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NCTA, ACA Agree: FCC Needs Broadband Challenge System

Both the National Cable and Telecommunications Association
and the American Cable Association are in agreement that the FCC needs to set
up a process to verify that government broadband subsidies are going to
unserved areas rather than to over-builders of existing broadband service.

The FCC, in implementing its Connect America Fund Phase II
of its move of Universal Service Funds from phone to broadband subsidies,
proposed to use the National Broadband Map to identify eligible census blocks.

The FCC also proposed that eligibility be based on a
definition of available broadband service tied to a definition of 4 Mbps downstream
and 1 Mbps upstream. But it also recognized that might be tough since the map
info was collected on a definition of 3 Mbps/768 Kbps.

In comments on the Phase II rollout, both ACA and NCTA urged
the FCC to adopt the lower standard. ACA pointed out that the proposal by the
price cap LECs to up the standard to 6/1.5 Mbps would bring some census
blocks with 4/1 provided by cable operators under the unserved definition.
"Such a misguided policy would undermine the FCC's objective of not
providing support where an unsubsidized competitor provides service."

ACA also says the FCC should not make latency or capacity
benchmarks part of the unserved definition, at least until it better defines
those terms. ACA also says that while the FCC is correct not to treat purely
speculative deployments as served areas, it should count those areas where
"the provider has publicly announced that service will be available within
a reasonable period" if progress toward that service can be documented.

The FCC is also creating an appeals process for cable
operators and other competitive carriers to challenge unserved designations
that would trigger the ILEC support. Both associations agree that the FCC
should treat partially served census blocks as ineligible for LEC subsidies,
saying it would be too tough to drill down to the sub-census block level.

NCTA has also asked the commission to publish the challenges
to the initial census block list and explain why they were or were not
accepted. NCTA also wants it to publish the price cap LEC's acceptance or
rejection of support.

"[A]llowing providers access to this information
benefits the public because providers are less likely to expend their resources
to build in new areas where price cap LECs will shortly be providing subsidized
service, and can instead direct their build-out efforts to areas that do not
receive government support," NCTA said.

In the first phase of the program, the two largest potential
recipients, AT&T and Verizon, declined to accept the funding, deciding
instead to build out on their own timetable and without the restrictions the
FCC put on the funding. They also had to specify where they would deploy and
how much of their eligible funding they would use.

The first phase of the fund is $300 million of transitional
support as the FCC moves from the old high-cost support mechanisms for price
cap carriers to the Connect America Phase II mechanism, in which the FCC will
offer $1.8 billion annually to subsidize broadband build-outs in price cap
territories via a combination of cost modeling and competitive bidding.

With Verizon and AT&T sitting out, the majority of the
Phase I money went unspent and the FCC is currentlytrying to modify the rules there to make it more attractive to the price
cap LECS.