ACA to FCC: Right of First Refusal is Unfixable

Won't keep competitors who could provide better service for less money from being shut out
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Concerned that the FCC's Universal Service Reform (USF) proposal, as currently constituted, gives big telcos a right of first refusal on billions in broadband subsidies, the American Cable Association has asked the commission to back off a modified version of that right it says the FCC is proposing.

ACA says that even with reductions in the length of time of the right -- telcos had proposed 10 years -- and accelerating the build-out schedule (telcos had sought five years) and requiring faster speeds, that does not cure the basic problem that competitors who could provide better service for less money (like ACA's members on the frontlines of rural buildouts) would be shut out.

FCC Chairman Julius Genachowski signaled in outlining the draft proposal last week that incumbent telcos would be getting a years-long right to broadband subsidies where they currently get USF phone service subsides and before proposed competitive bidding for the subsidies eventually kicked in, suggesting that was the best way to get broadband delivered most quickly in the short term.

"ACA  urges the Chairman and the other Commissioners to reject the right of first refusal proposal as set forth in the Chairman's draft order," the association said in a letter to the commission. "It is an expedient measure that falls short of meeting the public interest objectives of bringing about universal broadband service in the most efficient and effective manner."

A commission staffer on background confirmed that the FCC right of first refusal had not given telcos all they asked for, but that a version was contained in the draft order. But the source also said that they expected a second draft to be issued sometime this week, and another commissioner staffer said they continued to negotiate with the chairman's office.

FCC Chairman Julius Genachowski outlined the proposals publicly and also briefed industry players on the details, according a source.

There is no hard cap on the $5.5 billion USF fund in the first draft, something cable operators had been looking for. There is said to be a requirement that USF funds only go to areas where there is no unsubsidized competitor, which cable operators had been pushing for.

Like ACA, the National Cable & Telecommunications Association opposes the right of first refusal as the telcos proposed it.

The FCC is scheduled to vote on its USF reform proposal at its Oct. 27 open meeting, although items can be pulled from the agenda up until the start of a meeting.

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