FCC Moves Forward With CAF Phase II; Delays New Rate Floor; Defines Reasonable Request; Abolishes QRA; Seeks Comment on Higher Broadband Speeds; Considers Changes to Mobility Fund Phase II

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At its April open meeting, the Federal Communications Commission (FCC) adopted a “Report and Order, Declaratory Ruling, Order, Memorandum Opinion and Order, and Seventh Order on Reconsideration” that continues the implementation of universal service fund (USF) reforms that were adopted in the 2011 USF/ICC Transformation Order.  The USF item addresses a significant number of issues related to Phase II of the Connect America Fund, including the structure of the competitive bidding process that will be used to distribute CAF Phase II support in the event a price cap carrier turns down its state-level commitment offer.  It also adopts a CAF Phase II ETC designation process to “allow[] non-traditional providers, such as cable operators, satellite providers, and electric cooperatives, to become eligible for support.”  Other significant parts of the recently adopted USF item are as follows:

  • The “Order” portion of the USF item delays the effective date of the FCC’s new rate floor and sets a measured phase-in for its implementation.
  • The “Declaratory Ruling” addresses the requirement adopted in the USF/ICC Transformation Order that upon receipt of a “reasonable request” for service, carriers must deploy broadband to the requesting customer within a reasonable amount of time.
  • The Seventh Order on Reconsideration abolishes the quantile regression analysis that was adopted in the USF/ICC Transformation Order and was used to limit USF support received by rate-of-return carriers.
  • The “Further Notice of Proposed Rulemaking” seeks comment on whether to increase  the download speed required for subsidized broadband networks, from 4 Mbps to 10 Mbps; whether to retarget Mobility Fund Phase II support to ensure the continued deployment and preservation of 4G LTE mobile broadband service; and how to establish a Connect America Fund for rate-of-return carriers within the current budget for the program.
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