On July 9, 2014, the Federal Communications Commission (the “FCC”) published the Connect America Fund Program (“CAF”) Report and Order, Declaratory Ruling, Order, Memorandum Opinion and Order, Seventh Order on Reconsideration, and Further Notice of Proposed Rule Making in the Federal Register. Ultimately, CAF will phase out the Universal Service Fund (USF) and become its successor in providing financial support for broadband network expansion in rural and underserved areas. Additionally, the program is also designed to facilitate the FCC’s intercarrier compensation (ICC) reforms such as adopting a uniform bill-and-keep model in which carriers will look first to their subscribers to cover the costs of the network, and then to USF support if necessary. Anyone with an interest in rural telecommunications service will want to consider filing comments with the FCC regarding the CAF program proposal.
The CAF program is also designed to facilitate the FCC’s intercarrier compensation reforms such as adopting a uniform bill-and-keep model in which carriers will look first to their subscribers to cover the costs of the network, and then to USF support if necessary.
Under the Report and Order, the FCC voted to:
- Streamline the process for allowing “non-traditional” telecommunications providers to be eligible for CAF funding;
- Adopt rules that govern a competitive bidding process for competing carriers that seek access to CAF subsidies in high cost areas; and
- To delay the execution of mandated increases in USF “rate floor” that defines the minimum rate that USF recipient carriers can charge for local change phone service.
The Orders and Declaratory Ruling are effective August 8, 2014. Importantly, section 54.310(e)(1) will not be in effect August 8, 2014 until approved by the Office of Management and Budget.
Furthermore, the FCC published the CAF Program Further Notice of Proposed Rulemaking (FNPRM) in the Federal Register on July 9, 2014. The FNPRM implements the USF reforms and CAF programs that were adopted in the 2011 USF/ICC Transformation Order.
The FCC seeks comments on:
- Offering CAF for rate-of-return carriers and reducing the interstate rate-of-return from its current level of 11.25%
- Comments on the Mobility Fund Phase II
- Changes to the eligible telecommunications carrier (ETC) designation process
- Among other things, an increase in the minimum broadband speed to 10 Mbps downstream for recipients of high cost USF support.
These comments are due on or before August 8, 2014 and reply comments are due on or before September 8, 2014.