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MTIA Annual ConferenceLodge of the Four Seasons
Lake Ozark, Missouri August 8, 2006
Washington Update
Daniel MitchellVice President, Legal & Industry Division
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National Telecommunications Cooperative Association
(NTCA)
Since 1954, the NTCA has been the voice of small, rural telecommunications carriers connecting the heartland of America to the world. We are community-based, locally owned companies, dedicated to providing vital communications services and ensuring the economic future of rural America.
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Telecom Act Rewrite
• Stevens Bill– Attempts to ensure a sufficient the universal
service fund (USF) contribution base by broadening the base of contributors to include VoIP and Broadband providers and allows the Federal Communications Commission (FCC) substantial flexibility in modifying the USF contribution mechanism.
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Telecom Act RewriteUSF Contribution
• The FCC allowed to create a new USF contribution methodology using one or more of the following:– (1) revenue from communications service, – (2) working telephone numbers or any other
identifier protocol or connection to the networks, or
– (3) network capacity.
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Telecom Act RewriteInterstate/Intrastate
• Removes the interstate/intrastate distinction for purposes of assessing USF contributions on interstate, intrastate, or international portions of communications service.
• Allows the FCC to discount USF contributions for family plans (wireless or landline phones under one phone bill).
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Telecom Act RewriteOther USF Issues
• Exempts the USF funding mechanism from the Anti-Deficiency Act.
• Prohibits a primary line restriction.
• Requires the FCC to fix the phantom traffic problem.
• Requires random periodic USF audits of carriers and requires the FCC to establish rules to prevent fraud, waste and abuse of USF support.
• Does not require the FCC to eliminate the identical support rule and require wireless ECCs to base their support on their own costs.
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Telecom Act RewriteECC Designations
• Eligible Communications Carrier (ECC) Designation
– The Stevens Bill amends section 214(e) of the Act which determines whether a carrier is eligible to receive universal service support.
– Requires state commissions to rule on eligible communications carrier (ECC) designations within 6 months.
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Telecom Act RewriteECC Designations
ECC guidelines:
1. Submit a 2 year upgrade plan as part of the ECC application.
2. Demonstrate that the carrier will satisfy consumer protection and service quality standards.
3. Provide service on a timely basis to requesting customers.
4. Provide service throughout entire service area through own facilities or a combination of own facilities and resale from another carrier.
5. Demonstrate ability to remain functional in emergency situations.
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Telecom Act RewriteSeparate Broadband Fund
– Establishes a separate broadband universal service fund of $500 million to serve unserved areas throughout the United States.
– Defines broadband service as any transmission of information of a user’s choosing with a transmission speed of at least 400 kilobits per second in at least one direction, regardless of the transmission medium or technology employed, that connects to the public Internet for a fee.
– Satellite providers are considered facilities-based providers eligible for Broadband USF support.
– Support limited to a single facilities-based provider per unserved area.
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Telecom Act RewriteVoIP Obligations
• Requires ILECs to interconnect with a requesting VoIP providers, however, once a VoIP provider requests interconnection, the VoIP provider is required to have the same rights, duties and obligations as a telecommunications carrier (e.g., pay access charges and USF contributions).
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Telecom Act RewriteVideo Franchises
• The Stevens Bill does not provide the FCC with the authority to grant a “national franchise certificate” to CATV or IPTV providers.
• It streamlines the franchise process at the local level. • Local Franchise Authorities (LFAs) are required to “grant” a
franchise application within 75 calendar days, or it is deemed granted, unless the franchise has been previously revoked under Section 625(b) of the Act.
• Franchise fees shall not exceed 5 percent of gross revenues of the new CATV or IPTV provider.
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Telecom Act RewriteShared Headend
• Includes a shared headend provision that requires video service programming vendors that have attributable interest in a CATV or IPTV provider cannot not deny an unaffiliated CATV or IPTV retail video provider access to video programming solely because an unaffiliated CATV or IPTV provider uses a shared headend.
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Telecom Act RewriteRural Exemption
• Strengthens the rural exemption by striking 251(f)(1)(c), which had required a rural ILEC to provide a requesting competitive cable provider interconnection and/or unbundled network elements when a rural ILEC also provides competing video service the requesting cable provider.
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Telecom Act RewriteMunicipal Broadband Providers
• Allows municipalities to provide broadband and preempt state legislation that would state otherwise.
• Requires that all laws that apply to private broadband providers apply also to municipal broadband providers.
• Requires municipalities to allow private broadband providers to bid for municipal broadband projects before a municipality decides to take on the project itself.
• Encourages municipalities to partner with private broadband providers. Lastly, this section grandfathers existing municipal broadband providers.
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Telecom Act RewriteWireless Spectrum
• Permits unlicensed wireless devises to use unused eligible broadcast television spectrum in a manner that protects the spectrum licensee from interference.
• Eligible broadcast spectrum frequencies would include:– All frequencies between 54 – 72 MHz– All frequencies between 76 – 88 MHz– All frequencies between 174 - 216 MHz– All frequencies between 470 – 608 MHz– All frequencies between 614 – 698 MHz
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Telecom Act RewriteDigital Television
• Consumers without digital capable televisions will not be able to receive over-the-air analog broadcast television signals on February 17, 2009.
• CATV providers are permitted to convert over-the-air digital broadcast television signals to analog signals to their cable subscribers with analog TVs to ensure over the air signals are received by their analog cable TV subscribers.
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The FCC Chairman Kevin Martin
CommissionerKathleen Abernathy
CommissionerMichael Copps
Commissioner Jonathan Adelstein
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Chairman Kevin Martin
CommissionerMichael Copps
Commissioner Jonathan Adelstein
CommissionerDeborah Taylor Tate
Commissioner Robert M. McDowell
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Universal Service
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USF Contribution Methodology
NTCA ex parte (Mar. 15, 2006):• Expand USF contributors to include all high-
speed Internet access service providers;• Require all VoIP and IP-enabled service
providers to pay into USF;• Eliminate the Identical Support Rule; and• Raise or eliminate the Wireless Safe Harbor
Provision.
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Interim USF Contribution Methodology• FCC released its interim USF contribution methodology order June 27, 2006. The order
contains the following:
– FCC raised the wireless safe harbor from 28.5% to 37.1%.
– Interconnected VoIP Providers (e.g., Vonage, 8x8, etc.) will contribute to the USF mechanisms based on 64.9 % of their revenues or based on their actual traffic data.
– FCC did not expand the base of USF contributors to include all wireless, statellite, electric, cable, and wireline broadband transmission providers from contributing to USF.
– FCC allowed Bell Operating companies and other carriers that are offering broadband transmission and DSL services as non-common carriers under Title I regulation to discontinue including their broadband/DSL revenues as part of their universal service fund (USF) contribution calculations.
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Interim USF Contribution Methodology
• Rural ILECs which remain under Title II regulation are still required to include their broadband/DSL transmission revenues as part of their USF contribution calculations.
• This allows rural ILECs to continue to recover a portion of their broadband costs associated with the local loop through rate‑of‑return regulation.
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Intercarrier Compensation
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NARUC Intercarrier Compensation Task Force Missoula Plan
• Supporters of the Missoula Plan:– AT&T– BellSouth– Cingular– Commonwealth Tel. Co.– Epic Touch– Global Crossing– Iowa Telecom– Level3– Madison River– Rural Alliance (250+/- rural ILECs)
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NARUC Intercarrier Compensation Task Force Missoula Plan
• Non-Supporters of the Missoula Plan:– Verizon– Qwest– CTIA (Wireless carriers)– NCTA (Cable TV Providers)– NASUCA (State Consumer Advocates)– RICA (Small CLECs)– Others
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NARUC Intercarrier Compensation Task Force Missoula Plan (Tracks)
• Track 1– All study areas affiliated with an RBOC– Price Cap non-rural, and RoR rural study areas not part of a CRTC*
– Price Cap rural study areas > 1 million loops• Track 2
– Price cap rural study areas < 1 million loops– Price cap non-rural study areas of CRTCs– RoR non-rural study areas not affiliated with an RBOC– RoR rural study areas > 10K loops that are part of a Holding
Company that also has Price Cap or non-rural study areas• Track 3
– RoR rural study areas < 10K loops that are part of a Holding Company that also has Price Cap or non-rural study areas
– All other RoR rural study areas
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NARUC Intercarrier Compensation Task Force Missoula Plan (Rates)
• Track 1: RBOCs & Large Price Cap– Uniform Structure and Uniform Rates– Low per minute termination rates ($0.0005 to $0.0007)
• Track 2: Mid-Size– Mid-size Price Cap– Target rate is +/- $0.01 (transport and termination)– Optional Incentive Regulation
• Track 3: Rural Rate-of Return (RoR)– Unified Interstate and State Access @ Interstate (≈ $0.018)– Rates vary by company with optional pooling and rate
banding
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NARUC Intercarrier Compensation Task Force Missoula Plan (SLCs)
• Track 1– Residential SLC Caps increase $3.50 over 4 years– Average residential SLC may increase by no more than
$0.75 in steps 1 and 2, and $1.00 in steps 3 and 4– No residential SLC may increase by more than $0.95 in
steps 1 and 2, and $1.20 in steps 3 and 4• Track 2
– Residential SLC Caps increase $2.25 over 3 years– MLB SLC Cap increase to $10.00
• Track 3– Residential SLC Caps increase $2.25 over 3 years– No MLB increase
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Missoula Plan Restructure Mechanism (RM)Estimated $1.5 Billion
• Track 1– RM = $320 Million
• Track 2– RM = $548 Million
• Track 3– RM = $458 Million
• CLECs– RM = $125 Million
• State Commissions to insure RM is utilized for appropriate purposes
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Missoula Plan ( Outstanding Issues)• NTCA supports the Missoula Plan. NTCA will file comments in support of
the plan and will attempt to enhance the plan in several areas where the plan is silent.
Silent Issues:
• NTCA will file comments arguing that the estimated $1.5 billion restructure mechanism (RM) in the Missoula plan should be non-portable to CETCs.
• NTCA also believes that the proposed RM for Track 1 should include offsetting adjustments for increased revenues received by Track 1 carriers from the new transiting charges included in the Missoula Plan. Track 1 carriers may not need a RM because of their new transiting revenues under the plan.
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Missoula Plan ( Outstanding Issues)• Silent Issues Continued:
• The current definition for a covered rural telecom carrier (CRTC) should be modified to allow any LEC that receives a waiver from the FCC to be treated like an ILEC and receive corresponding ILEC treatment under the Missoula Plan.
• The Missoula Plan does not clearly describe rules that apply to independent state networks, such as Iowa Network Services (INS), South Dakota Network (SDN) and Onvoy.
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NTCA on Intercarrier Compensation ReformNTCA BLUEPRINT:
1. Adopt a separate set of rules and regulatory policies for rural telephone companies;
2. ILECs should be compensated for the use of their networks by other communications providers;
3. Preserve and sustain universal service;
4. Preserve the rural ILECs option to operate under rate-of-return regulation and participate in NECA pools;
5. Rules should encourage investment in a network infrastructure capable of delivering high quality broadband services in all areas of the nation.
