The FCC should cap the overall size of USF programs to protect consumers after the agency announced March 13 an increase in the program’s contribution factor to 17.4 percent for the second quarter of 2015, Free State Foundation's Seth Cooper said in a blog post Monday. The contribution factor is up from 16.8 percent. “Reducing USF surcharges should go hand-in-hand with comprehensive reforms that reduce the overall size of the USF subsidy system and improve its efficiency,” he wrote. Wireless customers are hit hardest by USF increases, he said, saying the agency considers 37.1 percent of a wireless consumer's calling plan as interstate long distance and subject to the USF surcharge. Given the commission’s authorization of an E-rate increase of $1.5 billion annually, “it's hard to expect voice consumers will avoid even heavier USF surcharge burdens in the future,” Cooper wrote.

It's “critically” important for the FCC to require ILECs offer competitive carriers wholesale local transmission facilities on rates, terms and conditions that let competitors compete for retail services, TDS Telecommunications said in a letter posted Friday in docket 05-25. Competitive carriers “remain crucially dependent on incumbent LEC wholesale transmission facilities in order to serve business customers,” the letter said. It's “clear to any industry observer that the incumbent LECs retain substantial and persisting market power over last-mile physical connections needed to serve business customers,” TDS wrote. The failure to adopt regulations “will significantly undermine, perhaps destroy entirely, many competitive carriers’ ability to compete. That outcome would lead to higher prices, less innovation, and degraded service quality for business broadband services across the country,” TDS wrote. Contrary to ILECs' arguments, competitive carriers aren't on equal footing with incumbent LECs when deploying fiber loops and are not able to obtain equivalent services from wholesale providers on reasonable rates, terms and conditions, the TDS said. It said ILECs as incumbents have “significantly lower costs” in deploying new loops to commercial buildings than CLECs. After “the relentless lobbying machine of the large ILECs eventually resulted in FCC and state commission decisions to increase the price and reduce the availability of regulated wholesale loops needed to serve business customers,” it has been “virtually impossible for CLECs to compete for small- and medium-sized business customers in second- and third-tier markets,” TDS said.

Google officials suggested FCC rule changes that would remove barriers to broadband deployment. The officials met with commission Chairman Tom Wheeler’s senior counselor Philip Verveer and other agency officials March 24, said an ex parte filing posted in docket 07-245 Friday. Existing rules still permit owners of infrastructure including poles, ducts and conduits to delay network build-outs through protracted make-ready timelines and processes, Google officials said in the meeting. The commission should “expeditiously update and clarify its infrastructure access and make-ready rules to streamline deployment processes,” Google said. Representing the company were Kevin Lo, Google Fiber general manager, Johanna Shelton, Google director-public policy and government relations, and Staci Pies, senior policy counsel. Google met with Wheeler aide Gigi Sohn and Matthew DelNero, deputy Wireline Bureau chief. Earlier last week, NCTA said it's “particularly puzzled” by Wheeler’s comments that cable companies are blocking access to utility poles by competitors (see 1503260052).

NCTA said on its policy blog it's “particularly puzzled” by FCC Chairman Tom Wheeler’s comments to congressional committees that cable companies are blocking access to utility poles by competitors. “For starters, cable operators are not denying access to poles" and often "do not even own poles,” the post said Thursday. “Rather, like other competitors, they attach their facilities to poles owned by electric utilities and telephone companies. We are unaware of any case where a cable operator has denied pole access to another company and it is unfortunate that the Chairman continues to suggest otherwise.” NCTA said also the net neutrality order would allow pole owners to “demand higher pole rental fees from cable broadband providers.” The agency didn't comment.

It’s “vital” that the FCC clearly state its decision on commissions paid by inmate calling service providers to correctional facilities in the ongoing ICS rulemaking (see 1410230026), Securus Technologies CEO Richard Smith and Vice President Dennis Reinhold told Commissioner Mignon Clyburn and her aide Rebekah Goodheart; Daniel Alvarez, an aide to Chairman Tom Wheeler; and Lynne Engledow, deputy chief of the Wireline Bureau Pricing Division, said an ex parte filing posted Tuesday in docket 12-375. ICS providers are required to pay the commission in most of its contracts, and to be able to renegotiate the contracts, “the law must be clear,” the Securus officials said at the March 19 meeting. They made the same argument to Travis Litman, an aide to Commissioner Jessica Rosenworcel in a separate meeting the same day, said another filing.

Comments are due April 24, replies May 11 on The Compliance Group’s Jan. 27 petition for a declaratory ruling to clarify the exemption for systems integrators from USF contribution obligations, said an FCC Wireline Bureau public notice Tuesday. It said Compliance wants a clarification on whether the exemption applies to the resale or provision of interconnected VoIP when resold or provisioned by a systems integrator.

Investors “under-appreciate” the FCC’s “broad and vague authority” created by the net neutrality order, Capital Alpha Partners said in a note to investors Sunday. In the short term, the order is a “status quo outcome” because carriers don't engage in blocking, throttling or paid prioritization, the note said. That the order contains broad forbearance and doesn't regulate retail rates are positives, CAP said. But the no unreasonable interference or disadvantage standards in the Internet conduct rule is a “catch-all vehicle that invites an unlimited number of complaints to be filed by political critics of the cable and telecom companies,” the note said. The rule is also “a vehicle for the potential arbitrary exercise of the FCC's regulatory discretion in [its] own proactive industry monitoring and investigations,” the note said. The added commission authority “complicates the business of broadband, which itself is becoming increasingly amorphous with new non-traditional entrants and products,” said the note.

FCC letter of credit requirements for recipients of rural broadband experiment (RBE) funding are "inconsistent with commercially prudent lending practices,” CoBank said in a letter to the agency posted Friday in docket 10-90. RBE recipients need to obtain a letter of credit when they are selected for funding and then renew and increase the letter of credit each year to reflect the amount of funding they will receive over the next year, the rural lender noted. If a recipient can't obtain a letter in any year, it would be considered in default by the commission, which would be able to demand repayment of the funds, the filing said. The bank that initially approved the letter of credit would effectively be in the position of having to renew the letter of credit each year or having the borrower face default, CoBank said. The lenders’ exposure would increase over time “as it is impossible to assess the various risks facing operators in the rapidly changing telecommunications industry over a 10-year horizon,” the filing said. The amount required to be covered by a letter of credit should increase only through the build-out period and then be reduced or eliminated, CoBank said. The commission’s ability to change performance requirements for carriers also “adds an element of regulatory and political risk,” and is also “inconsistent with commercially prudent lending practices,” CoBank said. The agency should clarify that award recipients are responsible only for meeting the performance standards that exist when the awards are granted, the filing said.

The FCC’s net neutrality order will hurt small edge providers despite the agency’s contention otherwise in a footnote in the order, NERA Economic Consulting said in a paper Wednesday. CALinnovates commissioned NERA to do a paper on the economic ramification of classifying broadband under Communications Act Title II and submitted it as part of the group’s comments in the net neutrality proceeding, the statement said. The agency said it disagreed with the initial paper’s findings, saying it didn't take into account forbearances in the order. “Simply forbearing from selected sections of Title II does not reverse our findings, nor does the FCC provide any evidence that it should,” NERA said in Wednesday's paper. “If anything, we understated the effects this Order has on innovation as it inserts regulatory uncertainty well beyond [that] already contained in Title II.” The order “implements a far-reaching regulatory scheme that is beyond (in many ways) what we envisioned,” the firm said. Among other things, the scope of the order is unclear, because the meaning of terms “broadband Internet access service” and “reasonable network management” will be up for debate, bringing regulatory uncertainty.

Approval of the Comcast/Time Warner Cable deal and the transfer of licenses between Comcast and Charter Communication, would “severely harm competition” and slow the growth of new technologies and networks, representatives of Comptel, NTCA and the Independent Telephone & Telecommunications Alliance told FCC officials, including General Counsel Jonathan Sallet, in a March 12 meeting, according to an ex parte filing posted in docket 14-57 Tuesday. Restricting innovation and competition “could impact job creation, consumer prices, and economic growth,” the filing said. Among those attending the meeting were Comptel Chief Advocate Angie Kronenberg and Assistant General Counsel Mary Albert; NTCA Vice President-Legal and Industry Jill Canfield; ITTA Vice President-Regulatory Affairs Micah Caldwell; Global Economics Group Principals Richard Schmalensee and Howard Chang; and Markham Erickson and Andrew Guhr of Steptoe & Johnson. On the claims about competition, the filing pointed to a separate Steptoe & Johnson filing the same day, which said Comcast/TWC would give Comcast "unprecedented market power" over video distribution, "both as an owner and/or controller of content and as a buyer with tremendous leverage to extract even lower prices for unaffiliated content." The deal would also harm innovation in the set-top box market, the filing said. TWC before the deal had been trying to enable third parties to develop innovative devices for its cable system, the filing said. Comcast, rather than encouraging third-party innovation, "has spent significant resources" developing its own proprietary, closed platform," the Steptoe filing said. "The immediate result of this transaction would be to limit, rather than expand, consumer access to competitive set-top boxes. The demise of FanTV immediately upon the announcement of Comcast’s announced purchase of TWC, suggests that the transaction has already had a chilling effect on innovation." Comcast didn't comment.