Rural telcos backed trade group calls for the FCC to fully fund rate-of-return USF mechanisms for model-based and nonmodel broadband-oriented subsidy support (see 1611140036). About 50 RLECs, represented by JSI, said the commission should consider allocating enough additional funding to cover the more than $160 million in extra annual support needed to meet demand after 216 companies opted into the Alternative Connect America Cost Model (A-CAM) mechanism (see 1611030046). Reducing A-CAM support amounts to address the excess demand "will dangerously push the FCC toward making a move contrary to the Communications Act mandate to make Universal Service Support 'specific, predictable and sufficient,’” said a JSI filing posted Tuesday in docket 10-90. If the FCC can't fully meet model-based demand, it should allow carriers to switch to the revised, nonmodel support, it said. Among others calling for fully funding model-based support were nTelos (representing two Lumos telco subsidiaries), three RLECs represented by Fred Williamson & Associates, ENMR Telephone Cooperative, Project Mutual Telephone, Hot Springs Telephone, Accipiter Communications, Adak Eagle Enterprises and Etex Telephone Cooperative. Some also called for fully funding the nonmodel support, which NTCA says needs up to $100 million in further annual funding. If the FCC can't fully fund the A-CAM mechanism, some urged the FCC to take steps to fund as many carriers as possible, tap $50 million from a Connect America Fund reserve, and reduce broadband deployment obligations to account for the reduced support. A few carriers said the FCC should prioritize support for carriers that aren't as far along in their broadband deployment as others.

Incompas said the FCC should impose wholesale conditions on Verizon buying XO to mitigate harms the group alleges would result from the proposed transaction. "The Commission should require that the combined company extend for up to seven years the terms of wholesale contracts pursuant to which XO is a seller and the terms for individual circuits that wholesale customers purchase from XO," said an Incompas filing posted Monday in docket 16-70. "The Commission should also prohibit Verizon from increasing for seven years the wholesale rates that XO currently charges customers for services provided pursuant to existing XO contracts or individual circuit arrangements, which generally are substantially lower than the wholesale rates that Verizon charges." The agency should also "prevent Verizon from using its increased market power to stifle competition in the provision of business services at bandwidths below 50 Mbps by imposing penalties on competitors that engage in pro-consumer technology transitions," Incompas said. "Verizon continues to assess shortfall liability for TDM services, even when a wholesale customer is replacing those services with purchases of Ethernet services that more than cover the shortfall, and even when the TDM tariff option includes circuit portability such that the wholesale purchaser’s spend is not tied to a specific end-user location." The group proposed Verizon/XO conditions to guarantee wholesale access to "unbundled DS1 and DS3 capacity loops" at discounted rates regardless of IP transition plans, ensure "special construction" charges are subject to the proposed conditions, and prohibit the combined company from changing "Ethernet over Copper" service terms and conditions and altering their geographic coverage for seven years, except in some specified cases. Verizon emailed in response: “The record contains a great deal of uncontested information documenting the benefits of this transaction -- including to our deployment of 5G. We don’t believe the requested conditions are warranted and we look forward to continuing to work with staff to conclude the proceeding.” Monday was Day 168 of the FCC's nonbinding 180-day review clock for the transaction.

Rural telco groups asked the FCC to hike funding for rate-of-return USF mechanisms to address budgetary concerns as RLECs attempt to meet broadband buildout duties under program cost controls. "NTCA urges the Commission to make additional budget resources available to fund fully both the model-based and non-model aspects of the reforms it adopted in March," said a filing by the group posted Monday in docket 10-90. NTCA cited an opportunity to address concerns it has been expressing, including last week (see 1611090015). "Providing an additional $160 million per year for ten years to fund the model offers, paired with up to $100 million per year in additional to fund the budget shortfall in the nonmodel mechanisms represents the best, most comprehensive way to seize this opportunity," it said. WTA effectively echoed the call for another $160 million in model-based support beyond the $150 million in additional support the commission already allocated for the mechanism, from a Connect America Fund reserve, to meet strong demand. "This singular opportunity supports full funding of A-CAM [Alternative Connect America Cost Model] at the $200 per location benchmark and at a budget that would entail an additional allocation of an average of approximately $310 million annually in additional funding," said a filing from the group. If the FCC can't provide that much, WTA said it "should reduce its per location funding cap from $200 to $175, and modify the associated fully funded (25/3 and 10/1) and partially funded (4/1 and reasonable request) buildout obligations accordingly," referring to broadband download/upload data-speed requirements. That would require an additional allocation of $125 million to $150 million, WTA said. ITTA, which represents mid-size rural-oriented telcos, also supported additional funding to address the anticipated shortfall, but said it understood the commission may not be able to fully fund the A-CAM mechanism. "Should that be the case, ITTA urges the Commission to allocate an additional $95 million of funding annually for model-based support," said a filing from the group. "This would enable all carriers that accepted such support to receive $146.10 per location, the same amount of per-location support that the Connect America Phase II program provides to price cap carriers." USTelecom said it agreed with the proposals to provide an additional $160 million annually to the A-CAM mechanism. If the FCC cannot do that, it "should reduce its per location funding cap from $200 to $175, and modify the associated fully funded (25/3 and 10/1) and partially funded (4/1 and reasonable request) build-out obligations accordingly," requiring an estimated additional allocation of $125 million, said a USTelecom filing that hadn't yet been posted in the docket. The FCC didn't comment.

The FCC cleared Call Catchers (Freedom Voice) license transfers to GoDaddy Operating as part of the domain name registrar's takeover of the cloud-based communications company. A Wireline Bureau public notice said the approval came after DOJ and other executive branch departments (“Team Telecom”) notified the FCC Monday they were no longer asking the commission to defer action on a license-transfer application. "The Executive Branch Agencies state that, based on the information provided to them by the Applicants and their analysis of potential national security, law enforcement, and public safety issues, they have no objection to the Application," said the PN in docket 16-171 listed in Thursday's Daily Digest.

FCC staff approved modifications to a rural telco high-cost loop support (HCLS) formula proposed by the National Exchange Carriers Association (see 1608260028). The changes will cover "average schedule company" HCLS support for 2017, said a Wireline Bureau order Wednesday in docket 05-337.

NTCA called on the FCC to increase funding for rural broadband subsidy support in the wake of recent agency indications there's a USF budget shortfall for rate-of-return carriers. First, the commission announced small rural carriers receiving "non-model" funding would face an average 9 percent reduction in support in the first half of 2017, which the group estimates could cost the carriers $100 million, said CEO Shirley Bloomfield in a blog post Tuesday. Then, she said, the FCC revealed that an additional $150 million in funding for carriers opting into model-based support was $160 million less than the demand. "The sum total of these two numbers -- just under $260 million -- provides proof positive that the high-cost USF program for smaller carriers is woefully underfunded,” she wrote. "Failure to address such budget concerns comprehensively could both undermine the success of model election efforts and have a significant adverse impact on the consumer rates for standalone broadband that were a substantial driver of reform," said a related NTCA filing Wednesday in docket 10-90 on discussions with aides to Commissioner Jessica Rosenworcel and Mike O'Rielly. "In finalizing the implementation of model-based support, the Commission should: (1) ensure appropriate recalibration of buildout obligations in light of any USF support shortfalls; and (2) avoid any adverse impact of any kind now or in the future upon the hundreds of companies that did not elect model-based support but yet already face significant USF support reductions in 2017 due to the 'budget controls' that will hinder their ability to keep investing, to repay loans for investments already made, and to offer affordable, quality broadband services to consumers."

Moody’s downgraded its outlook for Frontier Communications' below-investment grade debt rating to negative and cut it a notch to B1 due to “persistently weak fundamentals,” the credit ratings business said Monday. “The downgrade follows disappointing 3Q results, particularly within its recently acquired California, Texas and Florida (CTF) markets,” Moody’s said. “The negative outlook reflects the risk that Frontier may not be able to reverse the unfavorable operating trends among its CTF markets and that EBITDA could continue to decline.” Wells Fargo last week downgraded Frontier for showing weak revenue in the new markets (see 1611020017). In April, Frontier acquired Verizon wireline assets in Florida, Texas and California but experienced a bumpy transition that’s still getting attention from state regulators and politicians (see 1610130059).

The FCC should provide more funding to meet high demand from rate-of-return carriers for model-based broadband support, ITTA said in meetings last week with aides to Commissioners Mignon Clyburn, Jessica Rosenworcel, Ajit Pai and Mike O’Rielly. The agency should implement the model no later than Jan. 1, said the mid-sized carrier association, according to a Nov. 4 ex parte letter in docket 10-90. The Wireline Bureau sought meetings last week after demand for Alternative Connect America Cost Model support exceeded by more than $160 million annually the 10-year budget set by the FCC (see 1611030046). The commission should see the high demand as “an opportunity rather than a problem,” ITTA said. “The overall subscription level, and especially the dozens of carriers who accepted such support notwithstanding seeing reductions in support relative to legacy mechanisms, is testament to the success of the policies underlying the offering of model-based support for broadband deployment in rural America. Such funding will support more broadband deployment by more carriers more rapidly to unserved and underserved consumers than legacy mechanisms, subject to more concrete and defined build-out obligations than legacy mechanisms.”

CenturyLink agreed to sell its data centers and colocation business for $2.15 billion cash to a consortium led by London-based BC Partners and Medina Capital, it said in a Friday news release. CenturyLink also will get a minority stake valued at $150 million in the consortium’s new global secure infrastructure company, it said. CenturyLink said the transaction will partly fund its acquisition of Level 3, announced earlier in the week (see 1610310033). The consortium will take CenturyLink’s 57 data centers, comprising 195 megawatts of power across 2.6 million square feet of raised floor capacity, the company said. The deal is expected to close Q1 2017, subject to regulatory OK by the interagency Committee on Foreign Investment in the U.S. and a Hart-Scott-Rodino antitrust review, CenturyLink said.

The Schools, Health & Libraries Broadband Coalition launched an effort to press the FCC to "make emergency improvements" to a business data service draft order, to ensure anchor institutions have access to affordable broadband offerings. “Providing fast, affordable internet is the best way to improve education and lift community anchor institutions into the future,” said SHLB Executive Director John Windhausen in a release Thursday announcing the #NOBufferBrains campaign, which includes a video. “Schools use Ethernet, Hospitals use Ethernet, and Libraries desperately need Ethernet. The National Broadband Plan set the goal of gigabit speeds for all anchor institutions by 2020, and the FCC must not miss this opportunity to advance that goal.” The group wants the FCC to regulate both legacy TDM and newer Ethernet services with data speeds at or below 50 Mbps "in an equivalent manner to help smaller and rural anchor institutions obtain more affordable broadband connections."