NTCA says new Charter's 2M broadband subscriber requirement could hurt rural telcos

NTCA says that the FCC's requirement to Charter Communications (NASDAQ: CHTR) to expand its broadband footprint could actually harm the rural telcos the organization represents by creating artificial competition in areas that cannot support it.

"Mandating competition where none would otherwise exist imposes the risk of undermining, rather than furthering, broadband availability and affordability," NTCA said in an FCC filing. "The lack of consideration and coordination with other efforts will lead to duplicative and wasteful efforts to reach certain locations, even as other unserved locations will remain ignored altogether in frustration of the Commission's stated objectives."

As part of its agreement with the FCC to gain approval of its acquisition of Time Warner Cable and Bright House Networks, Charter agreed to provide service to at least 2 million new residential customers -- 1 million of whom are already receiving broadband service of at least 25 Mbps.

A number of NTCA's members compete directly for broadband and/or video subscribers with Charter, Time Warner Cable and Bright House networks.

NTCA noted that the telcos it represents face a number of key challenges in delivering broadband to rural areas. According to the NTCA's 2014 Internet/Broadband Availability Survey, service providers noted cost, regulatory, uncertainty, long loops, current regulations, financing, low customer demand and fiber order delays as their biggest challenges.

"Ninety-two percent of survey respondents cited cost, 74% regulatory uncertainty, 54% long loops, 46% current regulatory rules, 22% obtaining financing, 18% low customer demand, and 18% fiber order fulfillment delays," NTCA said. "Yet despite these myriad challenges, NTCA member companies continue to provide their customers with state-of-the-art services."

Another unintended effect is this program could also risk the investments made by Tier 2 and Tier 3 service providers in rural areas and undermine the public policy benefits of the FCC's USF program which are also currently aimed at driving broadband deployment and stimulating broadband adoption in high-cost areas.

In particular, the Charter requirement could duplicate a number of service providers' efforts to expand rural broadband by using the FCC's CAF-II program to provide service in hard to reach areas.

"The lack of consideration and coordination with other efforts will lead to duplicative and wasteful efforts to reach certain unserved locations, even as other unserved locations remain ignored altogether in frustration of the Commission's stated objectives," NTCA said. "For example, the Connect America Fund (CAF) Phase II unserved area build outs by price cap carriers are just commencing, the Commission is still in the process of developing the CAF II competitive bidding process for areas the price cap carriers choose to leave unserved, and a recent order creates new CAF mechanisms for rate-of-return-regulated carriers that include buildout requirements."

For more:
- see the release
- here's NTCA FCC filing (PDF)

Related articles:
Wheeler: Rural areas are falling behind the broadband curve
NTCA: Unsubsidized RLECs should provide reasonably priced broadband, voice services
NTCA: Affordable video content will drive competition, broadband investment in rural markets

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