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Judges in the 10th U.S. Circuit Court of...

Judges in the 10th U.S. Circuit Court of Appeals are likely to uphold the FCC Connect America Fund order, wrote Stifel Nicolaus analysts Christopher King and David Kaut in a research note Thursday. Based on what they have “heard and…

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read so far” about Tuesday’s oral argument (CD Nov 20 p2, Nov 21 p6), the analysts expect the judges to issue their ruling in Q2 or Q3, generally upholding the revamp of the $4.5 billion USF and the intercarrier compensation framework. King and Kaut said the panel could be “more skeptical” about agency reforms limiting broadband USF subsidies for rate-of-return rural telcos. The ruling will be “generally helpful to ‘midsize’ price-cap wireline telcos” that gain access to broadband USF support, the analysts said. It could also be helpful to AT&T, Verizon and Sprint, which all stand to gain from reductions in long-distance and wireless intercarrier compensation payments to LECs, they said. “We note oral arguments can be a shaky barometer of court sentiment, and we believe particular caution is in order here, due to the complexity of the case and its fallout, and the fact that we did not attend the all-day session in Denver,” the analysts said. “So the court could still come out any number of ways, with murky ramifications."