WASHINGTON, July 25, 2012 -The Federal Communications Commission (FCC) needs to “go back and do its homework” on how its 2011 service reform order will affect broadband in rural areas, according to National Telecommunications Cooperative Association Senior Vice President of Policy Michael Romano.

“We don’t see them discussing at all what the effect is on consumer rates,” Romano said. “FCC is very focused on reaching un-served areas. We think that’s a laudable goal; we have members in un-served areas.

“But in fixating on that goal,” Romano said the FCC ignored the goal of ensuring broadband services are able to sustain in rural areas at a “reasonably comparable” quality and price.

In the service reform order, the commission adopted rules to phase down existing high-cost support for competitive eligible telecommunications carriers (ETCs). The goal is to “create structural incentives for rate-of-return companies to operate more efficiently and make prudent expenditures.” NTCA claimed the FCC adopted flawed regression analysis-based caps on USF support, which “will frustrate sustainable broadband deployment in rural areas contrary to law and good policy.”

NTCA filed a petition for review of the order last December. The FCC tried to hold the appeal, but a U.S. Court of Appeals denied the FCC’s motion last week. Petitioners issuing briefs against the FCC over the changes are expected to file them in early October.

“NTCA has determined that several aspects of the order require judicial review to ensure that reforms are consistent with the Communications Act and other provisions of law,” according to a statement from Romano when NTA filed its petition in December.

The association organized a visit for small telecommunications firms to meet with federal policy-makers this week to urge suspension of new caps on Universal Service Fund (USF) support, according to a NTCA release Tuesday. The telecom leaders represent small, independent telephone companies and cooperatives in Ohio, Colorado, Kansas, Wisconsin, Iowa, Minnesota and Texas that serve as “carriers of last resort” in their communities. Among several concerns, Romano said small companies are worried about whether they will be able to upgrade to the FCC’s target broadband speed under the reforms.

“It is troubling that these caps took effect prior to the release of any testing that assesses their validity and volatility,” said NTCA Chief Executive Officer Shirley Bloomfield in the release.

NTCA and its members are urging Congress to seek an immediate suspension of the USF caps until testing demonstrates the caps will provide “sufficient and predictable support that enables sustainable broadband network investment and operation.”

The telecom leaders are also asking policy-makers to study the effects of last year’s reforms on the availability and affordability of voice and broadband services for rural consumers before proceeding with the rule changes, according to NTCA.

“Even for those rural areas that do have good broadband, you don’t deliver broadband, build a network and walk away from it,” Romano said. “It’s not a cost-free exercise for rural areas. In un-served and under-served areas, it’s not about just building the network, but maintaining it over time.”


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