Entries in RLEC Plan (7)

Thursday
Sep152011

Rural Associations Urge FCC to Reject Last-Minute USF “Wish Lists”

The Consensus Framework is an Opportunity for Pragmatic and Meaningful Reform

In reply comments filed last week, NTCA, OPASTCO, WTA and NECA encouraged the FCC to adopt the RLEC Plan without modification, and reject various alternative plans filed in this last comment cycle on USF/ICC reform. The Rural Associations argue that the last-minute alternative plans “provide little, if anything, in the way of detail and even less in terms of how consumers would benefit by their enactment,” and are based mostly on “broad policy statements recast from earlier phases of these proceedings.” The Rural Associations believe that the FCC has in its hands a reasonable, realistic and practical framework for thorough reform with the Consensus Framework (RLEC and ABC Plans), and “The time for concepts and theories is long past. Reform will go nowhere if the industry continues to spiral around high-level policy debates and the grinding of ‘old axes’ in lieu of delving into the gritty details that are essential to complete the reform process.”

The Rural Associations explain that the RLEC Plan has received widespread support, and it presents a much less radical solution than some of the alternatives which propose hard caps on the fund, reverse auctions, and total elimination of access revenue. Furthermore, the Rural Associations explain that “The Consensus Framework represents a detailed, balanced and pragmatic approach to comprehensive reform that is capable of getting the Commission and industry beyond the seemingly endless stalemate.”

Although the Consensus Framework has been criticized by cable, wireless, and other industry sectors as being far from an industry consensus, the Rural Associations make the important distinction that “some of the largest contributors to the USF as well as those who depend the most upon the Fund” participated in the negotiations. In other words, the destiny of the Fund should probably be determined, to some degree anyway, by those companies who keep the fund in existence and use it successfully, like RLECs. At the very least, RLECs should have a primary say in how RLEC funding is distributed, and “The RLEC Plan seeks to preserve the past and present successes of RLECs in bringing quality, affordable voice and broadband services to their high-cost markets.” In addition to maintaining stability for RLECs, the Rural Associations also explain that the RLEC Plan abides by the FCC’s USF/ICC reform guiding principles of responsibility, modernization, fiscal accountability and market-driven policy.

The Rural Associations point to the National Cable and Telecommunications Association’s “Amended ABC Plan” and the Google, Skype, Sprint-Nextel and Vonage “Tech/User Plan” as two examples of late filed, “potentially dangerous” proposals.  The Rural Associations assert that NCTA’s proposal to reduce rate of return to 8.5% and eliminate it completely in 2019 “provides no analysis whatsoever of the impact of this proposal on consumers or the USF itself.”  Throughout this proceeding, the Rural Associations have advocated “methodical and surgical” reforms, and they warn the FCC that “A particular policy approach that may seem ‘visionary’ or ‘progressive’ could turn out to be disastrous if put into practice without a thorough understanding of its implications.”

By contrast, the Rural Associations submitted the RLEC Plan months ago, and the FCC and industry have had ample time to consider the benefits, consequences and estimated short- and long-term impacts of an entire suite of reforms, from the size of the fund to access rates to arbitrage.  The opportunity for heavy-duty analysis does not exist with the late-filed plans, nor do most of the alternative plans cover the entire range of USF/ICC reform topics in great detail.  The FCC’s Public Notice, which specifically asked questions about three alternatives plans (RLEC and ABC Plans, and the Joint Board Plan) should have been a fairly clear hint that the time was up presenting new, radical plans—some members of the industry are even speculating that the FCC had already begun writing the final rules before the Public Notice was released last month.  The Rural Associations recognize that at this stage in the game, it is time to focus on how the plans outlined in the Public Notice will work for the industry at large: “In lieu of leaping into the unknown based upon undeveloped proposals and last-minute plans for purportedly-groundbreaking (and equally damaging) policy shifts, the Commission should adopt the RLEC Plan, as modified by the Consensus Framework.”

The question now is will the FCC accept the Consensus Framework “as is,” or will it be modified in light of the opposition that has emerged in this comment cycle?  The Rural Associations believe that many of the suggested modifications are “unworkable” and would significantly threaten the “delicate balance” that was achieved through ILEC-RLEC negotiations.  One particular area where the Rural Associations are not willing to budge is the proposed $4.5b Fund budget.  Cable industry commenters are calling for a “hard and durable permanent cap” on the fund; but the Rural Associations insist that the $4.5b budget, which could be modified as needed in the future, is a “far more effective approach for driving and demanding efficiency in the reform and operation of these programs, while avoiding the legal quagmire that would arise in adopting a firm (and potentially permanent) cap notwithstanding the statutory mandates.”

The Rural Associations argue that a hard cap is contrary to the Telecommunications Act, it would discourage new investment, and challenge the ability of carriers to recover current investments in broadband networks.  They assert that Comcast provides no data or evidence to illustrate that a hard cap at today’s funding levels will be sufficient in the future, and imposing a hard cap would require a separate rulemaking proceeding which could take years.  Furthermore, a permanent cap may have “unintended and unforeseen consequences,” since nobody can predict with certainty what the future holds.  Rather, “All that anyone can know at this point is that budget targets are more flexible than permanent hard caps, and can be much more readily modified to address economic and industry changes (probably substantial) that are likely to take place at any given point in the future.”

Some critics of the RLEC and ABC Plans believe the Consensus Framework solutions are too focused on the wireline industry, despite the fact that the wireline industry market share is under constant attack from wireless and cable.  However, the Rural Associations insist that the RLEC Plan is not “backward-looking.” They explain, “It constitutes a pragmatic way to preserve and promote access to high-quality, affordable broadband services that many rural consumers enjoy only because the existing High Cost program for RLEC service areas has been so effective.”

While it may have been exciting for some members of the industry to draft radical and completely transformative proposals for USF/ICC reform—which we have definitely seen no shortage of—the fact remains that there must be specific and predictable universal service support going forward in accordance with statutory requirements.  If adopted, the Consensus Framework could help facilitate further, more dramatic changes down the road as the industry transforms to all-IP, as consumer broadband technology demands and trends become more predictable, and as ubiquitous broadband becomes a reality.  The Rural Associations make some very interesting points about the importance of flexibility and stability, because we definitely do not know for certain what the future holds.  This is only the first significant step in transforming USF for a broadband world, and it may be the best option for the FCC to err on the side of caution while still ensuring that outdated and insufficient policies are modernized.

The Rural Associations' reply comments are available here.

Wednesday
Sep072011

Transitioning to CAF: RLEC Plan Steps and Impact

NTCA Outlines RLEC Plan’s Steps, NECA Calculates Preliminary Impact on RLECs' Slice of USF Pie

Last week, rural telecom association NTCA and the National Exchange Carriers' Association (NECA) held ex parte meetings with members of the FCC to provide additional details about the associations’ RLEC Plan for USF/ICC Reform—NECA submitted a chart illustrating how legacy USF support for RLECs may transition to the Connect America Fund (CAF) coupled with a Restructure Mechanism (RM); and NTCA presented a condensed summary of the steps in the RLEC Plan.

As shown below, NECA’s Preliminary RLEC CAF + RM Computation chart starts at $2b and accounts for modest growth of $50m per year up to “a total annual budget of $2.3b” by the sixth year.  By the eighth year, Legacy USF support is reduced by more than half, with CAF + RM support replacing the legacy funds without increasing the overall size of the fund by more than $300m.  According to NECA, “incremental funding will be necessary to enable access restructuring, promote further broadband build-out (but only to the extent supported by increases in USF/CAF funding above current levels for any individual company), and provide a reasonable opportunity to recover the costs associated with existing investments in broadband-capable plant.”

NECA’s calculations were produced “using industry-wide assumptions and growth rates, together with preliminary inputs and factors.”  NECA also provided a summary of their calculations and assumptions, and a description of the RM.  NECA explains, “The RM is designed to recover revenue losses as a result of capping interstate originating and terminating switched access rates at the start of access reform as well as revenue losses caused by reducing terminating access rates to targeted levels in three phases,” where the targeted level is ultimately the $0.0007 per minute terminating end office rate.

To calculate the RM, NECA explains, “The total revenue shortfall is the sum of the intrastate and interstate revenue shortfalls…The RM is calculated by offsetting the combined revenue shortfalls by increases in subscriber line charge (SLC) revenue.”  If residential rates in a study area are below the $25 local rate benchmark, the monthly residential SLC can be increased by 75 cents per year until the benchmark is met.  NECA further explains, “if additional SLC revenues in a given step exceed the intrastate RM, the SLC revenue in excess of the intrastate RM is then used to offset the interstate component of the RM;” and “earnings in excess of a 10% RoR for that year will be used to offset the intrastate component of the RM for that year after the SLC revenue offset has been taken into account.” 

Also helpful for understanding the potential road ahead for USF is NTCA’s summary of the steps in the RLEC Plan.  The four steps explained in NTCA’s August 26 ex parte filing are as follows:

Step 1: “Implement short-term ICC reform measures that confirm intercarrier compensation is due for all traffic originating from or terminating to the PSTN regardless of technology; VoIP pays established interstate access rates for all interexchange traffic and reciprocal compensation for local.”  The FCC should also address phantom traffic and access stimulation in this step.

Step 2: Short-term USF reform, beginning January, 1, 2012, including “a limitation on recovery of prospective RLEC capital expenditures,” and “cap recovery of corporate operations expenses by applying the current HCLS corporate operations expense cap formula to all federal high cost support mechanisms.”

Step 3: This step would initiate the process of capping interstate access rates with an 8-step “realignment program,” that includes unifying RLEC intrastate terminating access rates at interstate levels; reducing RLEC terminating local switching rates to $.005 per minute; and finally “unless the FCC determines otherwise, terminating local switching rates would be reduced to $.0007 per minute in 3 equal installments for RLECs.”  Step 3 would also see the implementation of the $25 rate benchmark (as described above in the summary of the NECA calculations).  NTCA emphasizes that “ICC rate reduction will be deferred in any year in which, for any reason, there is insufficient high-cost support and/or restructure mechanism funding available.”

Step 4: The final step in the RLEC Plan is to “implement an RLEC-specific CAF mechanism designed to re-focus existing RLEC USF support on broadband.”  As illustrated by the NECA chart above, legacy funding would decline as CAF funding is phased in.  NTCA explains that RLEC CAF support is determined “by subtracting the product of an urban broadband transmission cost benchmark times broadband lines in service, from actual RLEC network broadband transmission costs.”

If the RLEC Plan is implemented, NTCA recommends that the FCC review and modify the plan as needed after 3-5 years.  NTCA also presents several “overarching principles” that the FCC should keep in mind as the final rules are drafted; such as not imposing a hard cap on high cost support, allowing the RLEC portion of the fund modified growth of $300m by the sixth year, removing the high cost fund budget after 2017, allocating $300m for mobile broadband service, and targeting $2.2b for areas served by price cap carriers consistent with the Consensus Framework proposals.

In this final comment cycle, the RLEC Plan has gained considerable support from statewide telecom associations and a number of individual RLEC commenters, but not all RLECs are completely on board. With reply comments due this week, it will be interesting to see how the Consensus Framework parties react to the questions and critiques posed in the comments. Although not all RLECs advocate the same reform plan, the RLECs who have participated in this proceeding have presented a tremendous amount of evidence and commentary to illustrate how harmful the FCC's initial USF/ICC Reform NPRM proposals would be for these companies and for the rural Americans they serve. It is now up to the FCC to ensure that RLECs have reasonable opportunities for existing broadband investment and lost access revenue recovery, and ample opportunities to continue bringing the benefits of broadband to high-cost rural areas.

NECA’s chart and calculation explanation is available here, and NTCA’s ex parte filing is available here.

Monday
Aug292011

ACA: ABC Plan Inconsistent with FCC’s Goals for USF/ICC Reform

Cable Association Argues ILEC Proposals are “Salvageable,” Provides Recommendations

Comments on the FCC’s Further Inquiry in the Universal Service-Intercarrier Compensation Transformation Proceeding were due on August 24. The American Cable Association (ACA) voiced its concerns with the price cap ILECs' ABC Plan and provided their recommendations about how the ABC Plan can be improved in order to meet the FCC’s goals of fiscally responsible and competitively neutral USF/ICC reform.  Although ACA was critical of the ABC Plan, it appeared to have a somewhat sympathetic position towards RLECs.  Cablecos were not involved in the industry negotiations that led to the ABC Plan and Consensus Framework with the RLEC Plan; therefore ACA warns the FCC that these proposals “are far from an industry consensus balancing diverse interests, a basic fact that the Commission should consider when determining whether these plans are in the public interest.”  

ACA believes that the ABC Plan is “deeply flawed: it would enable universal service funding to grow significantly and would tilt the competitive landscape in favor of the Price Cap incumbents.”  ACA argues that the ABC Plan is not competitively neutral, and it will not fix the myriad current problems with USF/ICC.  ACA states, “Rather than being ‘transformational,’ these proposals merely continue, if not exacerbate, current flaws in the universal service fund and intercarrier compensation regimes.  They also directly and materially harm ACA members, who provide telecommunications and broadband service in competition with these Price Cap carriers.”  Despite being peppered with problems, ACA is convinced that the ABC Plan’s proposals are “salvageable” with “targeted fixes.”

First of all, ACA believes that there needs to be a hard cap on the Connect America Fund (CAF) at the 2010 level.  Without a hard cap, ACA argues that the contributions burden on consumers will become unreasonable.  ACA further argues that the Consensus Framework proposal to limit the fund at $4.5b is actually “riddled with loopholes,” because it would allow rate-of-return carrier support to increase by $300m and the budget only remains in effect for 6 years.  As a result, “under the ABC and RLEC Plans, there is abundant opportunity for the fund to grow, which the Commission should not permit.”

ACA’s second recommendation is to distribute USF support in a “competitively neutral manner,” meaning reverse auctions.  ACA’s members believe that they could help extend broadband in rural areas with USF support, and they “are eager to see the Commission provide competitively neutral and efficient support for universal broadband so they can seek to serve these areas.”  ACA argues that the ABC Plan will effectively grant the price cap ILECs “a new government entitlement” to unserved areas, and the Rights of First Refusal proposal would especially give the ILECs an unfair competitive advantage.  ACA challenges the ILECs to accept reverse auctions, and “if they are in fact the most effective and efficient providers of broadband to unserved or underserved areas, the Price Cap incumbents would have nothing to fear from a competitively neutral distribution process.”

ACA’s next proposed fix for the ABC Plan’s flaws is a significantly limited access replacement mechanism (ARM), where carriers would only receive this support “where harm is demonstrable and severe.”  ACA ideally would like for there to be no ARM, but if the FCC decides to adopt a revenue recovery mechanism, then such funding should end after 3 years and the funding level should be less than 100% and reduced each year in the 3 year period.  ACA reasons that “transitional mechanisms like an ARM have a way of becoming permanent rights,” speculating that price cap carriers could ultimately end up collecting ARM support long past a reasonable timeframe.

When it comes to RLECs, ACA seemed understanding of the challenges that small rural companies will face if High Cost funding is reduced or eliminated: “These smaller providers are most reliant on current High-Cost funding to provide service to consumers and will suffer most if funding is reduced significantly and precipitously.  Further, these smaller telephone companies have generally demonstrated competence in providing service and have a deep commitment to their customers.”

ACA recommends that incumbent ETCs with less than 100,000 lines should have the option to continue receiving high cost support for 8 years, “so long as they agree to commit to provide broadband service in all their service areas,” at 4/1 Mbps initially and 16/4 Mbps within 6 years.  ACA’s recommendation to make funding for small companies somewhat contingent on broadband speeds provided is interesting, but the key here is that funding must be available, sufficient and predictable. Whether phasing out high-cost funding after 8 years will meet the sufficient and predictable principles, especially if large network investments must be made by year 6.

Overall, the ACA presented some interesting arguements, challenges to the proposed plans, and recommendations for USF reform.  There is growing opposition to the Consensus Framework by parties who were not directly involved with its development, but with $4.5b per year at stake, one can’t blame the dissenters for doing whatever they can to try to influence the FCC in this eleveth hour comment cycle.  Do you think the FCC will be accomodating to the parties who were not involved in the industry negotiations?

ACA’s full comments are available to read here.

Sunday
Aug282011

$300m Mobility Fund is Arbitrary and Inadequate, Claims RTG

Rural Wireless Carriers Call RLEC-ILEC Consensus Framework for USF “Highly Flawed”

Comments on the FCC’s Further Inquiry in the Universal Service-Intercarrier Compensation Transformation Proceeding were due on August 24, and the rural wireless industry did not hold back any criticism of the wireline ILEC’s ABC Plan or the Consensus Framework negotiated by the Rural Associations and the ABC Plan participants. I have been looking forward to hearing the wireless response to the ABC Plan’s proposed $300m Advanced Mobility/Satellite Fund (AMF), and the Rural Telecommunications Group (RTG) comments did not disappoint. RTG slams the $300m amount for mobility funding as arbitrary, insufficient, inadequate, meager and measly; and they argue that the Consensus Framework “shows that the landline authors of the RLEC and ABC Plans are oblivious to the rapid changes taking place in the marketplace or have chosen to ignore them.”

Wireless carriers had no part in the industry negotiations that led to the Consensus Framework, which I think seems rather irresponsible given the significant role that wireless plays in the broadband market. Wireless broadband critics may argue that mobile broadband is not equal to wired broadband in terms of speed, service quality and capacity; but the market speaks clearly that wireless broadband is both a compliment and a substitute for wired broadband, depending on an individual consumer’s needs. Wireless service critiques aside, I can’t help but agree with RTG’s assertion that “it is a given that mobile wireless will play the most important role in the country’s broadband future and any order resulting from this proceeding should ensure the continued growth of wireless broadband.” The question then comes down to this: how much USF support should be dedicated specifically to wireless broadband, especially when the FCC is intent on keeping the size of the fund at or near the current level?

RTG unfortunately does not offer a specific amount of ideal funding, rather they argue that the funding should be based on actual costs, and “the size of the mobility fund would have to be substantially larger than $300 million and should reflect specific, ongoing support in order to spur investment and ensure the availability of existing wireless services and the expansion of mobile broadband networks.” I wonder, what constitutes a “substantially larger” mobility fund: $600m? $1b? More? There are a lot of costs involved in building and maintaining a wireless network (especially when spectrum acquisition is factored in), and I think we have all learned a thing or two about this from watching the recent drama with the AT&T/T-Mobile merger unfold. AT&T allegedly could build out 4G wireless to nearly the entire country for an additional $3.9b—equal to 13 x’s the proposed annual budget for the AMF.  I certainly do not expect the AMF to cover all costs to deploy wireless broadband in rural areas, but when put in perspective, $300m indeed seems like a pittance.

In addition to the size of the AMF, RTG is concerned about the disproportionate amount of money that wireless carriers pay into the USF while proposals on the table call for shifting support away from competitive ETCs. According to RTG, “Competitive ETCs would lose approximately 75% of their current support. In contrast, incumbent wireline carriers would lose only one third of their current support.” RTG is worried about the outcome of this proposal on rural wireless carriers, and “the consequence of applying such a large reduction of support to competitive ETCs will be a shrinking or elimination of many rural wireless networks.” RTG further argues for a transitional phase-out of CETC support of at least 10 years and a sufficient recovery mechanism to offset the lost funding.

RTG also raises concerns about including satellite support in the $300m AMF. They believe that funding for satellite broadband should come from the ILEC’s slice of the USF pie, because “satellite carriers provide a fixed Internet access service, and should not receive support from a fund proposed for ensuring that consumers enjoy the benefits of mobility.” RTG points out that the ABC Plan participants wish to partner with satellite providers and “rely on satellite in order to avoid having to serve the highest-cost areas.”

I have been highly critical of this particular large-carrier proposal in the past, and I agree with RTG that if wireline ILECs want to hand off the responsibility for serving especially remote areas to satellite providers, then the funding should come from the ILEC portion of USF. I think it is also important to look at the difference in market demand for mobile broadband and satellite broadband as an indicator that perhaps grouping these two services in the AMF is not reflective of actual consumer trends. I rarely hear of anyone clamoring for satellite broadband service, but there are stories every day about the dire need for improving mobile broadband. Expanding wireless broadband to 98% of America is a key component of the Obama Administration’s goals for universal broadband, and it is interestingly also a major point of debate in the AT&T/T-Mobile merger controversy.

RTG definitely covered some of the most contentious issues in this proceeding, and it will be interesting to see if, or how, the FCC responds to the wireless industry’s demands for a larger Mobility Fund. I imagine that RLECs would be concerned that a larger Mobility Fund could mean a smaller RLEC fund, but what do rural telecom providers who have a stake in both wireless and wireline think?

Read RTG’s comments here.

Thursday
Aug252011

Western RLECs Support “Separate but Integrated” RLEC and ABC Plans

Western Associations Urge FCC to Adopt Consensus Framework and Strict Call Termination Rules

On August 24, 2011, the Western Associations (comprised of state telecom associations from California, Colorado, Idaho, Montana, Oregon, Washington and Wyoming) filed joint comments on the Further Inquiry in the Universal Service-Intercarrier Compensation Transformation Proceeding. In their comments, the Western Associations voiced support for the Rural Associations’ RLEC Plan for rate-of-return companies and presented some rather convincing arguments for strong call termination rules.

The Western Associations argued that the RLEC Plan is “a well thought out, integrated and comprehensive plan that represents significant compromise on the part of rural telecommunications companies across the nation,” and RLECs would experience less financial loss under the Consensus Framework of the RLEC Plan and ABC Plan than they would under the FCC’s initial USF/ICC NPRM framework. The Western Associations seem to understand that RLECs need to let go of some of the USF-enabled financial security of the past, for “the landscape is changing, and members of the Western Associations recognize the change must come” regarding USF and ICC. I found this notable, because the physical landscape of the states in the Western Associations is arguably the most expensive and challenging in the nation to build wired broadband, and I think this particular comment illustrates that these companies are being very realistic and reasonable about the future of USF.

The Western Associations emphasize that if the FCC adopts the Consensus Framework, two conditions must exist: the FCC should not pick and choose specific components of the RLEC Plan to adopt, and “it would not be appropriate to comingle aspects of the ABC Plan with the RLEC Plan and apply the comingled set of outcomes to the rural incumbent local exchange industry.” Although the ABC Plan was the result of broad industry negotiations including RLECs, it is really only applicable to large price cap carriers—the Western Associations note that “The ABC Plan and the RLEC Plan are carefully balanced to work together on separate, but parallel tracks taking into account very real differences between price cap and rate of return companies.”

The Western Associations provided some examples to illustrate how the RLEC Plan would result in revenue reductions, but not nearly as dramatic as the revenue reductions estimated under the FCC’s National Broadband Plan framework. Toledo Telephone Company calculated that it would see annual revenue reductions of $975,000 by 2015 under the FCC’s plan and annual revenue reductions of $275,000 under the RLEC Plan. I personally feel that $275,000 is still a substantial hit in revenue for a small company, but if it means the difference between defaulting on loans and laying off half the employees, then clearly the $275k hit might not the end of the world. The Western Associations agree, arguing, “while the RLEC Plan changes the support a rural company will receive, the change is manageable. The financial shocks of the NPRM proposals are not.”

I thought the Western Associations made an interesting point about the size of revenue reduction as a result of USF and ICC reform—they argued that companies should not lose more than 5% of their current USF support in a given year. They reason, “such a provision would also avoid losses in revenue that could negatively impact business plans, negatively affect the ability of a company to repay loans or have the negative consequence of preventing a company from obtaining new debt financing to pursue broadband deployment.” Although I agree with this reasoning in theory, I question how such a 5% annual reduction cap would work under the final rules. I also feel as though the FCC intends to make more significant USF reductions for companies that have been allegedly abusing the system, so a 5% reduction might not be sufficient to bring such companies in line. In other words, the bad actors might get a hall pass to continue receiving more USF support than needed.

The Western Associations took the opportunity to bring up an especially vexing ICC-related issue in their comments: least-cost routing abuse and call termination arbitrage. This is becoming a serious problem in rural areas, where calls are not being completed or experiencing quality problems to customers in rural areas, primarily RLEC customers. The Western Associations argue, “This abuse of telecommunications providers’ responsibility to complete calls is causing substantial economic and personal harm. Rural businesses are losing customers. Families, sometimes with sick loved ones, are unable to complete calls to one another.” They provided several convincing examples of this problem: a state patrol office in the Wahkiakum West Telephone Company service area repeatedly experiences calls not coming through; medical workers and pharmacies are not able to reach patients in rural areas; and a son of an elderly woman in the St. John Telephone Company service area could not reach his elderly mother, which resulted in emergency crews being sent to her home twice (for no reason). The Western Associations sternly state, “Someone in a rural community should not have to die to get this problem addressed.”

What is the solution to the call termination problem? The Western Associations urge the FCC to adopt the traffic signaling rules outlined by the Rural Associations, which “require complete population and end-to-end transport without alteration of call signaling records.” Furthermore, they encourage the FCC to equate call termination problems with call blocking, and issue severe penalties for companies who engage in this type of arbitrage. I personally feel that there is no technological excuse for any provider preventing calls from being completed in a rural area—it comes down to money and greed, and the problem has escalated to the point where regulatory intervention is now needed to correct a market failure.

Overall, I thought the Western Associations provided some convincing arguments and examples in favor of the RLEC Plan and Consensus Framework. The Western Associations appear to have a forward-looking and reasonable attitude towards USF/ICC reform, and they clearly are bracing for change and revenue reductions as a result of the reforms.

The Western Association’s comments are available here.