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2015 Average Schedule HCLS Formulas Receive Approval

Posted on December 17, 2014

The FCC’s Wireline Competition Bureau has approved the National Exchange Carrier Association, Inc.’s (NECA) modifications to the average schedule company high-cost loop support (HCLS) formula. Small rate-of-return local exchange carriers (LECs) are allowed by the FCC’s rules to estimate their costs through the use of an “average schedule” instead of filing an annual company-specific cost study because cost studies can be extremely burdensome and expensive for the smallest LECs. These average schedule companies’ HCLS is calculated pursuant to formulas that are developed annually by NECA which are based on industry data from average schedule companies and similarly-situated “cost companies.” As in prior years, NECA’s formula first estimates current year costs by applying forecasted growth factors to recent cost per loop (CPL) data, and then uses cost allocation factors and regression analyses to produce estimated CPLs for all average schedule companies. Each CPL is then used to calculate each average schedule company’s HCLS amount. NECA’s proposed formula for 2015 projects $10.3 million in payments to carriers serving 179 average schedule study areas, a decrease of 8.0 percent from 2014 payments. The 2014 HCLS formula is expected to end up providing $11.2 million in support to carriers serving 207 average schedule study areas. The 2015 HCLS formula for average schedule companies will be in effect from January 1, 2015, through December 31, 2015.

For additional information, please contact Tony Veach.

Cable Rates Continue to Outpace Inflation

Posted on December 16, 2014

As required by law, the FCC’s Media Bureau conducted its annual cable rate survey for the calendar year ending January 1, 2014.  The Report found that the average monthly price of expanded basic service (the combined price of basic service and the most subscribed cable programming service tier excluding taxes, fees and equipment charges) for all communities surveyed increased by 3.1 percent over the 12 months ending January 1, 2014, to $66.61, compared to an annual increase of 1.6 percent in the Consumer Price Index (CPI). In communities where there is no effective competition, the average price of expanded basic service increased by 3.2 percent, to $65.32 while in effective competition communities, the average price of expanded basic increased by 2.9 percent, to $68.16.  On a per channel basis, the price per channel (price divided by number of channels) for subscribers purchasing expanded basic service increased overall by 0.9 percent over the 12 months ending January 1, 2014, to 50 cents per channel.  In communities without a finding of effective competition, the price per channel increased by 1.6 percent to 53 cents per channel, but actually decreased by 0.1 percent in effective competition communities, to 45 cents per channel. The Report notes that the price per channel is 14.7 percent lower in effective competition communities than in communities without a finding of effective competition, which reflects that operators in effective competition communities carry, on average, more channels on expanded basic service than operators carry in communities without this finding.

For additional information, please contact Howard Shapiro.

FCC Seeks Further Input on Closed Captioning

Posted on December 16, 2014

The Federal Communications Commission (FCC or Commission) has released a Further Notice of Proposed Rulemaking (FNPRM) regarding closed captioning. It did so to allow parties an opportunity to more thoroughly address several proposals made by commenters in response to an earlier FNPRM that sought input on: (1) extending some of the responsibilities for complying with Commission rules regarding the provision and quality of closed captioning on television beyond video programming distributors (VPDs) to other entities involved in the production and delivery of video programming; (2) adopting a burden shifting approach for complaint resolution that would require both VPDs and video programmers to be involved in the resolution of consumer complaints; and (3) whether the Commission’s rules permitting VPDs to rely on certifications from programming suppliers to demonstrate compliance with the Commission’s captioning requirements should be eliminated if the Commission were to reapportion responsibility for closed captioning rule compliance.

In response to these questions, some commenters raised concerns regarding the ability of VPDs and consumers to locate the correct video programmer contact information in order to resolve closed captioning complaints should the Commission decide to extend some closed captioning rule compliance responsibilities to video programmers. Specifically, the Commission now invites comment on:

  • requiring video programmers to file contact information and certifications of captioning compliance with the Commission;
  • whether any other means would make programmer contact information and certifications more widely available to consumers, VPDs, and other interested parties; and
  • whether these potential rule modifications alter previous Commission positions and whether there are justifications for the Commission changing course at this time.

Comments will be due 20 days, and replies due 30 days, after Federal Register publication, which has not yet occurred.

For additional information, please contact Erin Fitzgerald.

USF Contribution Factor Jumps to 16.8 Percent

Posted on December 16, 2014

The FCC’s Office of Managing Director (OMD) has announced that the proposed universal service contribution factor for the first quarter of 2015 will be 0.168 or 16.8 percent. This is a .7 percent increase from the 16.1 percent contribution factor that was used for the fourth quarter of 2014. OMD projects that the total collected interstate and international end-user telecommunications revenues for the first quarter of 2015 will be $15.30 billion, while the projected revenue needed to fund all four universal service fund mechanisms in the first quarter of 2015 is $2.18 billion. If the FCC takes no action on the proposed contribution factor within 14 days following its announcement, the rate will be declared approved.

For additional information, please contact Tony Veach.

Technological Advisory Council Releases Mobile Device Theft Prevention Report; Seeks Input

Posted on December 15, 2014

The Federal Communications Commission’s (FCC or Commission) Technological Advisory Council Subcommittee on Mobile Device Theft Prevention has released its report regarding the incidence and characteristics of mobile wireless device theft in the U.S. The report also includes recommendations to the Commission, industry and law enforcement for next steps to reduce mobile wireless device theft. Some of these recommendations include:

  • Making “lock/wipe/restore” functionality operational by default on all mobile wireless devices.
  • Enhancing protection of unique mobile wireless device identifiers (International Mobile Equipment Identity (IMEI) or Mobile Equipment Identity (MEID) numbers or perhaps a new identifier to be developed) from alteration.
  • Improving the timeliness, accuracy, and availability of data about mobile wireless device theft for use by law enforcement.

The Commission’s Office of Engineering and Technology (OET) and Consume and Governmental Affairs and Wireless Telecommunications Bureaus seek input on these recommendations. In addition, OET and the Bureaus seek comment on steps that would need to be taken by service providers, retailers, resellers and other members of the mobile wireless communications sector to ensure that mobile wireless devices that are placed into service on networks in the United States have not been listed as lost or stolen on relevant databases. Comments are due January 30, 2015, and reply comments are due February 17, 2015.

For additional information, please contact Erin Fitzgerald.

FCC Seeks Comment on Incentive Auction Comment Procedures

Posted on December 15, 2014

The Federal Communications Commission (FCC or Commission) has adopted a Public Notice seeking input on procedures for the 600 MHz Broadcast Incentive Auction currently scheduled to take place in early 2016. The Public Notice is not yet publicly available, but according to a Commission Fact Sheet, parties will be asked to comment on a number of specific detailed proposals and crucial auction design issues, including:

  • the methodology for establishing opening bids for the reverse and forward auctions;
  • the components of the final stage rule;
  • application of the Commission’s Mobile Spectrum Holdings policies and the implementation of the spectrum reserve;
  • factors to consider in making provisional and final channel assignments and the order of priority in which they should be considered.

In particular, the Public Notice will discuss how the Commission plans to deal with impaired markets, propose an initial spectrum clearing target of 84 MHz, and set a price per MHz-pop benchmark of $1.25 for “Category 1″ (largely unimpaired) spectrum blocks in the nation’s 40 most populous partial economic areas. This benchmark will determine when reserve-eligible bidders will be able to start bidding on spectrum reserved for carriers with less low-band spectrum in a given partial economic area. Comments will be due on or before January 30, 2015, and reply comments will be due on or before February 27, 2015.

For additional information, please contact Erin Fitzgerald.

Copyright Office Announces Deadlines for Comments Responding to Handset Unlocking Petitions

Posted on December 15, 2014

The U.S. Copyright Office has adopted an NPRM establishing the deadlines for responding to petitions seeking exemptions to the DMCA to allow for wireless handset unlocking, among other exemptions.  Interested parties may file long comments that include a full legal and evidentiary basis for supporting a petition or short comments.  Comments supporting the adoption of a proposed exemption and comments that neither support nor oppose a proposed exemption, but seek to share relevant information regarding an exemption, are due February 6, 2015. Comments that oppose a proposed exemption are due March 27, 2015. Reply comments are due May 1, 2015.

For additional information, please contact Tara Shostek.

FCC Order Finalizes Details of CAF Phase II; Modifies Rate-of-Return Support

Posted on December 15, 2014

The Federal Communications Commission (FCC) has adopted a Report and Order that continues its efforts to implement the universal service reforms adopted in the landmark 2011 USF/ICC Transformation Order. For rate-of-return carriers, the FCC’s order modifies the high-cost funding mechanism that has been in place since the elimination of the quantile-based regression analysis benchmarks, but the move is only intended to be a short-term measure. Also of note to rate-of-return carriers are the parts of the order that continue the implementation of the “competitive overlap rule” and the FCC’s decision to require all recipients of Connect America Fund (CAF) support to provide broadband service at speeds of 10 Mbps downstream and 1 Mbps upstream. In the rest of the Report and Order, the FCC finalizes the details of Phase II of the CAF, and announces that it is prepared to make offers of CAF Phase II support – totaling roughly $1.8 billion annually – to price cap carriers in early 2015. These details include the following:

  • The CAF Phase II term of support for price cap carriers has been increased from five years to six years, with an option for a seventh year in certain circumstances.
  • The CAF Phase II build-out requirements have been modified to provide carriers with more flexibility.
  • The FCC will forbear from applying certain universal service obligations in low-cost census blocks where price cap carriers are not eligible to receive CAF support, as well as census blocks where carriers face competition.
  • Price cap carriers that decline the offer of CAF Phase II support in a state will be required to continue to deliver voice service to high-cost census blocks until the winner of the competitive bidding process begins providing service.

For additional information, please contact Tony Veach.

FCC Continues E-Rate Modernization By Increasing E-Rate Funding Cap

Posted on December 15, 2014

The Federal Communications Commission (FCC) has adopted a Second Report and Order and Order on Reconsideration that continues its efforts to modernize the schools and libraries universal service support program (E-Rate program). The most high-profile change to the E-Rate program adopted in the order is the decision to permanently raise the E-Rate program’s funding cap by $1.5 billion, which will push annual E-Rate funding over $3.9 billion. Increased E-Rate funding is expected to close a “connectivity gap” in the nation’s schools and libraries by making more funding available to purchase gigabit access services over the next five years. Other E-Rate reforms adopted by the FCC are expected to improve the administration of the E-Rate program and increase options for purchasing high-speed broadband by:

  • Suspending the requirement that applicants seek funding for large up front construction costs over several years, and allowing applicants to pay their share of one-time, up-front construction costs over multiple years;
  • Equalizing the treatment of schools and libraries seeking support for dark fiber with those seeking support for lit fiber;
  • Allowing schools and libraries to build high-speed broadband facilities themselves when that is the most cost-effective option, subject to a number of safeguards;
  • Providing an incentive for state support of last-mile broadband facilities through a match from E-rate of up to 10% of the cost of construction, with special consideration for Tribal schools;
  • Requiring carriers that receive high-cost support to offer high-speed broadband to schools and libraries located in geographic areas receiving those subsidies at rates reasonably comparable to similar services in urban areas; and
  • Increasing the certainty and predictability of funding for Wi-Fi by expanding the five-year budget approach to providing more equitable support for internal connections (Category 2 services) through funding year 2019.

For additional information, please contact Tony Veach.

Effective Date of Cellular Harmonization Rules Announced

Posted on December 12, 2014

The FCC has announced that January 4, 2015 is the effective date of the new 800 MHz Cellular Service rules based on geographic-based licensing. However, three of the revised rules require a modified information collection and will not be effective until they are approved by OMB and have been published in the Federal register. These rules address when a cellular transmitter may be added without FCC approval, the mandatory electronic filing of maps with certain applications, and the removal of 16 exhibits and technical information in new-system and CGSA expansion applications.

The Commission notes that non-compliant or unnecessary filings will be dismissed if not withdrawn.  The Commission also reminds licensees that despite the changes it has made to the filing requirements, licensees continue to be subject to all applicable rules, obligations and conditions of operation, including coordination with Canada and Mexico, Quiet Zone requirements, NEPA, and coordination among licensees.

For additional information, please contact Tara Shostek.