FCC Opens Comments On NCTA USF Proposal

Trade group says FCC can save up to $2 billion if it adopts proposal

By John Eggerton -- Broadcasting & Cable, 12/9/2009 10:09:28 AM

The FCC has issued a request for comment on the National Cable & Telecommunications Association's proposal to reform the Universal Service Fund by creating a two-tiered process to determine where there is effective competition that would reduce or eliminate support payments.

In a notice issued Wednesday, the FCC gave commenters until Jan. 22 to weigh in on NCTA's proposal.

Calling it a "modest first step" on the road to Universal Service Reform, the National Cable & Telecommunications Association on Nov. 5 told the FCC it knows how the FCC can save the government up to $2 billion, freeing it up to help underwrite ubiquitous broadband deployment.

In a petition for rulemaking, NCTA said that sum can be recovered by no longer providing subsidies to phone companies in rural areas where competition exists from new entrants, like cable companies for example.

NCTA argues that the subsidy, which was meant to support service where no other was available, no longer reflects a marketplace in which consumers can choose cable voice service in much of the country.

NCTA includes a study it says shows where the FCC is providing billions in subsidies to phone companies where they have unsubsidized competitors.

NCTA wants a two-step process. First, it wants a petition--a cable company for example--to be allowed to demonstrate that an unsubsidized wireline competitor serves more than 75% of customers in a given area, or that the state has found "sufficient competition" to deregulate retail rates charged by incumbent carriers. If that threshold was met, the FCC would require the USF recipient to demonstrate the minimum support necessary to serve the noncompetitive portions of the service area.

The cable trade group argues that before the fund can be extended to underwrite broadband as well as phone service the FCC must first "control the size of the existing mechanisms."

The FCC's Wireline Competition Bureau wants to hear more.