Thursday, September 8, 2011

The Final USF/ICC Reform Lightning Round: Reply Comments—FTTH Council, LARIAT, and LightSquared

Reply comments were due September 6, 201 for the Further Inquiry in the Universal Service-Intercarrier Compensation Transformation Proceeding (AKA USF Reform), where the industry was asked to respond to a variety of questions about several proposed alternative frameworks for USF and ICC, namely The Rural Associations’ RLEC Plan and the price cap carriers’ ABC Plan (which together forge the Consensus Framework), and the Federal-State Joint Board’s plan. This is it, people—the final chance for the industry to throw some hard punches at whomever they are so inclined to oppose, be it the FCC, the RLECs, the price cap ILECs, the Joint Board, or any number of commenters who may have said something irksome in any of the previous comments going back to April 1. Many of the reply comments are fairly short and only attack one or two issues, so I’m switching back to the multiple summaries per post format. Today I will be covering the FTTH Council (who submitted my favorite comments in the previous round), Wyoming WISP LARIAT, and satellite broadband visionary LightSquared. 

The FTTC Council’s members include small, rural and public sector providers who utilize FTTH for broadband. In the previous round of comments, they provided a most excellent discussion about broadband speeds and FTTH investment, which I wrote about here and here. I was a little disappointed that they didn’t add much to this discussion in their reply comments, but they still made some good points and supported the arguments presented by the Rural Broadband Alliance. The only topic the FTTH Council addressed from the Public Notice is the modified broadband speed target of 4Mbps/768kbps; which the Rural Broadband Alliance called a significant step backwards from the National Broadband Plan which was released nearly 2 years ago. The FTTH Council concurs.

On America’s Thirst for Broadband: The FTTH Council argues that 4 Mbps/768 kbps might be acceptable for unserved areas for a very short period of time, but they recommend that the initial speed be targeted at 12/2.5 Mbps—but really, it should be symmetrical and higher. They describe how the rural stakeholders who have commented in this proceeding, such as the Nebraska rural companies, the Rural Broadband Alliance, and NASUCA have all argued that 4/1 and 4/768 is completely inadequate for rural areas, and is “already obsolete and would deprive rural customers of reasonably comparable service” (pg. 3). The FTTH Council talks about some studies that show broadband speed demand will likely be 25/25 Mbps by 2015, including a Cisco study that concludes there will be more networked devices than people in the world by the end of this year, and “by 2015 there will be two networked devices for every person” (pg. 7). A FCC Household Speed Guide recently claimed, “if more than two users/devices were accessing ‘basic functions plus one high-demand application,’ the minimal downstream speed a household needs for adequate performance is ‘6 to 15 Mbps’” (pg. 8). The FTTH Council does not want to see rural Americans suffer with slow broadband, and “Consumers in rural America demand the same connected devices and applications, and require the same broadband speeds to support them, as those in urban areas. It should be the goal of the CAF to meet the broadband connectivity needs of rural consumers” (pg. 9).

My Thoughts: The FTTH Council is right. I’ve talked about how I think the fundamental flaw of the National Broadband Plan and one of the many fundamental flaws of the FCC’s USF/ICC NPRM is the 4/1—and now 4/768—broadband speed target. Why on earth does the FCC want rural Americans to settle for a broadband speed that was inadequate for most high-bandwidth applications 3 years ago? Many CAF recipients won’t start deploying broadband for a year or more, while the urban world continues to benefit from new and awesome broadband applications. 4/768 relegates rural Americans in unserved areas to like 4th class citizens, and it will do nothing to improve America’s broadband rankings on a global scale. It has long been my believe that rural Americans are the ones who need the highest speed broadband the most, so they can benefit from applications like distance learning and telemedicine and real-time commodities markets. People in cities can walk down the street to meet their basic needs for health, education, entertainment, socialization and income; but people in rural America do not have that luxury—and with 4/768 broadband, they will not have any luxuries anytime soon, or ever. 

Here is a chart that I made last year for my project where I compared the NBP to broadband plans in Japan, South Korea and Sweden, and argued that the 4/1 Mbps target is the Achilles Heel of the NBP:

Click to Enlarge


LARIAT is a fixed wireless Internet service provider (WISP) in rural Wyoming. WISPs have been generally very critical of USF reform proposals submitted by RLECs and ILECs, as well as proposals developed by the FCC. LARIAT argues that the FCC needs to also act on special access reform, improving access to licensed and lightly licensed spectrum, reducing barriers for antenna siting, and making access to backhaul more readily available. LARIAT is opposed to proposals in the ABC Plan, and it argues that USF reform should instead “enable the consumer to choose between the widest range of possible providers, and ensure that all comers are able to compete on a level playing field,” instead of granting ILECs a monopoly in unserved areas (pg. 5).

On Rights of First Refusal: I’ve been really interested in the ROFR debate within the broader ABC Plan opposition, and LARIAT provided some interesting comments and one good example about why ROFR should not be adopted. LARIAT argues that the ABC Plan is “cynically crafted to provide incumbent local exchange carriers, who are rarely the most cost-effective option, with a right of first refusal in virtually every area where CAF funding will be the highest” (pg. 3). LARIAT serves the city of Laramie and the surrounding Albany County in Wyoming, and “the population is extremely concentrated in the relatively small area where CenturyLink provides DSL service…the 35% market share threshold of the ABC Plan is so low that it would nonetheless give the ILEC a right of first refusal throughout the very large area served by the Laramie central office. The result: taxpayer money would be wasted as subsidies flowed to the incumbent rather than to more cost-effective providers such as WISPs” (pg. 4). LARIAT shows that the city of Laramie has a population density of around 1,000 people per square mile, but the remainder of the county is around 1 person per square mile. 

On A Separate Fund for Wireless: LARIAT does not agree that there should be separate funds for wireless/satellite and wired broadband, because separate funds would favor technologies “rather than allowing carriers to compete and the market to decide” (pg. 4). LARIAT argues that fixed wireless and mobile wireless broadband are not equal, and “consumers should have the right to opt—preferably via a voucher system in which they select carriers in an active, vibrant market—for a provider whose performance is more suitable for the real time applications that they are, increasingly, using” (pg. 4).

My Thoughts: I appreciated that LARIAT provided an example to show how ROFR will likely be harmful in Albany County, WY. I’ve been on and off the fence about ROFR and I can see how it could both be a benefit and a horrible mess, depending largely on the service area in question. One of the FCC’s goals in USF reform was to increase broadband access specifically in price cap ILEC areas, because these companies have been so slow at deployment in rural areas—in fact, most of the unserved areas lie in price cap ILEC territory. So in this regard, ROFR might be a benefit. However, I don’t really know if it is necessary that a price cap ILEC serve rural unserved areas, since they have shown such little interest in doing so all along. Further, I don’t think it is up to CAF to fund this deployment, since price cap ILECs generate billions of dollars in revenue. I think the 35% threshold should be increased to something like 75%, and I don’t think that CAF support should only go to the ILEC in an unserved rural area. However, from my understanding of the ABC Plan, ILECs would not be eligible for CAF support in rural areas where there is at least one unsupported competitor—so by that logic, CenturyLink would be ineligible for ROFR in the areas of Albany County where LARIAT provides service even if they meet the 35% threshold by way of their service in the city of Laramie. 


Although I have often meant to write about the ongoing LightSquared drama of this summer, I’ve not really had an opportunity to study the situation closely. Anyway, LightSquared’ s reply comments primarily revolved around advocating that satellite providers can directly participate in reverse auctions and Tribal lands should be exempted from USF reductions and other proposals that could hinder broadband deploying in these areas. LightSquared discusses how they have 40 MHz of spectrum for broadband and aggressive deployment plans; they have already invested $1b and plan to invest an additional $14b to cover 100% of the US with 4G LTE by 2015. Additionally, LightSquared’ s efforts will “generate $120 Billion in consumer benefits to the U.S. by providing a broadband platform on which retailers, wireline and wireless providers, cable operators, device manufacturers and new entrants can offer new and better service” (pg. 3). LightSquared has also stepped up to help improve broadband in Tribal areas by, for example, donating 1,000 satellite phones with free service until 2020 to hospitals and health clinics in Tribal communities in the Southwest. Overall, “LightSquared’ s unique combination of resources spectrum assets, and its mission of serving areas that have been denied access to adequate broadband services directly addresses two of the Commission’s most important policy objectives: solving the spectrum scarcity issue, and providing broadband service to unserved and underserved areas of the country” (pg. 6-7). 

On Leading Bidder Rights: LightSquared is irritated with proposals that place satellite in the unfavorable position of being a partner to an ILEC in order to receive CAF funding, and not as a frontrunner in reverse auctions. LightSquared supports a ViaSat/WildBlue proposal that insists, “Satellite providers should be able to participate in auctions directly, and there should be no restrictions on the service areas on which they bid;” furthermore, they should be the leading bidders in reverse actions (pg. 8). What happened to this reform effort being about “shared sacrifice?” Anyway, LightSquared thinks that demoting satellite service to “partner status” “in which a necessary precondition to their partnership in the CAF program is an invitation by a wireline or terrestrial wireless carrier” is not technologically neutral (pg. 9). LightSquared reasons, “Given the plight of unserved and underserved areas with respect to broadband services, the last thing the Commission should do is restrict these American’s options with respect to receiving such services. Any such unnecessary restrictions will just further ensure that these citizens are left behind far longer than they need to be” (pg. 10).

On Tribal Exemptions: LightSquared provides some interesting comments on the Tribal broadband challenge, and a slightly different perspective than the Tribal carriers who have commented in this proceeding, since LightSquared is not by definition a Tribal carrier. LightSquared is also one of the only non-Tribal and non-RLEC carriers I have seen who actually seems really excited about providing broadband in Tribal communities. LightSquared argues that Tribal communities should be exempt from caps on USF support, for “The Commission has recognized that service to Tribal lands entails unique challenges that justify exemption from the USF rules that apply to other rural areas” (pg. 15). LightSquared describes a White House Native American Business Leaders Roundtable session where it was said that “Native American communities are grossly underserved in terms of banking services, capital development and broadband services, and that these deficiencies contribute to severe levels of unemployment and underemployment” (pg. 16). LightSquared is prepared to address these problems, and “has the incentive and ability to provide services that can empower a wide variety of innovative providers of services and applications, from healthcare to law enforcement, to Tribally-owned telecommunications and data service providers” (pg. 17). LightSquared can provide wholesale service and backhaul to Tribal communities that want to provide their own broadband, which I think is something important to consider. 

My Thoughts: I don’t agree with LightSquared’s position on reverse auctions, but this is nothing new. However, I thought they provided an interesting perspective on Tribal broadband. Last week I expressed that Tribal carriers might not be the most efficient providers of broadband service if they are trying to implement FTTH to low density populations with 50% unemployment, charging rates twice as much as the national average, and only seeing a 20% adoption rate. I suggested that fixed and mobile wireless would be better solutions for Tribal lands. I think LightSquared fits into this equation as a wholesale or backhaul provider, where the Tribal communities can still have their own Tribally-run communications providers. LightSquared points out that out of over 300 recognized Tribes, there are only 8 true Tribal carriers. Perhaps if Tribal communities had more opportunities to access affordable wholesale and backhaul services then we would see more true Tribal carriers and a higher broadband adoption rate—something that is not very likely if Tribal carriers have no choice but to charge over $50/month for 1.5Mbps DSL. As far as Tribal carriers being exempted from USF rules, I still think there needs to be a greater focus on broadband adoption before large investments are made with or without USF.  

I suggest that Tribal communities look at some examples of mobile banking, healthcare, education and e-commerce in African and Latin American countries. There has been a considerable amount of innovation and development in these areas internationally, in countries where it is less likely that each home has a landline broadband connection. I’ve always been interested in how developing countries have essentially leapfrogged both landline telephony and broadband, and I think Tribal areas could follow this model here in the US, especially since landline telephone penetration rates are so low in these areas as well. I might write more about this later, since I’ve been hoping to address both international rural broadband topics and Tribal topics lately. 


That’s it for today!
Cassandra Heyne

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