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The America’s Broadband Connectivity Plan

The America’s Broadband Connectivity Plan

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Published by: National Association of Manufacturers (NAM) on Jul 29, 2011
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July29,2011ChairmanJuliusGenachowskiCommissionerMichaelCoppsCommissionerRobertMcDowellCommissionerMignonClyburnFederalCommunicationsCommission445TwelfthStreet,S.W.Washington,D.C,20554
Re:America'sBroadbandConnectivityPlan
DearMr.ChairmanandCommissioners:Thecompanieslistedbelowrespectfullysubmittheattachedproposaltoreformtheuniversalserviceandintercarriercompensationsystems.Wehavebeenworkingingoodfaithforthepastseveralmonthsdiscussingreformamongstourselvesandwithotherstakeholders.Aftermonthsofhardwork,andsignificantconcessionsonthepartofallsignatories,wehaveattemptedtodevelopaframeworkthatbalancesthemanypolicyandpoliticalchallengestheseissuespresent.Ourproposalwillensurethatfourmillionruralhomesandbusinessesinhigh-costareasservedbypricecapcarrierswillhaveaccesstobroadband,twomillionofwhichwillenjoythebenefitsofbroadbandforthefirsttime.Wethankyouallforyourleadershipinthisarea.WealsothanktheteamthatpreparedtheNationalBroadbandPlan,whichhasservedasafoundationforthisproposal.Asyouknow,wecannolongeraffordtocontinuetosidesteptheurgentneedtoimplementnewpoliciesinthisspace.Theindustryisready.TheCommissionisready,havingstudiedbothoftheseissuesforyears,providingmultipleopportunitiesforpubliccomment,andreceivingthousandsoffilings.Thetimeisnowformeaningful,comprehensivereformofboththeuniversalserviceandintercarriercompensationsystems.Theframeworkwehavedevelopedwilldirectlyenableefficientdeployment,operation,andenhancementofbroadbandnetworksinhigh-costareas.Thereformsweproposewillsimultaneouslyrationalizetheuniversalserviceandintercarriercompensationsystems.Theywillencourageadditionalprivatesectorinvestment.And,
 
theywillhelpnarrowthe"rural-ruraldivide"bytargetingfundingtoareasthathavebeenneglectedunderthecurrentuniversalserviceprogram.AstheNationalBroadbandPlanandtheFCC'snoticeofproposedrulemakingacknowledged,arural-ruraldivideexistsbecausethecurrentsystemsupportsupgradestothebestruralnetworksinthenationbutdoesnotaddresstheneedsofmillionsofothersinruralareasthatreceiveinsufficientsupport.Addressingthesedisparitiesinthecurrentsysteminafairandequitablewaywillmakesubstantialprogressinclosingthisdivide.Finally,andmostimportantly,thesechangeswillproduceenormousbenefitstoconsumers.RATIONALIZINGANDREFORMINGTHEHIGHCOSTFUNDTheplanproposestocreateandfundanewbroadband"ConnectAmericaFund"thatwillfocusontwoimportantgoals:(1)extendingbroadbandtounservedareaswithinfiveyears;and(2)maintainingandimprovingbroadbandserviceinotherhigh-costareas.Supportwouldbeawardedthroughacombinationofaforward-lookingcostmodelandcompetitivebidding.Thisproposalisdesignedtostaywithinabudgetconstraintof$2.2billion.ThemainobjectiveoftheConnectAmericaFundwillbetosupportbroadbandinareasinwhichthereisnoprivatesectorbusinesscase.Asaresult,underourproposal,thesystemwouldnolongersupportservicesinareasinwhichanotherprovideroffersthedefinedservicewithoutasubsidy.ProvidersthatelecttoreceivesupportfromtheproposedConnectAmericaFundmustofferbroadbandservicethatprovidescustomerswithaminimumactualbandwidthof4megabitsperseconddownstreamand768kilobitspersecondupstream.Thisservicewouldalsoproviderobustcapacitythatissufficientforhouseholdstouseeducationandhealthcareapplications.Thebroadbandserviceobligationistechnologyneutral:providerscoulduseanywirelineorwirelesstechnologythatmeetstheCommission'sbandwidthandcapacityrequirements.Whilefocusedonthenation'sbroadbanddeploymentgoals,ourplanalsoacknowledgesandrespondstoadditionalpolicyconcernsthatmayconstraintheprogram'sabilitytoenableubiquitousbroadbandaccessinthenearterm.Ourinitialprojectionsdeterminedthatannualsupportwouldneedtogrowtoapproximately$10billionforallAmericanstoreceiveterrestrialbroadbandaccess.We,however,optedtopursueanalternativepathtoaccomplishthesecriticalgoalswithoutincreasingthesizeofthehigh-costfund.AsChairmanWaldenrecentlyobserved"...thesupportfromthehigh-costfundhasnotalwaysbeentargetedtothoseconsumersinthoseruralareaswhoneeditmost,whichhascreatedarural/ruraldivide.Andthemountingcostsofthehigh-costfund,alongwithdeclinesintheUSFfundingbase,haveledtoever-increasingcustomersurchargesashighas15%oftheinterstateportionofacustomer'sphonebill.Inaword,theUniversalServiceFundhasbecomeunsustainable.
Reformisnolongeranaspiration;itisanecessity."
1
L
SpeechbeforetheOregonandWashingtonTelecommunicationsAssociations(June7,2011)
(emphasisadded).
2
 
FIXINGTHEBROKENINTERCARRIERCOMPENSATION
Reformingtheintercarriercompensationsystemisacriticalcomponentofourframework.Asyouknow,newtechnologiesandproductsareeatingawayatwirelinecarriers'accessrevenues.Carriersarelosingaccesslinesthatprovidethebasisforaccesscharges.Carriersarealsoincreasinglyunabletorealizeaccessrevenuesontheirremaininglinesbecauseofthefraudandarbitrageschemesmadepossiblebytoday'scomplicated,multi-tieredsystem.Today'sstatusquoisnotthebasisforcomparison-wemustconsiderwhatwillhappentoourindustryifintercarriercompensationreformdoesnottakeplace.Thefutureofcontinuedintercarriercompensationlosseshasdireconsequences,forbothcarriersandconsumers,intheabsenceofreform.Althoughfindingtherightwaytotransitionawayfromthepoliciesofthecircuit-switchedworldisdifficult,consumersandtheentireindustrywillbenefitfromtheeffortonceitiscompleted.Thisplanproposesreasonablereformsthatincludeafive-yeartransitiontoasingle,lowdefaultterminatingrateof$0.0007perminutestartingJuly1,2012andcompletingJuly1,2017,coupledwithessentialopportunitiesforcompaniestorecovertheselostrevenuesfromtheircustomersaswellasthroughanewtemporaryrecoverymechanismthatwouldbepartoftheuniversalservicefund.Inaddition,theplancallsforimmediate
FCC
actiononcompensationforVoiceoverIPtraffic,accesspumping,andphantomtraffic.ThesereformswouldgointoeffectonJanuary1,2012.Movingallcircuit-switchedtraffictoauniform,lowdefaultrateandfixingtheotherpersistentproblemsdoggingthesystemwillhelppreventthearbitrage,disputesandlitigationthathavedivertedresourcesandcapitalfromproductiveuses.Carriersandpolicymakerswillbefreedoftheburdenstheseintractableissueshaveimposedsotheymayputtheirresourcestomoreproductiveuse.And,theplancontainsseveralbackstopsthatwilllimitanyannualincreaseinthefederalsubscriberlinechargetomodestamounts.Toensurethesemajorreformsdonotdestabilizecarriersservinghigh-costareas,itiscriticalthattheCommissionadoptandimplementproposeduniversalservicereformsatthesametimeastheseintercarriercompensationreforms.
BENEFITTOCONSUMERS
Theconsumerbenefitsofthisplanareundeniable.Mostimportantly,theplanifadoptedwillmakecurrentlyunservedhouseholdsinhigh-costruralareaseligibleforbroadbandsupport.Itwillenablecontinuedandenhancedbroadbandaccessinareasthatareservedtoday.Broadbandservicesprovideconsumerswithaccesstoawidearrayofeducation,healthcare,employment,andentertainmentapplications.'Thusplanwill
2
See
MarkDutz,JonathanOrszag,andRobertWillig,
TheSubstantialConsumerBenefitsofBroadbandConnectivityfor
u.s.
Households,
InternetInnovationAlliance(July2009)(estimatingthatconsumersreceivemorethan$30billionofnetbenefitsfromtheuseoffixed-linebroadbandathome).
3

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