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PEDRO R. PIERLUISI

COMMITIEES:

P UERTO RICO

E THICS

J UDIC IA R Y

WASHINGTON OFFICE:

1213 LoNGWORTH HousE O FFICE BuiLOING

cteongress of tbe mlniteb ~tates

N ATURAL RESOURCES

(202) 225-2615

FAx: (202) 225-2154

SAN JUAN OFFICE:

~ou~e of l\epre~entatibe~

157 AVENIDA DE LA CONSTITUCION

ANTIGUO EDIFICIO DE MEDICINA TROPICAL

asbtngton. ]JB(IC 20515-5401

ALA DE E NFERMERIA 200 PISO

SAN JuAN, P uERTO R1co 00901

(787) 723-6333

FAJt: (787) 729-7738

March 26, 2014

Hon. Thomas Wheeler

Chairman

Federal Communications Commission

445 121h Street, SW

Washington, DC 20554

Re: Connect America Fund Phase I and Phase II Funding in

WC Dockets J0,-90 and 05-337, FCC DA 13-2304 (rei. Dec. 2, 2013)

Dear Mr. Chairman:

I write in my capacity as Puerto Rico's representative in the U.S. Congress.

As you

know, Puerto Rico continues to lag far behind the rest of the United States in both

broadband and telephone subscribership and deployment. The Federal Communications

Commission's broadband progress reports consistently observe that, of all U.S. states and

territories, Puerto Rico has the largest number of residents that are unserved by fixed

broadband.

In its 81h Broadband Progress Report, the FCC noted that more than half of

Puerto Rico's residents-54 percent of the population or 1.9 million people-lack access

to fixed broadband at speeds widely available throughout the rest of the United States.

This is nine times the national average of 6 percent.

This glaring disparity must be

addressed. Closing this gap is critical to Puerto Rico's economic future and the ability of

its residents to access the many educational, social, political and health-related benefits of

broadband that the rest of the United States enjoys.

I understand that the FCC is currently considering how to distribute $9 billion in

broadband support over a five-year period as part of Phase II of the Connect America

Fund (CAF).

In its 2011 USF Transformation Order, the FCC spoke directly about

Puerto Rico when it recognized the unique challenges of serving the non-contiguous

areas.

The FCC specifically directed its Wireline Competition Bureau to "reflect the

unique circumstances and operating conditions in the non-contiguous areas of the United

States" in any model it adopts to distribute CAF Phase II funding.

The FCC further

stated that, if the Wireline Bureau is unable to follow this directive for whatever reason,

the Bureau must maintain existing universal service support for the price cap carriers in

such non-contiguous or insular areas_

At present, price cap carriers in Puerto Rico receive $36 million annually in existing

universal service support.

However, the current distribution model proposed by the

Bureau would award Puerto Rico only $7 million annually.

The FCC is increasing the

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total money available by 67 percent, yet also proposing to decrease the amount made

available to Puerto Rico by 77 percent.

This result makes no sense, given that the FCC

has consistently found Puerto Rico to be the U.S. jmisdiction with the weakest level of

fixed broadband deployment.

Put simply, the proposed model does not adequately

account for the unique operating conditions in Puerto Rico, including its low per capita

income, the very low "take rate" for fixed broadband where the service is available (30

percent compared to 80 percent in the model), and the relatively high cost of goods and

certain services in the territory due to its geographical location.

As per the FCC's

directive, the Bureau must maintain the level of universal service funding Puerto Rico

currently receives.

Adequate broadband infrastructure is essential to educate children, attract and grow

businesses, and build a robust economy.

The CAF Phase II funding provides an

important opportunity to substantially improve the state of broadband deployment in

Puerto Rico.

Oversight by the FCC is needed to ensure that the CAF support is

distributed to those communities, like Puerto Rico, where it is needed most and will have

the greatest impact.

Sincerely,

~~

-~ô R. Pierluisi

Member of Congress

cc:

Hon. Mignon Clyburn, Commissioner

Hon. Michael O'Rielly, Commissioner

Hon. Ajit Pai, Commissioner

Hon. Jessica Rosenworcel, Commissioner

2

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