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ACA to Rockefeller: FCC Should Rein-In Proposed USF Right of First Refusal

The American Cable Association says that FCC should not give billions of dollars to incumbent telcos to deploy broadband in rural areas via a right of first refusal for Universal Service funds. FCC Chairman Julius Genachowski signaled last week that for the sake of getting subsidies migrated as quickly as possible, incumbents might need to keep getting the money over a transition period to a bidding process.

ACA's concerns came in a letter to Senate Commerce Committee Chairman Jay Rockefeller (D-W. Va.) and ranking member Kay Bailey Hutchison (R-Tex.) on the eve of an Oct. 12 hearing on the FCC's proposed USF reforms.

'By largely ignoring the presence of competitive providers, who lead in providing broadband service," ACA President Matt Polka wrote, "the Commission's Connect America Fund (CAF) will fall far short of achieving these goals."

"If it is to ensure that rural communities throughout the country receive broadband service comparable to that in urban areas, the Commission must avoid adopting the inefficient right of first refusal (or no-bid contract) proposal for price cap incumbent telephone companies. Instead, the Commission should rely on a competitive distribution process," ACA wrote.

The FCC has proposed a competitive bidding process, but the chairman said last week that "[the] goal of getting robust, scalable broadband-with capacity and latency comparable to urban broadband-over broad geographies in rural price cap areas as quickly as possible may be best achieved through a phased approach that ensures accountability."

The Connect American Fund is the new name for the subsidies, generally to rural areas, the FCC is proposing to migrate from traditional phone service to broadband. The competitive providers Polka refers to includes many of ACA's small and midsized, often rural carriers, who are on the front lines of that rural broadband rollout.

ACA and the National Cable & Telecommunications Association have submitted a modified proposal that would give some support for a limited period of time, allowing those incumbents to build out areas immediately, while limiting the waste, fraud and abuse it says comes from "sole-source" contracts.

ACA also advises the chairman there should be a hard cap on the $4.5 billion USF fund.