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ACA Gives F to ABC Plan

The American Cable Association, which earlier this week told the FCC it had issue with the Universal Service Fund reform plan proposed by incumbent phone companies, the so-called ABC, or America's Broadband Connectivity, plan, has taken off the gloves.

In comments on the proposal, which were solicited by the FCC, ACA called the proposal one of "counter financially imprudent and economically outdated ideas advanced by incumbent phone carriers clinging to monopoly-era support mechanisms overtaken by technology and market forces."

"Without a doubt, the FCC will fall short of its mission if major phone companies insist on ballooning the size of the high-cost fund and demand on receiving USF money in markets where they face competition or where competitors can offer service more efficiently," said ACA President Matthew Polka.

ACA called the ABC plan a blueprint for maintaining the same flawed USF and intercarrier compensation system, and said it would "also directly and materially harm ACA members."

The telcos backing the plan told the FCC it is "good for consumers, is good policy for the Commission, and makes good business sense for the industry." They argue it provides targeted support for broadband in high-cost areas, provides a fiscally responsible budget for the fund and is a path out of the "byzantine" system different intercarrier compensation rates.

The FCC is currently working up its own plan for USF reform that includes migrating the phone subsidy fund to broadband, controlling the size of the fund and mitigating waste, fraud and abuse.

ACA says that, instead, the plan would "skew the USF reform process in favor of large phone carriers" by giving them more government support than they already have, but with "minimal" obligations. "Because that would result in a bad deal for consumers, competitors," says ACA, "and the FCC, ACA maintains that the ABC plan's core features must be rejected."

Instead, says ACA, any USF reform should be based in the following principles: "adoption of a permanent cap on the $4.5 billion high-cost fund; distribution of funding to broadband providers on a competitively neutral basis; and elimination of current high-cost funding support for large phone companies within two years."

The National Cable & Telecommunications Association plans to file comments later Wednesday, but it joined with ACA in the letter earlier this week with concerns that the ABC proposal was weighted too heavily toward incumbent phone company interests, particularly an incumbent right of first refusal for USF funds even where competitors might be able to provide service more efficiently.