CenturyLink, Frontier should not be given $176M to support rural market voice, says NCTA

CenturyLink (NYSE: CTL) and Frontier recently asked the FCC in a joint filing to get an additional $176 million to provide services in rural areas not supported by the CAF-II program, but the National Cable Telecommunications Associations (NCTA) says the regulator should deny their request.

The NCTA said in a FCC filing that any funds made available for rural areas should be used to expand the availability of broadband services. Further, the organization said, CenturyLink and Frontier knew they were taking on significant deployment and legacy support obligations when they voluntarily elected to receive hundreds of millions of dollars annually from CAF Phase II last year.

"At a time when the Commission repeatedly has acknowledged the importance of providing all Americans with access to broadband, the notion of spending hundreds of millions of consumers' dollars on a program that does not deliver broadband to a single home should be a non-starter for the Commission," NTCA said.

NTCA contends that the two ILECs have not provided any evidence to back up their assertions or how the funds would be monitored. 

"Unlike the CAF Phase II money they received, this new money seems to be untethered from any obligation," NCTA said. "Indeed, CenturyLink and Frontier have not even committed to spend the money they are seeking in the areas where they suggest it is necessary."

NCTA added that neither CenturyLink nor Frontier have "proposed to provide the Commission with any information regarding how the money is spent or offered any suggestion as to what would happen if any portion of the money ultimately proved to be unnecessary for maintaining the relevant facilities."

CenturyLink and Frontier were amongst the several ILECs that accepted CAF-II funds to expand 10/1 Mbps broadband services to rural areas. CenturyLink accepted $500 million in CAF-II funds, while Frontier announced it would accept $283 million in CAF-II funding.

By accepting these funds, CenturyLink promised to deliver broadband service to an additional 1.2 million rural households and businesses in 33 states and Frontier committed to deliver service to 650,000 rural locations that they could not reach before due to the cost.

When the FCC issued its December 2015 forbearance order on Universal Service Fund (USF) program, the FCC ruled that price cap carriers will still have to still provide voice services in hard-to-reach areas without any funding in about six percent of the census blocks where they serve as the incumbent service provider.

For their part, CenturyLink and Frontier asked the commission to provide what they call interim voice service support.

Frontier, for one, said in a separate filing that it costs over $1 billion to provide services in these hard-to-reach areas.

"These unfunded areas include the costliest-to-serve locations in the most rural and remote areas of these study areas," the ILECs said in a FCC filing. "Because of their geography and terrain, these unfunded areas tend to have higher-than-average ongoing maintenance costs, and also experience more service disruptions due to extreme weather events and natural disasters such as tornados, mudslides, floods, and wildfires."

NCTA also called out the FCC for not implementing the Remote Areas Fund after it approved the 2011 Connect America Fund order.

"Had the Commission promptly moved to implement the Remote Areas Fund, customers in these areas would be beginning to experience broadband for the first time, rather than worrying about whether the incumbent LECs will continue to provide voice service," NCTA said. 

Frontier and CenturyLink share NCTA's concern about crafting a long-term solution for delivering broadband to the consumers who reside in the most remote and costly-to-serve areas in the country, but added that the organization misunderstands its request.

"It is disappointing that NCTA is against our proposal as it surely would oppose any action to impose a comparable unfunded voice obligation on cable companies," CenturyLink and Frontier said in a statement to FierceTelecom. "More importantly, by adopting interim funding, the FCC will ensure that customers continue receiving critical voice services in these extremely rural, high-cost areas while the FCC moves as rapidly as possible to adopt the Remote Areas Fund." 

For more:
- see the CenturyLink/Frontier FCC filing (PDF)
- here's the NCTA filing (PDF)

Related articles:
CenturyLink accepts $500M in CAF II funds, plans to extend broadband to 1.2M rural households
Frontier says it costs over $1B for carriers to provide rural voice services
Frontier takes $283M in Connect America Funding to bring broadband to 650,000 unserved sites

This article was updated on March 15 with additional information from CenturyLink and Frontier.