of the Commission’s decision to offer additional support to all carriers that accepted the revised offers of model-based support.

There is no question that broadband deployment lags in rural areas of the country. Hopefully, more predictable and greater support along with increased deployment and speed requirements will help eliminate these unacceptable broadband disparities.