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ACA Calls On FCC To Adopt Procedures To Ensure Government Subsidies Not Used Where Unfunded Broadband Providers Offer Service

Cable Groups Says Misallocation Of Funds Would Harm Competition And Consumers

PITTSBURGH, February 21, 2013 - The American Cable Association called on the Federal Communications Commission to establish a process to ensure that billions of dollars in broadband subsides that are provided to large incumbent phone companies through the agency's Connect America Fund (CAF) are not utilized where broadband service is already being provided by an unsupported provider.

"The FCC must protect the American taxpayer and the competitive market by ensuring that public subsidies will be used to deploy and maintain broadband technology only in eligible areas," ACA President and CEO Matthew M. Polka said. "ACA believes the FCC must make certain that support is not provided in areas where an unsubsidized competitor provides service."

ACA set forth its position in comments filed Feb. 20 in connection with the FCC's multiyear, multibillion dollar effort to ensure that all Americans have affordable access to broadband Internet service. The FCC estimates that about 100 million Americans do not have broadband access in the home. ACA's comments addressed the process for verifying the areas where large telephone companies (so-called price cap local exchange carriers (LECs)) may utilize support through the CAF program, and does not impact the distribution of funds for smaller telephone companies (Rate of Return LECs).

ACA's comments provided the FCC with a detailed outline that would require a price cap LEC challenging a census block designation on the National Broadband Map (NBM) to file sufficient evidence to support the challenge.  After reviewing all challenges from price cap LECs, the FCC should publish a list of all census blocks that are potentially unserved because sufficient evidence was provided and ask for responses from those claiming to serve the area. 

"The FCC can undertake a similar process for a competitive provider claiming an NBM designation is inaccurate because it is providing service in the relevant census block - with one exception.  Because price cap LECs normally follow FCC notices, the competitive provider need not inform the LEC when it files a challenge," Polka said.

In its comments, ACA said it agreed with the Wireline Competition Bureau's proposal to use 3 Mbps/768 kbps as a proxy on the NBM for 4/1 Mbps in developing the initial list of eligible areas, and to allow a party challenging the designation of an area as served by a provider offering broadband at 3 Mbps/768 kbps to present evidence demonstrating whether this proxy speed is being provided.

However, ACA cautioned that increasing the proxy to 6/1.5 Mbps as proposed by price cap LECs would cause the FCC to designate census blocks where cable operators provide service of 4/1 Mbps as unserved when in fact they are served.  Such a misguided policy would undermine the FCC's objective of not providing support where an unsubsidized competitor provides service.

ACA said it disagreed with the idea that network latency and capacity could be relied upon to challenge a census block as being served.  Although network speed is easy to measure, network latency and capacity are less precise gauges of performance.  The continued lack of a precise definition for these requirements would result in smaller providers facing unwarranted challenges.  Until the FCC can provide more precise latency and capacity metrics, it should not use them as a basis for a challenge, ACA said.

In its public notice, the FCC proposed giving 45 days to file challenges to the list of eligible census blocks and another 20 days for rebuttals.  Although ACA said 45 days were sufficient if its related proposals were adopted, it said 20 days were not enough under any circumstance for smaller providers with limited staff and resources to review evidence from potentially multiple price cap LECs in numerous census blocks and then gather adequate evidence to respond.  ACA said providing at least 40 days for a response would not cause undue delay.

ACA urged the FCC to modify the NBM when a census block is inaccurately classified as served or unserved.  If both sides in a dispute over the accuracy of the NBM provide credible evidence, the default determination should be that the NBM is accurate.  Such an approach will indicate to providers that participation in the broadband mapping process has value and will discourage challenges based on limited evidence.

ACA said it supported the idea that evidence backing a claim that an area is served should demonstrate that broadband service is currently available and should not be based on announced market expansion plans that may occur at some future date.  Nevertheless, ACA said is made sense for the FCC to take into account deployments that are actually in progress and where the provider has publicly announced that service will be available within a reasonable period of time.  ACA said it would be counterproductive to provide scarce government support for deployments that are not required to be completed for up to five years when an unsubsidized provider will be offering service in much less time.

ACA said the FCC should rule that the preliminary list of eligible census blocks would include only those that are completely unserved, and challenges would be permitted only on the census block level (and not on a sub-census block level). ACA said this idea would ease the administrative burden both for the FCC and for smaller providers that participated in the sanctioned mapping process and are designated on the NBM as serving a census block.  In addition, the trade group said unsubsidized providers were most likely to invest their own funds to expand their provision of broadband service in census blocks where they already provide service. 

ACA told the FCC to put a premium on transparency when critical decisions are involved.  For example, ACA said the FCC should not hold confidential until some later announcement information that a price cap LEC has made a statewide commitment to use CAF support to deploy broadband in unserved areas.  ACA said this information would almost certainly be relevant to ACA members who are in the process of planning future unsupported deployments in these areas.  As such, it would be contrary to the public interest to withhold it.

ACA said it was fundamental that price cap LECs submit sufficiently precise data about their use of Phase II support to deploy broadband to unserved locations.  Without this information, the FCC cannot ensure that support is properly spent.  ACA said the FCC should require price cap LECs to submit preliminary deployment plans at the time of acceptance. 

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/

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