Michigan Telco Allband Communications Gets Partial FCC Waiver Relief in Long-Standing Dispute

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The FCC has released an order providing much needed clarity to Allband Communications Cooperative (Allband), a Michigan ILEC, which since 2012 has contested the amount of high-cost support it has received from USAC. In 2005, Allband secured a $8 million loan from the Rural Utilities Service in order to deploy fiber outside of its study area.  In November 2011, the Commission released its landmark USF/ICC Transformation Order which, among other things, put a presumptive per loop cap of $250 per month on total high-cost universal support for all ETCs, to be phased over a three year period. Allband’s battles with the regulators began in 2012 when it filed a petition for waiver of Section 54.302 of the Commission’s rules and sought additional relief significantly above $250 until the year 2026 (which coincides with the date when Allband pays-off the RUS loan, in full).

In this most recent Order, USAC concluded that Allband made the necessary adjustments to its cost accounting and allocations that were required of Allband in an earlier FCC decision. This first determination then legitimized the cost figures provided by Allband since the initial 2012 waiver request.  The Commission has determined that Allband has demonstrated good cause exists to grant a waiver of Section 54.302. Specifically, the FCC believes that even with cost cutting measures in place, and based on Allband’s total company earnings, without relief from its debts/accounts payable, Allband still needs support above $250 per loop per month to be cash flow positive and keep its account balances above zero both in the near and long term. Furthermore, because there are no alternative service providers, Allband’s customers are at risk of losing access to voice and broadband services. Accordingly, the Commission has determined that because Allband has demonstrated that special circumstances exist, it will grant the $457 per loop per month amount requested by the carrier, which was based on Allband’s cost study using corrected cost allocation procedures. However, the Commission denied Allband’s request for support to be “adjusted in the future based upon continuing annual cost studies and reports” to the extent those cost studies would increase support above $457 per loop per month. The Commission will not grant a waiver until completion of all RUS loan payments.  Instead, the Commission has granted Allband a waiver until March 1, 2021, which is three years from this most recent high-cost support price adjustment, and which Allband may seek to renew thereafter.

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