NCTA Seeking MSO Phone Subsidies


Cable companies that offer local phone service can’t get access to subsidies available to competitors due to federal and state regulations that favor incumbent phone carriers, the National Cable & Telecommunications Association said Friday.

Cable companies provide local service to 3.2 million customers -- a business that is expected to grow rapidly in the years ahead with cable’s deployment of voice-over-Internet-protocol service, enabled by their $95 billion in upgrades since 1996.

The NCTA is calling on the Federal Communications Commission to change rules that govern the universal-service program’s “High Cost Fund” so that cable companies are not automatically excluded from receiving subsidies designed to keep phone service affordable in rural areas.

In the letter, the NCTA explained that cable companies can’t obtain eligible-telecommunications-carrier status and qualify for funding because many state regulators reserve ETC status for companies that provide service throughout the state, also called a study area.

While many phone companies wire entire states and, thus, qualify for subsidies, cable companies have deployed their networks to track local boundaries or franchise areas and, thus, are ineligible, the trade group said.

“Ironically, this outcome, practically speaking, excludes from participation in the HCF companies that have made billions of dollars in investment in the facilities that have brought myriad services to many corners of the country,” NCTA senior vice president of law and regulatory policy Daniel Brenner said.

The NCTA urged the FCC to make a rule change that would allow cable companies to obtain ETC status if they make phone service available “throughout the area for which its affiliate cable-television company holds a franchise,” instead of throughout the state or study area.

Cable companies that provide local phone service as telecommunications carriers pay into universal-service programs, and Cox Communications Inc., for example, has said that it is a recipient of universal-service support.

In contrast, cable companies don’t contribute any nontelephony revenue to universal service, but they are entitled to receive funding by providing discount Internet access to schools and libraries across the country.