PITTSBURGH, February 10, 2012 - The American Cable Association called on the Federal Communications Commission to retain balance in the new Connect American Fund (CAF) regime and reject modifications that seek to turn back the clock and maintain the old pro-incumbent system.  Instead, the FCC should continue to ensure that the CAF delivers affordable broadband service to consumers and businesses located in some of the most difficult communities to reach efficiently and in a competitively neutral manner.

"With any undertaking as momentous and complicated as Universal Service Fund reform, there will be unintended consequences and implementation difficulties for the FCC to address and remedy," ACA President and CEO Matthew M. Polka said. "Such matters, however, should be distinguished from efforts by parties to reargue fundamental substantive decisions made by the FCC, which involved trade-offs and balancing between and among competing interests to arrive at policies consistent with the public interest."

ACA, in an opposition filed yesterday with the FCC, raised objections to some of the proposed CAF modifications, including those proposed by the United States Telecom Association (USTA).  In ACA's view, many of these changes would, if adopted, misallocate resources, distort competition, and delay broadband investment by the private sector.

Last October, the FCC voted to create the CAF, which will dedicate for the first time USF funding to the construction of broadband networks in rural and high-cost areas.  Under Chairman Genachowski, the FCC has set affordable and universal broadband access as a national priority, relying on the newly created CAF to act as a public sector stimulus to encourage providers to build out their broadband networks after accepting CAF funds outright or winning reverse auctions.

Following are some of ACA's concerns and proposed solutions:

• USTA requests that there should not be a flash cut withdrawal of Phase I legacy voice support when a reverse auction winner other than the price cap carrier begins to receive Phase II broadband support.  ACA agrees this flash cut may pose a problem for consumers if the recipient of CAF funding cannot immediately provide service to them.  However, USTA's proposal that the FCC reduce support for the price cap carrier over a five-year period would badly skew the competitive landscape in addition to causing the FCC to breach its budget.  Instead, ACA submits that price cap carriers should continue to receive Phase I legacy voice funding in a census block only until it is determined that the census block is served by unsupported competition, an auction winner begins providing service to a majority of the locations in the census block, or a Remote Areas Fund recipient begins to provide service in the very high-cost area.

• USTA urges the FCC to "clarify that delays resulting from circumstances beyond an [Eligible Telecommunications Carrier's] control will toll any CAF broadband build-out deadlines established in the [CAF] Order." Although ACA agrees that such unforeseen delays warrant waivers, USTA's proposal needs to be limited. Limited waivers of the penetration deadlines are not unreasonable if sufficient proof of the problem is provided, as well as evidence that the supported carrier exercised diligence to address the issue. However, such limited waivers should only apply to interim deployment coverage deadlines during the five-year term of support. The FCC should not grant a waiver or extension of the five-year term since this would undermine the potential to ensure support is awarded efficiently and performance requirements meet relevant market conditions. Instead, the FCC should determine at the end of the five-year term whether providing adequate broadband service to any locations not served by the support recipient will require further support (e.g. an unsubsidized competitor can offer service meeting the FCC's performance obligations), and, if so, what is the best competitive method to provide any additional needed support (e.g. auctions, vouchers).

"In the USF order, the FCC struck a balance and set the nation on a course toward more efficient distribution of support for broadband deployment based on competitive principles.  It should not now reconsider matters that were already carefully contemplated and decided, or make changes to the USF/CAF Order that would fundamentally alter the balance that was struck," Polka said.

About the American Cable Association

Based in Pittsburgh, the American Cable Association is a trade organization representing nearly 850 smaller and medium-sized, independent cable companies who provide broadband services for more than 7.4 million cable subscribers primarily located in rural and smaller suburban markets across America.  Through active participation in the regulatory and legislative process in Washington, D.C., ACA's members work together to advance the interests of their customers and ensure the future competitiveness and viability of their business.  For more information, visit http://www.americancable.org/