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Commission Document Attachment

FCC-14-54A3

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STATEMENT OF

COMMISSIONER MIGNON L. CLYBURN

Re:

Connect America Fund, WC Docket No. 10-90, Establishing Just and Reasonable Rates for

Local Exchange Carriers, WC Docket No. 07-135, Developing a Unified Intercarrier

Compensation Regime, CC Docket No. 01-92, Mobility Fund, WT Docket No. 10-208, ETC

Annual Reports and Certifications, WC Docket No. 14-58.

For most Americans, going without their smartphone, tablet or access to the Internet for any

length of time is difficult – indeed, most in this room can barely get through a Commission meeting

without checking and sending email or contributing to social media accounts. What we too often take for

granted, however, is that this engagement is one in which millions of Americans do without every single

day – denying them the advantages and opportunities, access to broadband provides: getting a better

education, utilizing advanced, remote, healthcare monitoring, finding the best job, working from home,

maintaining connections with loved ones, and participating in civic engagement.

Congress directed this Commission to ensure that all Americans, including low income

Americans, have access to advanced telecommunications and information services. In 2011, the FCC,

after years of good faith efforts faltered, comprehensively reformed its universal service and intercarrier

compensation regimes and put this country on a path to further close these divides.

This was no easy task for changes to any entitlement program are always difficult. But I am proud

to have been part of a landmark decision that has already paved the way to connect over a million

Americans with broadband for the first time, provide mobile coverage to tens of thousands of road miles,

and connect over 50,000 people living on Tribal lands with access to mobile broadband. We also

reformed intercarrier compensation in a manner that stopped the unpredictable declines in revenues and

provided carriers with certainty and predictability regarding future revenues.

At the same time, I have always made clear that we should be open to make course corrections

when appropriate. The USF/ICC Transformation Order is nearly 800 pages long and was bound to

include policies, however well intended, that did not quite achieve our objective or take into account a

market that developed differently than anticipated.

So I support today’s item because it continues down the path of reform, while making needed

adjustments and asking questions to ensure that we use universal service funds as prudently and

efficiently as possible. There is no question that an item this broad in scope would include pieces I would

have drafted differently but overall it strikes the right balance. I would like to take a moment to highlight

a few aspects.

The Mobility Fund. I strongly supported the creation of the first universal service fund dedicated

to mobility to ensure that consumers have access to mobile broadband services by providing ongoing

support to providers in rural and high cost areas. I am pleased that Mobility Fund Phase I and Tribal

Mobility Fund Phase I are in the process of connecting tens of thousands of previously unserved areas and

populations.

Today’s item proposes to retarget the Mobility Fund Phase II in light of marketplace

developments. I appreciate the support of Chairman Wheeler and my colleagues to propose to retain a

dedicated Mobility Fund focused on preserving service that exists today due to support from the universal

service fund and extending service to areas unserved by 4G LTE. If the size of the refocused Mobility

Fund II is less than the $500 million adopted in the USF/ICC Transformation Order, the item proposes to

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use unused funding to extend broadband through Connect America Phase II or the Remote Areas Fund.

This proposal furthers our goal of ensuring that all Americans have access to advanced services, such as

4G LTE, while continuing to extend broadband through Connect America Fund.

At the same time, I was concerned about continuing to phase down competitive ETC support

before the Commission finalizes a retargeted Mobility Fund Phase II. Without sufficient data on how

small and regional carriers are using competitive ETC support today, continuing the phase down could

put consumers at risk of losing mobile service, which is in tension with the directive in the statute for the

Commission to set policies based on the “preservation and advancement, of universal service.” For these

reasons, I advocated including the pause in USF/ICC Transformation Order. I am once again grateful for

the support of my colleagues to propose to retain the pause so that small and regional providers will have

certainty about the opportunities of a retargeted Mobility Fund Phase II before the phase down continues.

Rate Floor. There has been a significant focus recently on the Commission’s rate floor.

Concerns have been raised about affordability in rural areas and I share them. But my concern rests not

only with rural areas. We should also be asking why rates increased so unexpectedly in urban areas,

where significant poverty levels exist and the cost of living tends to be higher.

Had the urban rate average stayed fairly constant, the rate floor would not have increased much

above the current $14 and we would not even be having this debate. Coincidentally, urban rate increases

occurred around the time that states deregulated their local end user rates. And, I note the highest

monthly rates rest with the non-incumbent VoIPs, which typically are not regulated.

So, yes, concerns about the affordability of rates in rural and urban areas are valid – but the

mechanism to address these concerns, I believe rests with our Lifeline program – not the program, which

subsidizes the cost of networks in high cost areas without any regard to the wealth demographics of a

given area.

Rate of Return Reforms. The item also reconsiders several rules from the USF/ICC

Transformation Order, regarding reforms to rate of return carriers, including the safety net additive, for

carriers that qualified due to investment, and the benchmark rule also known as the quantile regression.

While I agree that the benchmark rule did not necessarily achieve its intended goal of rewarding

carriers that invested efficiently with additional support, I do have concerns about returning to the old

HCLS “race to the top” rule, where carriers with the highest costs get support and carriers with lower

costs receive little or no support. I want to thank Commissioner O’Rielly for working with my office on

this issue and I appreciate the Chairman for addressing these concerns, with specific proposals to reform

HCLS in the near term while seeking comment on a long-term solution for rate of return carriers

consistent with the goals of the USF/ICC Transformation Order of expanding broadband while

encouraging and rewarding increased efficiency.

Rate of return carriers often operate in the hardest to serve rural areas – such as Moncks Corner,

South Carolina, where I spent many summers and weekends, and areas that need and benefit from

broadband connectivity. I look forward to working with my colleagues in moving quickly to adopt near-

term and long-term reforms.

Competitive Process/Phase II. The item makes significant progress adopting and proposing the

rules for the Connect America Fund competitive bidding process. In particular, I support the decision to

enable providers to receive ETC designation after being selected in the competitive bidding process. This

retains the critical state role in the ETC process while encouraging the broad participation in the

competitive process.

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The Commission also seeks comment on aspects of the right of first refusal process, including

whether the speed should evolve and also proposes public interest and broadband deployment obligations

for insular areas that elect to continue to receive frozen support. Finally, I applaud the Wireline

Competition Bureau’s tireless work that culminated in the adoption of the cost model yesterday – a

significant achievement in and of itself.

As I said when the Commission adopted the USF/ICC Transformation Order, this is a marathon,

not a sprint and the progress we are making today will put us ever so close to the finish line, but we have

more work to do.

I again thank the dedicated staff of the Wireline Competition Bureau, the Wireless

Telecommunications Bureau, Rebekah Goodheart in my office, as well as the many other offices and

Bureaus that worked so hard on this item.

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