AT&T exec: FCC will recommend 4 Mb/s broadband Universal Service target next month

The Federal Communications Commission on February 8 is likely to issue “some kind of order—their vision of the way Universal Service will look in the future,” AT&T Senior Vice President Bob Quinn told reporters on a conference call yesterday. “The order will be a vision of the end-state and the principals [the FCC] will use to achieve that end state.”

The initial order then will generate a series of orders and notices of proposed rulemaking over the next several years, Quinn predicted.

To get that process started, Quinn believes the FCC will issue several NPRMs at the February 8 meeting. One will propose modifications to the high-cost Universal Service program, one will involve traffic pumping, and another will address phantom traffic.

Formalizing NBP recommendations

Many concepts that the FCC will put forth in its vision for Universal Service reform will come from the National Broadband Plan, Quinn said. For example, he believes the commission will recommend shifting support from voice to broadband, with a minimum 4 Mb/s downstream- 1 Mb/s upstream bandwidth target.

As recommended in the NBP, AT&T also expects reverse auctions to figure into FCC recommendations at the upcoming meeting. On the call with Quinn, AT&T Vice President of Federal Regulatory Hank Hultquist said that the FCC is likely to use reverse auctions first in awarding funding for areas that cannot get broadband today. As for areas that already have broadband but require ongoing support, Hultquist said he expects the FCC would more likely ask for comment on whether a reverse auction would be feasible.

One NBP recommendation the AT&T executives don’t expect to see the FCC formalize on February 8 is the phase-out of rate of return regulation. Instead, Quinn said he believes the commission will ask for comment about whether it should make that move.

Regarding the high-cost NPRM, Quinn said, “We think the FCC will propose . . . detailed changes to the way the high-cost fund works and will propose some rules.”

Hultquist said he believes the high-cost NPRM will discuss “which parts of the high-cost [program] will phase down to fund broadband.” In addition, he predicted, “It will talk about phasing down money to CETCs [competitive eligible telecommunications carriers].”

No expansion of contribution base . . . yet

Another topic the AT&T executives said they don’t expect to see the FCC address in the upcoming meeting is a recommendation to expand the base of entities that are required to pay into the Universal Service fund. Currently today’s voice-focused system collects money only from providers of voice services. But in an apparent reference to broadband providers, Quinn argued that the FCC “ought to broaden the base to include people that are benefiting from the infrastructure and not necessarily contributing to Universal Service.”

AT&T is hopeful that requirement “won’t be too long in coming,” Quinn said.

In connection with this, Quinn said he also believes that unlike voice, which is regulated in part at the state level and in part on the federal level, he believes broadband will be classified as an interstate service. “While the state commission may have a role in this area, it’s not going to be the kind of jurisdictional role that it had in the past,” Quinn said.

An FCC “compact” with carriers

The FCC’s vision for broadband Universal Service ultimately will take the form of a “compact” between the commission and an individual carrier, Quinn predicted. “We will see common law evolve into a compact between the company and the subsidizer whereby [the company has to] provide service under the terms of whatever the compact looks like.” In an unserved area, for example, a carrier might come forward with a plan to say “I’ll provide broadband for x amount of subsidy for the next five years and this is what the retail rate would be,” Quinn explained.

Some of the estimated 7 million U.S. households that cannot get broadband today are in AT&T’s territory. Asked whether AT&T envisions seeking funding to serve those areas through the proposed broadband Universal Service fund, Quinn was non-committal. “What we’re looking for out of this is for a rational system . . . that would enable us to participate in the program [if] we felt the compact or deal with the government made sense,” he said.

Net Neutrality obligations, he said, would make participation less attractive. He noted that if a carrier were allowed to maximize revenues by offering different service classes it would reduce the amount of subsidy that the carrier would require.