FCC Partially Grants FairPoint USF Waiver

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The Federal Communications Commission’s Wireline Competition Bureau (Bureau) has granted in part a petition filed by FairPoint Communications, Inc. (FairPoint) seeking waiver of section 54.312(c)(4) of the Commission’s rules. The rule requires carriers electing Connect America Phase I Round 2 incremental support to notify the Commission, the Universal Service Administrative Company (USAC), the relevant state, and any affected Tribal authority of the amount of support the carrier wishes to accept, as well as the wire centers and census blocks in which broadband would be deployed using that support. After receiving the required notifications, the Bureau conducted a challenge process permitting other, unsubsidized providers to assert that a listed census block was actually served and therefore ineligible for Connect America Phase I Round 2 support.

On August 20, 2013, FairPoint filed its initial election of Connect America Phase I Round 2 support. Following completion of the Connect America Phase I Round 2 challenge process, FairPoint accepted support for a total of 1,122 locations in 14 Virginia census blocks, with a deployment deadline of January 10, 2017. USAC subsequently contacted FairPoint about an audit of its use of Connect America Phase I Round 2 support. According to the audit, only 95 of the locations to which FairPoint reported broadband deployment were located in the 14 census blocks; the remainder of the locations were in 185 other census blocks that FairPoint failed to identify during the challenge process. The challenge process was therefore conducted for only 14 of FairPoint’s census blocks. Thus, competitors had no notice to challenge the other census blocks at that time.

On March 30, 2017, FairPoint filed its Petition, asking that the Commission partially waive section 54.312(c)(4) and conduct a new challenge process with the previously unidentified 185 census blocks to which FairPoint deployed between 2014 and 2016 using Connect America Phase I Round 2 support. FairPoint explains that, during the challenge process, an employee misunderstood the Commission’s requirements, and instead identified the census blocks containing the serving nodes for the locations, rather than the census blocks containing the locations themselves. “In the absence of a waiver,” FairPoint notes, “it is possible that USAC would disqualify all of the 1,027 locations to which FairPoint deployed broadband in the previously unidentified 185 census blocks, and require refund of the support associated with that deployment. Such a result would leave FairPoint with a substantial deficit of approximately $575,000 – an amount that otherwise would be dedicated to continued expansion of its advanced service capabilities.”

The Bureau decided to establish a challenge process for FairPoint’s list of 185 previously unidentified census blocks associated with the 1,027 locations for which it used Connect America Phase I Round 2 support. This challenge process will mirror the Connect America Phase I Round 2 challenge process, but will determine whether census blocks were served as of April 27, 2018.

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