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ACA, NCTA Take Issue With Telco USF Reform Plan

Cable operators large and small warned the FCC Tuesday about what they saw as problems with the America's Broadband Connectivity (ABC) plan for Universal Service Reform backed by large incumbent phone companies.

In a joint letter to the FCC, which is in the process of issuing its own proposal for USF reform, the American Cable Association and National Cable & Telecommunications Association said the ABC plan take "some steps" in the right direction, but "falls short" in various areas. Among the keys to the FCC reform are migrating support from traditional phone to broadband and reforming intercarrier compensation, which is how networks compensate each other for exchanging traffic across their respective networks.

In particular, the cable operators take issue with the right of first refusal for support that the plan would give the incumbent local exchange carriers, "denying alternate carriers [like cable operators] the opportunity to receive support even where they can serve the area more efficiently and denying consumers the opportunity to receive service from a superior provider," ACA and NCTA wrote. The letter is in advance of comments the associations plan to file on the plan.

They argue that the ABC plan would not necessarily restrain the size of the fund, which telecom companies pay into to subsidize service to hard to reach, and too expensive to reach, areas.

The ABC plan contains obligations for recipients of funding for a new Connect America Fund, which the FCC proposes to use to support broadband rather than the traditional phone service USF has traditionally funded.  But it does not have similar obligations for the transition period, say cable operators, which could provide potential for wasteful spending.

Cable operators say any transitional funding should be limited in size and duration and eligible only to smaller carriers with a demonstrated need.

They also argue that the FCC should not be too quick to deregulate tariffs and agreements on switching and transport services the large incumbents provide to competitive providers, like cable operators. They say eliminating those regs would compel them to pay "substantially more" for those services, which is contrary to the basic premise of intercarrier compensation reform.

The ABC plan was proposed in late July by AT&T, Verizon, CenturyLink, FairPoint, Frontier and WindStream. The FCC put the plan out for comment Aug. 3.

The FCC has been getting some flak for pushing back planned summer action on USF and ICC reform, which most commenters want it to tackle in tandem, with its decision on just how to engineer reforms not expected until fall at the earliest.

Among the issues cable and telcos agree on is that the USF fund needs reforming, its money spent wisely, and that it must be migrated it to broadband, though they differ on just how that should be accomplished.