Connecting America: At What Cost?


The National Cable & Telecommunications Association continues to be concerned about government
money being used to overbuild incumbent broadband suppliers as the FCC transitions its phone
subsidies to broadband. To that end, two weeks ago, NCTA executives met with FCC officials to
press upon them operators’ opposition to CenturyLink’s request for a waiver to use Connect
America funds to overbuild existing providers in its footprint.

Communications attorney George Foote has represented cable and telecom companies before
the FCC as a partner in Dorsey & Whitney in Washington. He spoke with Multichannel
about why some of the biggest telecom players — namely, AT&T and Verizon — turned
down government dollars to deploy broadband in un-served areas, and why that could put pressure
on the FCC to grant waivers to companies like CenturyLink.

MCN: Why did AT&T and Verizon
say thanks but no thanks
to money from the Connect
America Fund?

George Foote: I’m not sure, but on
the face of it they probably said
that [a] $775 per-customer subsidy
is not enough to serve the people
they are not already serving and
they don’t want to put the extra
money into it.

MCN: And there are the threeyear
build-out requirements ?

GF: Right.

MCN: So, were smaller companies
rushing to get the money?

GF: Everybody has the same starting
point, which is: ‘Is $775 enough
to make me put my own money
up to reach that fisherman out on
the point?’

MCN: It doesn’t seem to be if only a third of the
first-phase money was applied for?

GF: That’s right. They all have to make their own
calculations about their ability to serve an area and do
it competitively.

Theoretically, this money goes
to provide services in places that
are un-served. Some companies,
like Windstream, want to get
some money to go into places
where they would be a competitive

MCN: If the FCC does not get
more uptake on its $300 million
in initial Connect America
Funding, are they more likely to
grant a waiver for overbuilders
to get those buildouts?

GF: I think that is very likely.
This is really one of the first
shots the FCC is taking to get
broadband in more places, and
if this doesn’t work they will
try something else. It is a great
policy, and the FCC is going at
it with great vigor to make sure
everybody gets covered.

MCN: It won’t be great for cable
operators if they decide they have to
loosen those restrictions and allow

GF: Yes.

MCN: Do you think the FCC’s Connect America
fund will eventually connect America?

GF: Eventually, yes.

I look at what they are doing as kind of like the
high-tech world. Try something, if it doesn’t work, try
something else. They offer $300 million and get $115
million uptake. Since people didn’t take all the money,
the FCC will say, ‘We know the need is there. But we, the
FCC, may have underpriced what we’ll pay, so let’s go
back and sweeten the pot. Let’s grant some waivers, or go
to the reverse auctions and subsidize
the coverage at the best price they
can get for it.’

They have a whole toolkit of things
they can do.