FCC's Connect America Fund upheld by appeals court

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The FCC won a victory to maintain its Connect America Fund (CAF), a $4.5 billion plan set on bringing broadband service to 7 million people, as the U.S. Court of Appeals for the Tenth Circuit in Denver upheld the program.

CAF had been challenged by a number of independent telcos that cited concern about the financial impact that would be caused by the FCC shifting annual telephone subsidies to fund broadband deployments in rural areas.

One of the key concerns was the change in the intercarrier compensations system (ICS), which could have a larger effect on smaller telcos due to the exchanging of funds between carriers to transfer calls between one another primarily in rural areas.  

However, the appeals court did not agree with the service providers' claims, ruling that after "considering those claims, we find them either unpersuasive or barred from judicial review."

FCC Commissioner Mignon Clyburn issued a statement favoring the decision.

"After years of good faith efforts faltered, voting to approve the comprehensive reform of universal service and intercarrier compensation continues to be one of my proudest moments at the FCC," Clyburn said. "The reforms are changing the lives of millions of Americans who will receive broadband for the first time. I am extremely pleased that the Tenth Circuit Court of Appeals has affirmed the FCC's decision. I look forward to working with the Chairman and my colleagues as we tackle the next steps of reform."

Rural telco organization NTCA, while not happy with the decision, said it will continue to work with the FCC to resolve issues around the universal service fund and intercarrier compensation reform.

"While today's court decision is disappointing, NTCA–The Rural Broadband Association continues to work with the FCC and Congress to address many of the concerns rural carriers have raised over the last two-plus years about aspects of the 2011 Universal Service Fund and intercarrier compensation reforms," said Shirley Bloomfield, CEO of the NTCA, in a statement. "Through hundreds of meetings with commissioners and staff and engagement with members of Congress, we have already achieved several key course corrections since 2011, including the elimination of the quantile regression analysis caps and reinstatement of safety net additive support."

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