The news has not been good for wireless start-up LightSquared as recent reports suggest it is running out of cash as key Federal agencies and departments maintain the company has not demonstrated that its proposed Wireless service will not interfere with critical GPS applications.
Background
LightSquared started 2011 by celebrating the FCC’s decision to grant
In late November, AT&T and T-Mobile withdrew their application for FCC’s consent to their proposed merger because of an anticipated adverse decision signaled by FCC Chairman Genachowski, opting to focus their efforts on the Department of Justice’s antitrust case. The carriers’ apparent assumption was that the FCC would surely grant a re-filed application consistent with
Last week, AT&T bowed to reality as it and Deutsche Telekom withdrew their transfer of control application from the FCC, reportedly as FCC Chairman Genachowski announced his recommendation that the Commission adopt an order designating the application for hearing. Cecilia Kang reports on the applicants’ surprising move.
Harold Feld of Public Knowledge maintains that under
While the text of the FCC’s Report and Order and Further Notice of Proposed Rulemaking on universal service and intercarrier compensation reforms (“USF Order” or “the Further Notice,” as applicable) has not been released, the Executive Summary of the agency’s decision allows us to project the more prominent “winners” and “losers.”
The Winners
Verizon Wireless, AT&T (Mobility), Sprint and SIP-Based Voice Services Providers. These carriers will benefit as bill-and-keep replaces the current intercarrier compensation (“ICC”) scheme. These services providers will realize substantial savings as terminating switched access rates decline progressively during the transition to “bill and keep.” For the largest price cap incumbent local exchange carriers (“Price Cap ILECs”), the transition period is 6 years; for the rural ILECs subject to rate of return regulation (“Rural ILECs”), the transition is 9 years. For local CMRS traffic terminating on the local ILEC’s network, bill-and-keep becomes the default pricing rule.
Mobile Wireless Broadband Providers. Wireless competitive eligible telecommunications carriers (“ETCs”) must now support voice and broadband services. Initially, the new Mobility Fund will provide mobile wireless broadband providers up to $300M in “one-time support” for deployment of 3G/4G services in census blocks in which wireless broadband service is not available. This funding will be made available through a reverse auction tentatively set for the 3rd quarter of 2012. Beginning in 2012, up to $500M will be available for annual support to mobile wireless broadband providers.
Wireless Satellite Broadband and Unlicensed Wireless Broadband. Taking a new approach, the USF Order sets aside up to $100M annually for broadband satellite and unlicensed wireless broadband services to be provided to the most remote areas of the nation. The rules governing the eligibility and service obligations for these providers will be established in the Further Notice.
The Rural ILECs. For years, the Rural ILECs were the ‘whipping boys” for USF and ICC reform. Even though the USF Order adopted numerous reforms relative to these carriers, the Rural ILECs demonstrated their substantial investment in rural broadband infrastructure and the significant adverse impacts to customers and non-USF funding sources if radical changes to current support levels (particularly on top of ICC reforms) were implemented. Until 2017, Rural ILECs will receive up to $2B annually in support, approximating current annual USF support.
The Further Notice will review the Rural ILECs’ current 11.25 % authorized rate of return and funding approaches under the Connect America Fund (CAF)—the broadband focused successor to USF. To mitigate reductions in ICC payments but taking into account ongoing declines in ICC revenues, Rural ILECs will be allowed to recover some lost ICC revenues through a transitional Access Recovery Charge (“ARC”) mechanism, authorizing limited increases in subscriber line charges (“SLCs”) and supplemental funding from the CAF, if justified.
Price Cap ILECs (Principally Verizon, AT&T, CenturyLink, Frontier and Windstream). The FCC froze USF support at current levels for these carriers, offering them the opportunity to pursue additional one-time funding to deploy broadband infrastructure in unserved areas of their service territories. As with the Rural ILECs, continued support for these carriers (in rural areas) will reflect historical declines in ICC revenues which may be supplemented through the interim ARC mechanism described above.
Federal Communications Commission. The FCC made a number of challenging policy decisions to promote broadband development in under- and un-served areas of the nation. The agency deserves credit for addressing USF and ICC rules and policies in a comprehensive fashion.Continue Reading Winners and Losers under the FCC’s USF Order
The FCC has announced it will adopt a Report and Order and Further Notice of Proposed Rulemaking on Thursday October 27, 2011, approving significant changes to its Universal Service Fund program and its rules on intercarrier compensation. In this entry, we project several outcomes for this proceeding.
Broadly speaking, we believe the “ABC Plan” offered
When carriers routinely reject risk-balancing contract provisions based on “the business case,” deliver standard agreements that effectively eliminate the possibility of damages no matter how bad their services in a given instance, or demand iron-clad “preferred provider” clauses, the only conclusion is that the carriers do not perceive significant competition. While aggressive carrier positions are
Moving far more quickly than the Federal Communications Commission, rejecting AT&T’s promises of more rapid wireless broadband development and the carrier’s unprecedented public relations campaign, the Department of Justice today filed a civil antitrust lawsuit to block AT&T’s proposed acquisition of T-Mobile USA Inc. Two points in DoJ’s press release of particular note include the
The FCC’s USF/ICC Reform proceeding continues to generate a steady stream of ex parte meetings between FCC staff and interested parties. This is understandable. The redistribution of $4 to $5 billion annually in Universal Service Fund/Connect American Fund (“USF/CAF”) support (“Support”) and major changes in intercarrier carrier compensation (“ICC”) are at stake.
On August 3,
For over a decade, enterprise customers, 2nd tier interexchange carriers (“IXCs”), and many Wireless carriers have argued that special access rates are inflated, priced far above “just and reasonable” levels as required by Title II of the Communications Act. Unlike various broadband and spectrum initiatives, special access reform has garnered modest media attention and
Almost every domestic telecommunications carrier (Wireline and Wireless) are actively engaged in an FCC proceeding reassessing the Universal Service Fund (“USF”) program and the current intercarrier compensation (“ICC”) framework (“the NPRM”). The breadth of issues and range of opinions approximate those being expressed in the contentious debate in Washington on the Federal debt.
In the NPRM, the FCC proposes to shift USF payments from certain recipients and current USF programs to fund the initial phase of the Connect America Fund (“CAF”) that would support broadband service, as opposed to voice services, as initially proposed in the National Broadband Plan. Under the interim CAF program, the reallocated USF funds would be targeted for broadband deployment in unserved areas. Long-term, CAF would become the principal, if not exclusive, USF program.
USF Reform. The FCC has proposed a series of changes in existing USF programs for the purpose of shifting some monies historically paid to the RBOCs, major Wireless carriers, other mid-size incumbent local exchange carriers such as Frontier, and small, privately-owned or cooperatively-owned rural local exchange carriers (“RLECs”). Some proposals such as those intended to limit “traffic pumping” and “phantom traffic” and certain investments by RLECs have received broad support. Another proposal to limit subsidies paid to “competitive eligible telecommunications carriers,” principally wireless carriers serving rural areas, is also widely supported.
The “saved” monies would then be made available through a “reverse auction” under which entities would “bid” for CAF payments to construct qualified broadband networks in unserved areas. The low bidder would receive the CAF payment. The definition of “unserved areas” and the nature of qualifying broadband networks, i.e., minimum uplink and downlink speeds, are also being debated.
Other proposals that would impact the RLECs are more challenging or draconian, depending on one’s perspective, such as a national cap on per line support. Coming out of “left field,” House Republicans suggested this past week that USF funds could be used for deficit reduction.Continue Reading FCC and Industry Take A Hard Look at Universal Service and Intercarrier Compensation