The FCC released an important Public Notice late on July 29 pertaining to the 100% Overlap Rule. After months of discussions with and feedback from industry groups on a reasonable path forward in USF reform for rate-of-return carriers, it appears that the FCC is poised to begin implementing changes and possibly even have the major reforms approved by the end of the year (or by football season, as Chairman Wheeler has promised).

The 100% Overlap Rule Public Notice begins the process of phasing out support to rate-of-return carriers in service areas that are fully served by an unsubsidized competitor. The FCC published a preliminary list of 15 rate-of-return companies where a competitor provides service in 100% of their service areas; the list also names the competitor. Unless the determination is challenged, the rate-of-return carriers on the list will have their high-cost USF frozen at the amount disbursed in the prior calendar year, and then the amount will be phased out over the next two years. The FCC has decided not to include affiliates of rate-of-return carriers that offer broadband as an unsubsidized competitor.

A map view of the study areas subject to the 100% Overlap Rule is available on the FCC website. The FCC provides a list of study areas and shows the census blocks with competitive overlap and lists the competitors who provide service in the block. The competitor is required to provide the FCC with some information attesting to the locations served.

Rate-of-return companies who are on the list should submit comments, in which they provide “evidence that an unsubsidized competitor does not offer service to all locations in the census blocks.” JSI is available to assist clients with understanding the FCC’s map and with filing comments. Comments are due August 28 and reply comments are due September 28.

FCC Commissioners Clyburn and O’Rielly released a joint statement on the implementation of the 100% Overlap Rule:

“Providing support to a carrier that is in essence using it to compete against an unsubsidized provider is not the best use of our scarce federal universal service dollars, as it distorts the market, fuels inefficiency, creates an un-level playing field and is not the intent of universal service. While today’s action is a significant first step, we have more to do to address wasteful or excessive spending that is an undue burden on all consumers that contribute to the program. Further reforms are necessary to ensure we target finite universal service funds to areas that will not have broadband without such support.”

For more information about the new rule, or for assistance with comments, please contact John Kuykendall or Cassandra Heyne in JSI’s Maryland office at 301-459-7590 or Douglas Meredith in Utah at 801-294-4576.

Source: Source email