20180425AT&T Companies Reply Comments.pdf

John Sisemore
AT&T Services, lnc.
162 Roseheart
San Antonio, TX 78259
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AT&T
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April25, 2018
Commissioner Paul Kjellander
Commissioner Kristine Raper
Commissioner Eric Anderson
Idaho Public Utilities Commission
472W. Washington
Boise,ID 83720-0074
Email: secretary@puc. idaho. gov
RE: Reply Comments re. Position Statements Addressing Case No. GNR-T-I7-05, Public
Workshops re. Idaho Universal Service Fund, Order No. 33951
Dear Commissionen:
On behalf of the certificated AT&T Companies in Idaho, together with AT&T wireless
providers, including AT&T Corp., SBC Long Distance, LLC, Teleport Communications
America" LLC, New Cingular Wireless PCS, LLC, d/bla AT&T Mobility, and Cricket Wireless,
LLC (collectively, "AT&T" or the "AT&T Companies"), w€ respectfully submit this letter in
response to the Idaho Public Utilities Commission ("Commission") request for reply comments
responding to the position papers submitted on January 31, 2018 addressing the ongoing viability
of the Idaho Universal Service Fund ("IUSF"), potential solutions and outcomes, and other
issues outlined in the Commission's Notice of Public Workshops and Order No. 33951 dated
December 21,2017.
I. INTRODUCTION
The Commission has stated that the present state of the IUSF is unsustainable - the IUSF
must either be retired or reformed significantly. If it is reformed, legislative action will be
necessary. Some commenters also advocate funding the expansion of broadband internet access
services with the IUSF. AT&T supports the objective of getting internet service to those who are
unable to access it. However, internet access availability initiatives should not be funded by the
IUSF. Rather, if the Legislature decides that the state should establish a funding mechanism to
provide incentives for increased internet access availability for areas that lack it, the Legislature
should establish a separate, stand-alone state internet access fund that uses a competitive process
to award support to no more than a single provider to make available intemet access per
unserved area; and that program should be funded by appropriations from the ldaho general fund
- not from the IUSF.
In any event, the Legislature should review, then reaffirm or modify, the goals of the
IUSF; establish a firm and self-effectuating budget for the IUSF; and then determine whether a
I
change to the contribution base is necessary and, ifso, ensure that any such change is non-
discriminatory and comports with federal law. Until and unless legislative reform is achieved,
the Commission should refrain from any siguificant changes to the ruSF.
II. BROADBAI\D INTERNET ACCESS SERVICES
A. Debate regarding IUSF reform should occur at the Legislature and not at the
Commission.
While we appreciate the Commission initiating the discussion regarding potential IUSF
reform, AT&T believes this discussion is more appropriately held at the Legislature and not at
the Commission because the reform contemplated will require a re-evaluation of Idaho's goals
for the ruSF - issues that are properly determined by the Legislature. Any debate or workshops
should be held before and with the participation of the decision-makers who will ultimately
determine the future of the ruSF,Idaho's Legislature.
B. If the Legislature determines that ldaho should establish a funding mechanism
to support broadband internet access availability, AT&T recommends against
using the IUSF to support such availabitity.
Funding broadband availability from the Idaho USF would be inherently inequitable. The
FCC has preempted states from imposing state USF assessments upon fixed and mobile
broadband internet access service.l Because Idaho cannot compel broadband internet access
providers or services to contribute to the ruSF, using IUSF funds to support broadband internet
access is simply unfair. Moreover, because telecommunications revenues are declining, the
primary impetus for this entire proceeding, the telecommunications industry and its customers
I See In the Motter of Restoing Internet Freedom,WC DocketNo. 17-108, Declaratory Ruling, Report &Order, &
Order,FCC 17-166 n.1477 (rel. Jan. 4, 2018) ("[W]e conclude that any state requirements to contibute to state
universal service support mechanisms that might be inposed on . . . broadband Intemet access services would be
inconsistent with federal policy and therefore preempted by section 254(l). . . )); see a/so Rernarks of FCC
Commissioner Michael O'Rielly Before the Hudson Institute (February 6, 2018), available at
https://www.fcc.gov/document/commissioner-orielly-remarks-hudson-institute (last checked Feb. 13, 2018) C'FCC
Commissioner O'Rielly Remarks, February 6, 2018') ("Since 2015, the FCC has specifically preempted states from
imposing state USP contributions on broadband. Additionally...the FCC has declared that broadband is an interstate
information service. . . . [T]here is no severable intrastate component for states to assess. Therefore, any state that
proceeds down that path is acting in a manner that is inconsistent with our rules and is subject to a possible
preemption order or other challenges. . ..").
The FCC thus reiterated its prior 2015 decision preempting states from imposing USF contributions on broadband
intemet access services. See In the Matter of Protecting and Promoting the Open Internet, GN Docket No. 14-28,
Report and Order on Remand, Declaratory Ruling, and Order,30 FCC Rcd. 5601, 62 Communications Reg. (P&F)
l, FCC 15-24 (rel.Mar.l2,2015) (*FCC's 2015 Open Internet Ordef'), available at
https:'iapps.lcc.gov/edocs publicrattachuratch/F('('-15-24Alpctf, ("[T]heimpositionofstate-levelcontributionson
broadband providers that do not presently contribute would be inconsistent with our decision at the present time to
forbear from mandatory federal USF contributions, and therefore, we preempt any state from imposing any new
state USF contributions on broadband - at least until the [FCC] rules on whether to provide for such
contributions. . .. We. . .are not aware of any current state assessment of broadband providers for state universal
service funds.")
should not finance the growing internet access and internet-access-enabled services sector as a
matter of fundamental fairness.
C. If the Idaho Legislature decides to support broadband internet access
availability, AT&T recommends a properly-structured stand-alone state internet
access availability program paid for by appropriations from the state's general
fund revenues.
Some may suggest that mandating that mobile wireless voice and interconnected VoIP
contribute to the IUSF would somehow make support for broadband internet access by the IUSF
equitable. But this is not the answer. Doing so would still impose 100% of the funding burden on
only telecommunications carriers and interconnected VoIP providers - just one small segment of
the internet ecosystem whose intrastate revenues are declining significantly - to the financial
benefit of virtually every segment of the economy that relies upon broadband and broadband-
enabled technologies. A more equitable solution would be to require broader segments of the
economy that benefit from ubiquitous fixed and mobile internet connections to contribute their
fair share to support the availability of those connections in areas that lack them, as also
advocated by CTIA.
If the Legislature decides to establish a support mechanism to address internet access
availability needs, AT&T recommends the following general framework intended to
complement, and not duplicate, federal Connect America Fund ("CAF") support for Idaho:
l. We recommend a stand-alone state broadband availability program that is paid for by
appropriations from Idaho's general fund.2
2. All businesses in Idaho, including those that use and depend on broadband and
broadband-enabled technologies, are subject to various state taxes and fees that generate
state general fund revenues. Paying for a broadband program from state general fund
appropriations is thus the broadest, most fair and equitable funding base available to
support the availability of internet access services.3
3. Any state broadband availability program should complement and not duplicate funding
from sources like the CAF, Mobility Fund, and any other government infrastructure
funding, and like the CAF support mechanisms, should be subject to a firm and self-
effectuating budget. Policy makers should periodically review the program's progress
toward achieving identified broadband availability objectives; and on that basis, evaluate
whether the program continues to be needed.
Note: The total CAF support currently directed to broadband availability in ldaho
2 See FCC Commissioner Michael O'Rielly Remarks, February 6, 20 I 8 ("[S]tates that wish to fund broadband are
free to do so through separate programs using their general revenues. That is an option that several states have
already exercised when establishing their own broadband grant programs.").
3 State policy makers in several states have historically raided state USFs - which are supported only by the
telecommunications industry and their customers - to balance their state general fund budgets. Paying for a state
broadband fund using general fund dollars guards against this inequitable possibility.
exceeds $32 million per year. CAF model-based support mechanisms provide about $l I
million/year to price cap carriers4 and more than $8 million/year to rdte of return
("RoR") carrierss to support broadband availability to more than 33,000locations in
Idaho. Other rate of return carriers in ldaho receive CAF Broadband Loop Support
("BLS") in lieu of CAF model-based support; this support totaled more than Sl2 million
in 2016.6 The CAF BL,SRoR carriers must also expend defined percentages of their CAF
BLS support on deploying and/or maintaining l0/l broadband and must build out l0/l to
be built out to an identified number of locations according toformulas specified by the
FCC. This means the total number of ldoho locations receiving CAF support directed to
broadband nailabtlity exceeds the 33,000+ locations supported by the model-based
CAF support mechanisms.T
4. The state program should target funding to areas that are unserved by broadband intemet
access and that are expected to remain unserved, defined as areas that lack internet
service at speeds of at least 10 Mbps downstream and I Mbps upstream (*l0ll internet
access") from any fixed internet access service technology. Areas receiving federal CAF
support, or any other federal infrastructure support, should be ineligible for support from
the state program. Any other areas otherwise expected to receive 10/l internet access in
the foreseeable future should also be ineligible for state support.
5. Thereafter, a state broadband incentive program should award funding to no more than
one recipient per unserved geographic area. Support should be awarded through a
voluntary, competitively and technologically neutral competitive bidding process, with
support awarded objectively on the basis of lowest cost to the program per location
served, as also supported by the Idaho Cable Broadband Association.
a SeeFCC News Release, State, County and Carrier Data on $9 Billion, Six-Year Connect America Fund Phase II
Support for Rural Broadband Expansion (Sept. 15,2015), and accompanying attachments, specifically, attachment
labeled DOC-335269A5, a hyperlink to which is included in the text of the press release. The press release and
attachment are available at https://www.fcc.gov/document/connect-america-fund-phase-ii-funding-carrier-state-and-
county; and https://apps.fcc.gov/edocsJublic/attachmatch/DOC-3352694,5.xlsx.
5 See FCC News Release, Wireline Competition Bureau Authorizes 182 Rate-of-Returt Companies to Receive $454
Million Annuolly in Alternative Connect America Cost Model Support to Expand Rural Broadband, WC Docket No.
l0-90, DA l7-99 (released January 24,2017), available at https://www.fcc.gov/documenUwcb-authorizes-182-
companies-4 5 4m-annually-cam-support, containing a hyperlink in FN3 to
https://apps.fcc.sov/edocsJublic/attachmatch/DOC-343 I S0Al.xlsx (summarizing all carriers authorized to receive
A-CAM, list of CBs eligible for A-CAM supporq and the accompanying broadband location obligations).
6 The source ofdata regarding rate-of-retum carriers' CAF BLS, other legacy support, and CAF intercarrier
cornpensation (ICC) support is the federal universal service administrator's support distibution database, identi$ing
actual 2016 support disbursements for each rate-of-return carrier. See Universal Service Administrative Co.
(USAC) Funding Disbursement Search, http://www.usac.ors/hc/tools/disbursements ('USAC Funding
Disbursement Search"). To replicate the search, generate a funding disbursement, identiffing the year as 2016 and
the state as Idaho.
7 Rate-of-return ILECs in Idaho also receive federal CAF intercarrier compensation support, totaling about $6
million/year in 2016. Competitive ETCs receive CAF I Frozen support currently about $3 million/year, subject to
phase out following the planned Mobility Fund Phase II auction. USAC Funding Disbursement Search. Id. These
support mechanisms impose no specific broadband availability obligations on funding recipients; however, they do
provide high+ost support to the recipient cariers.
6. Funding recipients should be obligated to make l0/l broadband internet access available
to retail end users in the area for which funding is received.
D. Responses to other suggestions regarding internet access.
For the reasons discussed above, we oppose CenturyLink's suggestion to give the
Commission authority to approve one-time IUSF distributions for carriers of last resort
("COLRs") to build high-speed internet facilities that are capable of voice service in
unserved/underserved high cost areas. Without more details about CenturyLink's proposal, we
recommend the competitively neutral, competitive bidding process described above to award
support to no more than one funding recipient per area to get 10/l retail internet access to
eligible unserved areas to ensure that the most unserved locations get robust internet access at the
lowest cost per location; and that any such broadband intemet availability support mechanism be
funded by appropriations from the Idaho general fund.
Alternatively, CenturyLink proposes a "split the baby" approach, suggesting that buildout
of high speed internet be funded initially from Idaho's general fund with subsequent funding
from the ruSF. Again, for the reasons already discussed, we advise against using any IUSF
monies to support internet access. Any such initiatives should be funded by appropriations from
the general fund. CenturyLink also suggests tax incentives for the buildout of broadband. We
would need more information on CenturyLink's proposal to be able to comment.
We also strongly oppose the suggestion from the City of Ammon for Idaho to recognize
broadband as an essential service and require utility treatment for the high-cost wireline
infrastructure. Idaho does not have regulatory jurisdiction over internet access services. The FCC
has reconfirmed that retail broadband internet access service is an interstate information service
over which states cannot exercise regulatory jurisdiction.8
For these reasons, if the Idaho legislature decides to establish incentives to broaden
internet access, we recofirmend that Idaho do so by establishing a new broadband fund, funded
by the Idaho general fund, designed to complement and not duplicate federal CAF support. We
strongly advise against expanding Idaho's USF to support broadband.
8 FCC's 2015 Open Internet Order,l43 ("Today, we reaffirm the Commission's longstanding conclusion that
broadband Internet access service isjurisdictionally interstate for regulatory purposes.").
III. OTHER CONTRIBUTION ISSUES
A. The needs of the IUSF must be assessed first before determining whether the
contribution base needs to be expanded.
As discussed in greater detail in our January 31, 2018 position paper, because the IUSF
imposes burdens on contributing providers and their customers, before any reform is
contemplated, the Legislature should first establish measurable objectives of the IUSF and then
identi$ the smallest ruSF needed to achieve these objectives. Only then should the Legislature
decide whether expansion of the contribution base is necessary. And as discussed above, the
Legislature should not use the IUSF to support internet access and should account for any federal
USF funding and support mechanisms.
B. If the Legislature decides to assess wireless services for IUSF contributions, it
must assess both prepaid and postpaid mobile wireless services should be
assessed and a point of sale mechanism should be established that allows sellers
of prepaid wireless services, including non-carrier retailers, to collect the
assessment from consumers.
We disagree with CenturyLink that it is adequate to permit contributions to be
recoverable without providing for a recovery mechanism for all providers of assessable services.
This would discriminate against sellers who are unable to recover the surcharge without a point
of sale ("POS") recovery mechanism in violation of federal law,47 U.S.C. $ 254(0 which
requires contributions to state USFs be made "on an equitable and nondiscriminatory basis." To
this end, if prepaid wireless services are assessed for IUSF contributions, we recommend
collecting IUSF contributions at the point of sale by modifying Idaho's existing 911 contribution
POS mechanism to collect IUSF surcharges in the same assessment. See Idaho Code g 3 I .48 I 3.
The POS mechanism will facilitate competitive neutrality and the broadest possible contribution
base.
C. Untit and unless the Legislature provides policy guidance regarding the IUSF,
the Commission should refrain from making any significant changes to the
IUSF.
We agree with CenturyLink's points generally that there should be no surcharge increase,
that distributions should be appropriately decreased, and that IUSF recipients should be required
to demonstrate continued need until and unless a legislative solution is achieved.
IV. CONCLUSION
ln conclusion, AT&T appreciates the opportunity to provide these reply comments to the
Commission.
Sincerely
)t- -.5.*-.-e
John D. Sisemore
Director - Regulatory
cc:Carolee Hall,ID PUC (via email)
Margaret M. Thomson, Esq., AT&T (via email)
TaraN. Thue, AT&T (via email)
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