Rural Associations Urge Stay of Regression-Based Caps on USF Support

Posted by admin - May 25, 2012 - Filing

Unpredictable, Impenetrable and Imprecise Formulas Will Undermine Sustainable Rural Broadband, Fail to Serve the Goals of EncouragingEfficient Operations or Prudent Investment

WASHINGTON (May 25, 2012) – NTCA, OPASTCO, WTA and NECA filed an Application for Review and Petition for Stay of the quantile regression formulas and resulting caps on federal Universal Service Fund (USF) support adopted by the Wireline Competition Bureau on delegated authority from the Federal Communications Commission.

The caps were developed by Bureau staff in the wake of the Commission’s USF “Transformation” Order last fall to “create structural incentives for rate-of-return companies to operate more efficiently and make prudent expenditures.” As the Application for Review and Petition for Stay explain, however, numerous technical and legal flaws in the formulas adopted by the Bureau prevent the caps from achieving this purpose and will frustrate sustainable broadband deployment in rural areas contrary to law and good policy.

The new caps have the potential to arbitrarily limit any rural carrier’s USF support based on a complex system of quantile regression formulas. The formulas will generate “benchmarks” that are intended to identify if a rural carrier is potentially incurring excessive capital and operating costs. The benchmarks will then be used to cap affected carriers’ costs at lower levels. The Commission first published a proposed methodology for such caps last fall, and the Bureau took into account the comments of many stakeholders, including the rural associations, in attempting to improve the caps.

Despite these efforts, the formulas and the resulting caps suffer from a host of technical and legal flaws as described in the Application for Review and Petition for Stay. For example, the formulas continue to rely on data that are acknowledged to be wrong. They also impose random caps on support that are contrary to logic; for instance, the formulas appear to assume that per-customer costs will be higher in urban areas and that newer plant will cost more to maintain than older plant. The formulas are also imprecise and impenetrable, providing no clear business rules to inform any given carrier how its operations or investment could be allegedly “more efficient” or “more prudent.” This lack of transparency is exacerbated by unpredictability, because the benchmarks will change every year based on acts or omissions taken by carriers across the industry two years prior, which means that even if the business rules had been made clear, they would still change frequently and in unpredictable ways.

The rural associations, therefore, have urged the FCC to review and stay the use of the quantile regression formulas and the resulting caps because they are unsupported by evidence, contrary to law, harmful to rural consumers, and contrary to the objectives of promoting efficient, effective and sustainable rural broadband investment. The rural associations instead urge the Commission in today’s filings to adopt more transparent business rules, such as those proposed more than a year ago by the rural associations to constrain future investment based on the need to replace and upgrade aging network plant.

“The regression analysis formulas impose caps that are random from the start and will shift over time in ways that no carrier can hope to predict,” said Shirley Bloomfield, NTCA’s chief executive officer. “A support system that requires carriers, lenders, and investors to guess where caps will be imposed next—and does not signal clearly why those caps might apply in any given case—will undermine access to capital for rural broadband and violate the basic requirements that universal service be predictable and sufficient.”

“It is critical that the FCC immediately suspend implementation of the Wireline Bureau’s regression analysis-based formulas for capping RLECs’ reimbursable capital and operating costs,” said Stuart Polikoff, OPASTCO’s vice president of regulatory policy and business development. “The Bureau’s formulas are arbitrary, unpredictable, utilize faulty data and ultimately fail to accomplish what they were intended to do: encourage carrier efficiency and increase broadband deployment. Implementation of the Bureau’s regression-based caps would harm many rural consumers, who would face declines in service quality and higher rates for service. The Commission can and should protect rural consumers by setting aside the Bureau’s Order.”

“The unpredictable nature of the formulas and caps will depress broadband build-out in the rural areas our members serve, which will ultimately harm the consumer,” said Kelly Worthington, WTA’s executive vice president. “The results will be completely contrary to President Obama’s goal of expanding broadband access in all rural areas.”

USF/ICC Reform

Rural Associations File Comments on Level 3 Call Signaling Waiver Petition

Posted by admin - May 21, 2012 - Filing

On May 14th, NECA, WTA, NTCA, and OPASTCO filed comments in response to a request for partial waiver of the FCC’s call signaling rules by Level 3. The rural associations stated they “do not oppose grant of a waiver to Level 3 that is limited to circumstances identified in its petition, provided Level 3 provides additional information regarding its use of pseudo-NANP numbers, a customer’s private numbering plan number, or a toll-free number to populate the CN, and provided that such waiver is subject to the same limitations and conditions as those the Associations recommended for prior waiver requests.”

Call Signaling

Rural Associations Discuss Call Completion Survey with FCC

Posted by admin - May 21, 2012 - Filing

On May 17th, NECA, WTA, NTCA and OPASTCO met with representatives from the FCC’s Enforcement Bureau and Wireline Bureau to discuss the results of the Associations’ recently completed call completion survey. A notice of ex parte was filed.

Call Completion

Rural Telecom Associations Announce Results of Call Completion Test Project

Posted by admin - May 21, 2012 - Press Release

On May 17th, NECA, NTCA, OPASTCO and WTA released the findings of a joint call completion test project conducted to determine the frequency with which calls to rural areas are being successfully terminated.

The project found that despite recent efforts to restore faith in the integrity of the public switched telephone network, rural consumers continue to encounter significant problems receiving calls. While a comparison of recent test call results with those from the Rural Associations’ September 2011 test call project shows a modest improvement, call completion problems remain at an alarming and unacceptable level.

The current study found that call failure rates were 13 times higher to test lines in rural areas compared to those in non-rural areas. The occurrence of poor voice quality or “delayed setup” was also significantly higher in rural areas. Perhaps the most striking finding, however, was that nearly a third of rural test lines experienced completion problems on more than 20% of incoming calls.
Test calls were initiated and documented by volunteers in both rural and non-rural locations using a wide variety of interexchange carriers, wireless service providers, and VoIP services. More than 7,400 test calls were made April 9 to April 13 to 115 rural and non-rural test lines set up in 40 states.

The test call project was conducted to gauge the current scope of rural call completion issues that continue to threaten public safety, commerce and the basic ability of friends and family to communicate between rural and more urban areas. While the associations applaud recent actions by the Federal Communications Commission (FCC) to examine these issues—including the creation of a Call Completion Task Force and the adoption of a February Declaratory Ruling advising providers of potential liability for call failures—this recent test call project confirms that this nationwide epidemic remains a threat to public safety, commerce and basic communications between Americans. Accordingly, the associations renew their calls for the agency to take clear and unmistakable steps to enforce its rules and to ensure that routing practices by originating carriers and service providers produce high quality, reliable call completion results in all areas of the country.

“While we’ve seen a slight improvement, rural call completion issues are still at unacceptable levels,” said Jeff Dupree, NECA vice president of Government Relations. “Without additional and sustained action by the FCC, including enforcement action where appropriate, further necessary improvements may not be realized and any recent gains may in fact be lost.”

“The results of this project clearly show that much more remains to be done to resolve rural call completion issues in the wake of the FCC’s February ruling,” said NTCA Chief Executive Officer Shirley Bloomfield. “In presenting these results to the commission and to the public, we are once again drawing attention to the critical need for strict enforcement of the commission’s rules and a steadfast solution to this epidemic affecting the reliability of our country’s communications network.”

“The data illustrate what rural carriers already know,” OPASTCO President John Rose said. “The rural call completion problem remains largely unabated, and it appears this will remain the case until firm enforcement action is taken against those who perpetuate it by design or negligence.”

“The data presented to the FCC today validates what we continue to hear from our members and their customers – the call completion problem continues to persist,” said Kelly Worthington, executive vice president of WTA. “Rural residents, businesses and communities are being adversely affected by the lack of calls being completed and that those calls that are being completed still have a high level of poor call-quality. The FCC should engage in enforcement proceedings against offending carriers to begin correcting this problem,” said Worthington.

Call Completion

Rural Associations File Comments on ARC and Fairpoint Call Signaling Waiver Petitions

Posted by admin - May 4, 2012 - Filing

Today, NECA, WTA, NTCA and OPASTCO filed comments on two petitions requesting waiver of the FCC’s call signaling rules. The Alaska Rural Companies requested a broad waiver of the rules, and, in their comments, the rural associations “do not oppose grant of the requested waiver for the four specified circumstances described in the petition, subject to certain conditions as described herein.”

In the second petition, Fairpoint Communications requests a waiver “with respect to certain1SS7 network elements and multifrequency signaling equipment.” In their comments, the rural associations “do not oppose grant of a waiver to FairPoint that is limited to circumstances identified in its petition.”

Call Signaling