CenturyLink: FCC's CAF-II program should address unfunded rural area voice obligations

CenturyLink (NYSE: CTL) may be putting the initial foundations in place to build out 10/1 Mbps broadband service in rural areas via the FCC's Connect America Fund (CAF-II), but is concerned that it won't be receiving funds to support traditional voice services.

In an FCC filing, CenturyLink said it will now have to comply with a federal eligible telecommunications carrier (ETC) "voice obligation in the extremely high-cost parts of a number of states without receiving any high-cost support for this obligation."

It has asked the FCC to "realign the high-cost frozen support if it intends to sustain an ETC obligation for price cap carriers to offer voice service in extremely high-cost areas."

Interestingly, the FCC Wireline Competition Bureau's request to refresh the record provided a list of markets where CenturyLink currently does not provide service today.

"Additionally, the list of census blocks issued by the Bureau includes areas outside of CenturyLink's service territory -- places where CenturyLink is not authorized to provide service as an incumbent local exchange carrier (ILEC) and generally does not have network facilities," said CenturyLink. "The Bureau should clarify that the list of census blocks where CenturyLink is identified as having ETC obligations does not require CenturyLink to offer service in any part of those census blocks where CenturyLink is not an ILEC."

Although the CAF-II model uses GeoResults data, the FCC has the authority to resolve issues that arise from the data it collects on census blocks. CenturyLink has asked the regulator to clarify that "ETC obligations only extend to those parts of census blocks that are within its ILEC serving areas."

Joining AT&T (NYSE: T), Frontier and Windstream, CenturyLink accepted $500 million in CAF-II funds, enabling it to deliver broadband services to about 1.2 million rural households and businesses in 33 states over the next six years.

However, it declined CAF-II statewide offers for the states of California, Mississippi, Oklahoma and Wyoming. 

CenturyLink agrees with US Telecom's proposal it sent in April in response to the FCC's Notice of Proposed Rulemaking that the regulator should reallocate "frozen support now that price-cap carriers have accepted or declined CAF Phase II support."

"CenturyLink supports this proposal and urges the Commission to move forward with immediate adoption of the proposal to promptly resolve the unfunded ETC obligations that have resulted from this initial transition to CAF-II support," CenturyLink said. "This proposal would appropriately realign frozen support with ETC obligations allowing price cap carriers to continue to offer voice service in extremely high-cost census blocks."

For more:
- see this FCC filing (PDF)

On the Hot Seat: CenturyLink's Jones on net neutrality, special access and the $500M Connect America Fund opportunity

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