NTCA’S 2017 Outlook: Regulation

How Will a Fundamentally Different FCC Tackle Telecom Policy Challenges?

By Michael Romano

From a telecom policy perspective, it is hard to imagine anything that could beat the "one-two punch" of a 2016 filled with substantial regulatory reforms and groundbreaking election results (both national and model-based support), followed by a 2017 in which the only certainty might be change itself. On the heels of a year in which the FCC took historic action to reform the Universal Service Fund (USF) that provides much needed support for rural areas served by smaller telcos, we will see a fundamentally different FCC in 2017, with the full implications of that change still to be seen.

Rural Broadband: USF Reform and More

Small telcos like those in NTCA–The Rural Broadband Association’s membership operate in the highest-cost, most sparsely populated parts of rural America. They have had to work through regulatory uncertainty, technological shifts and competitive pressures that make it harder than ever to deliver on the promise of universal service. Yet these companies have made substantial strides, becoming ever more entrepreneurial and innovative as they respond to consumer demand and help their communities thrive. Still, ongoing availability of sufficient and predictable USF support is essential to make the business case to invest in robust advanced networks, to enable the operation of those networks over many years, and to facilitate affordable rates for consumers. In other words, predictable and sufficient USF support is still an essential “baseline” for rural telcos to make informed business decisions about investments in very rural locations and to provide services that are reasonably comparable to those available in urban areas.

From the tone-setting national broadband plan in 2010 through more recent proposals for reform, the industry and the millions of consumers they serve have seen many twists and turns in oversight of the federal USF. The most recent chapter of this longrunning debate focused upon how to fix the “standalone broadband problem”—the fact that rural consumers could not get access to affordable broadband from telcos without also buying “plain old telephone service”—as well as how to provide optional model-based USF support for those telcos who wanted it.

This new chapter held out the promise of finally delivering on USF reforms years in the making, leading to a frenzy of detailed plans and proposals. Starting in late 2014 and continuing through early 2016, NTCA and other rural telecom associations were constant presences at the FCC—often together but also separately, pursuing consensus plans where possible but also taking their own paths where needed to reflect the distinct composition of their memberships. Ultimately, NTCA was guided in this debate by a set of principles articulated by the NTCA Board of Directors, reflecting the diversity of the association’s membership and the industry’s strength in its collective numbers:

> Rural telcos should be able to recover past investment and expenses consistent with the USF rules in place at the time those investments were made.

> Telcos should be able to recover future investments and expenses through a USF mechanism that is predictable, sufficient and sustainable.

> Any obligations on telcos arising in connection with receipt of USF support should be calibrated to the amount of available funding.

> Any model implemented must be accurate and transparent.