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ACA Urges FCC To Withhold CAF Support From Price Cap Incumbents In All Areas Where They Face Competition

Trade Group Says Agency Needs To Focus Support On Unserved Areas To Prevent Wasteful Spending

PITTSBURGH, February 17, 2012 - The American Cable Association urged the Federal Communications Commission to withhold Connect American Fund (CAF) support from AT&T, Verizon, and other price cap incumbent local telephone companies that face competition in the provision of broadband Internet access, arguing that such a policy would prevent wasteful spending and cause competitive providers to continue investing in high-cost areas.

"ACA strongly supports the FCC's decision to dedicate Universal Service Fund (USF) money to broadband deployment for the first time in the program's history, recognizing that broadband Internet access is the cutting-edge technology that links hometown America to the networked global economy," ACA President and CEO Matthew M. Polka said. "Nevertheless, the FCC must ensure that financial subsidies do not flow into any area where price cap telco incumbents face competition in the provision of broadband service."

The ACA set forth its views in reply comments filed Friday with the FCC, telling the agency that incumbent preferences under the old USF regime should not be extended into the newly created CAF program, which will channel a finite amount of resources into the construction and maintenance of broadband facilities in some of the most remote regions of the country with greater investment risk both for the government and the private sector.

ACA recommended that the FCC refuse to heed the call of some incumbent phone carriers that want to retain USF policies from the narrowband era that would result in their receiving support to serve households that already have access to broadband service from unsupported providers for an extended period of time, regardless of the consequences for consumers or the financial stability of the CAF. ACA called on the FCC to cease providing funds promptly to price cap carriers in these already-served areas, and implement reverse auctions to award CAF support to deliver broadband service to areas that phone incumbents have declined to serve.

"The choice is clear: ACA supports moving expeditiously toward allocating support consistent with the widespread existence of broadband competition.  On the other hand, a number of parties wants to ‘turn back the clock' or at least delay implementation of the new regime, even though the legacy system is clearly broken.  It neither serves the needs of consumers nor provides support efficiently or where it is warranted," Polka said.

In a number of key recommendations, ACA proposed that the FCC:

  • Should define an "area subject to unsubsidized competition" as a census block where facilities-based providers of fixed voice and broadband service not receiving high-cost support offer service to at least a majority of service locations in the census block;
  • Should invite public comment on the proposed list of areas subject to unsupported competition both for Phase I support based on the National Broadband Map and for Phase II support based on the forward-looking cost model;
  • Should eliminate legacy support for price cap carriers as rapidly as possible in areas (census blocks) where supported competitors offer service, implementing this objective later this year when it plans to complete work on the cost model and determine areas where unsupported competition exists; and
  • Should, for other areas where there is not unsupported competition, continue to provide price cap carriers with Phase I legacy voice funding in census blocks until a Phase II recipient (other than a price cap carrier) begins providing service to a majority of the locations in the census block or a Remote Areas Fund recipient begins to provide service in the very high-cost area.

"With the adoption of the CAF Order last fall, the FCC took a major step toward reorienting high-cost support so that it matches the needs of broadband consumers and the new and dynamic industry structure.  ACA believes the FCC must eschew proposals that support the status quo or timidly move forward. The FCC should adopt policies that will enhance the chances that the new regime will benefit broadband consumers," Polka said.


About the American Cable Association

Based in Pittsburgh, the American Cable Association is a trade organization representing nearly 850 smaller and medium-sized, independent cable companies who provide broadband services for more than 7.4 million cable subscribers primarily located in rural and smaller suburban markets across America.  Through active participation in the regulatory and legislative process in Washington, D.C., ACA's members work together to advance the interests of their customers and ensure the future competitiveness and viability of their business.  For more information, visit http://www.americancable.org/

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