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ACA: Areas Where Cable Provides Broadband Must Not Be Deemed Unserved And Targets Of Government Subsidies

Trade Group Concerned CAF Could Threaten Private Investments Made in Broadband Plant In High-Cost Areas Or Deter Future Investment

PITTSBURGH, April 1, 2013 - The American Cable Association urged the Federal Communications Commission to adopt broadband subsidy rules that will not increase the risk that high-cost areas served with broadband by cable operators, who built their plant through private capital, are not overbuilt by large local telephone companies receiving support from the Connect America Fund (CAF).

"The FCC should protect the public by ensuring that broadband deployment subsidies do not result in significant government-supported overbuilding, which would cause real harm to cable operators that have invested only private capital," ACA President and CEO Matthew M. Polka said. "It would also mean that locations across the country that need support will not receive broadband because the program would not have additional funding."

ACA set forth its view in March 28 comments in connection with the FCC's new CAF program,  which makes available $1.8 billion annually over the next five years to large telephone companies (so-called price cap local exchange carriers (LECs)) to subsidize broadband deployment in unserved areas designated on the National Broadband Map (NBM).   

ACA's latest comments responded to a public notice the by FCC's Wireline Competition Bureau that sought comment on the following CAF issues:  How to determine which census blocks are served by an unsubsidized competitor; how price cap carriers will demonstrate they are meeting the FCC's requirements for reasonable comparability; and, what other providers need to demonstrate to be deemed unsubsidized competitors.

For several months, ACA has been on record in addressing the process for verifying the areas where price cap LECs may utilize support through the CAF program.  These comments did not impact the distribution of funds for smaller telephone companies (rate of return LECs).

One criterion that the FCC must rely upon to determine whether a census block is served is whether consumers in that area have access to broadband service with minimum downstream speed of 4 Mbps and minimum upstream speed of 1 Mbps.

The FCC asked what speed threshold should be utilized as a proxy for 4 Mbps/1 Mbps and specifically whether 6 Mbps/1.5 Mbps should be used.  In prior comments, ACA submitted that 3 Mbps/768 kbps should be used as the proxy for 4/1 Mbps, a position consistent with a previous Wireline Competition Bureau finding.  ACA explained that cable networks employ DOCSIS technology, which does not have the same restrictions on speeds as DSL networks operated by incumbent price cap LECs.  Thus, if a cable provider is shown on the NBM as offering 3 Mbps/768 kbps broadband service, it is likely actually offering a 4/1 Mbps service even if it is less than 6/1.5 Mbps.

ACA said that relying on 6/1.5 Mbps as the proxy would put at risk cable operators that are offering 4/1 Mbps service but less than 6/1.5 Mbps, and that appropriately indicated on the NBM that they are offering speeds faster than 3 Mbps/ 768 kbps.  These operators would now need to provide to the FCC probative evidence that they are in fact offering 4/1 Mbps service and would need do so on a census block basis.

"This is a huge burden on a smaller operator.  These operators assumed when they filed data through the State Broadband Initiatives (SBIs) in June, 2012, providing service with speeds of at least 3 Mbps/768 kbps service was enough to protect them," Polka said.

ACA told the FCC that the 6/1.5 Mbps proxy would mean that up to 6 million housing units receiving 4/1 Mbps service could be at risk of being overbuilt by a second provider receiving CAF support.

At least as a matter of equity, ACA said the FCC should use 3 Mbps/768 kbps as the proxy, and it should place the burden on the price cap LECs to challenge a cable operator claiming that while it is designated on the NBM as providing service at 3 Mbps/768 kbps, it is not actually providing 4/1 Mbps service. ACA cautioned the FCC not to alter the established baseline 4/1 Mbps benchmark because cable operators that indicated that they provide broadband at speeds of 3 Mbps/768 kbps on the NBM at the time the data was collected, can be expected to have upgraded their service to meet growing demand for higher speed service by the time that CAF money will be deployed in these areas.

ACA said it supported the FCC's proposal to establish a presumption that if a cable operator meets the speed threshold such that an area on the NBM is designated as served, the operator also meets the capacity, latency, and price requirements.  ACA added that a challenger should be required to submit clear and convincing evidence to prove the competing provider is not actually meeting the requirements.  ACA warned that permitting inquiries into these additional requirements would open every census block on the NBM to a challenge, placing a great burden on cable operators, which have already submitted mapping data, and on the FCC, which would need to hear and decide every challenge on potentially multiple factors.

Lastly, ACA said there are cogent reasons for the FCC to refrain from acting ambitiously to adopt benchmarks for price and terms of service, especially ones that would effectively establish either directly or effectively prices and minimum usage allowances that competitive providers must follow if an area is to be deemed served.

"The FCC should recognize that any attempt to establish hard and fast comparable rates and terms of service between urban and rural areas could threaten private investments already made in broadband plant in high cost areas or deter future such investment in these areas," 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 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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