Cable Operators Press D.C Flesh for Reform

Publish date:

Washington — Some of the National
Cable & Telecommunications Associations’
smaller cable operators have some
big problems with the telco-backed Universal
Service Fund/Intercarrier Compensation
(ICC) reform plan the Federal
Communications Commission is currently

Telecom companies pay into the USF
to subsidize service to areas that cannot
be reached economically, while the ICC
is the mechanism by which carriers compensate
one another for terminating traffic on their networks.

Representatives from some of those
smaller cable systems held meetings
last week with FCC commissioners and
on the Hill to argue that they should
get equal treatment when it comes to
the subsidies going to broadband, rather
than give a right of first refusal to incumbent
local-exchange carriers. That’s
what the plan proffered by the USAmerica’s Broadband Connectivity,
or the ABC Plan, proposes.

Members of both the NCTA and the American Cable Association,
a group representing independent operators, descended on the capital to make their case to rulemakers.
Among them were Tom Simmons, senior vice president
of public policy for Midcontinent Communications; Dave
Rozelle, executive vice president of Suddenlink Communications;
Dick Sjoberg of Sjoberg’s
Inc.; and Tom Larsen, vice president
of legal and public affairs
at Mediacom Communications.

In a briefing with reporters,
they said they thought the FCC
had received that message, and
was on the same page about
looking forward to broadband
rather than locking in a system
geared to legacy phone carriers.

Cable operators, telcos and
the FCC are in general agreement
that the fund, which subsidizes
phone service, must be
migrated to broadband and better
managed to prevent fraud
and waste. How that’s done,
who gets the money and how
much wound up dividing the
two industries, however.

The operators said their lobbying
team was working on improving
the ABC Plan up to the
last minute, which was why NCTA did not offer an alternate
plan in its comments on ABC, but rather urged the FCC to
modify it to be technologically neutral.

Among their key issues are reasonable, enforceable caps
on the fund; insuring that billions in subsidies still tied to an
old system are not one of the legacies of the longtime carriers
through a right of first refusal; and that, when it comes to intercarrier
compensation, cable isn’t reimbursed for its voiceover-
Internet protocol termination of voice traffic at a lesser
rate than telcos are for termination.

NCTA executive vice president and policy point man
James Assey, who was also at the briefing, said they were
not there to throw dirt on the ABC Plan, and that 75% of its
was “to the good,” particularly, he said, to move the subsidies
to more of a procurement model that shifted the subsidies
from areas where it has been demonstrated service
can be provided without subsidies to truly unserved areas.

National Broadband Plan architect Blair Levin, who is
currently Communications and Society Fellow at the Aspen
Institute, is also concerned that the telco Universal Service
Fund reform plan would give incumbent phone companies
right of first refusal to some of those funds.

Speaking at an industry event in Washington last week,
Levin said there was “a lot of good stuff in the ABC Plan.”
He said one of the things the FCC did right in the 1990s
— he was chief of staff to then-chairman Reed Hundt —
was to listen to the market. He said if the FCC were to make
the judgment that incumbents get that right of first refusal,
it would be “losing its credibility as an expert agency.”

The FCC is expected to offer its USF proposal within the
next couple of months, though it has pushed back its timetable