Mobility Fund ETC Applicants Need Not Conform to Rural Telco Service Area

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Connect America Fund, FCC, WC Docket No. 10-90, 06/27/12

Key Holding:

The FCC will forbear from requiring that the service area of an eligible telecommunications carrier (ETC) applyiing for support from the new Mobility Fund conform to the service area of any rural telephone company serving the same area.


Eliminating the matching service area requirement should maximize the number of broadband service providers participating in the Mobility Fund Phase I auction while removing the necessity of considering a large number of individual waiver requests, which would have been an impossible task in light of the short time remaining before the auction application deadline.

By Robert Emeritz  

In an attempt to reduce barriers to participation in Phase I of the Commission's new mobility fund, the FCC adopted June 27 a limited forbearance from requiring that the service area of an eligible telecommunications carrier (ETC) conform to the service area of any rural telephone company serving the same area, pursuant to Section 214(e)(5) of the Act and section 54.207(b) of the Commission's rules (Connect America Fund, FCC, No. WC Docket No. 10-90, 06/27/12).

“Enabling new ETC service areas to be defined in a more targeted manner for Mobility Fund Phase I is consistent with our approach of targeting support to areas with a specific need for the support, helps preserve those efficiencies, and thus serves the public interest,” the Commission declared.

The limited forbearance applies only with respect to conditional ETC designations for participating in the Mobility Fund Phase I auction--that is, ETC designations conditioned on receipt of Mobility Fund Phase I support.

Reverse Auction.

As part of the comprehensive reform and modernization of the universal service system undertaken in the recent USF/ICC Transformation Order, FCC 11-61 [54 CR 637], the Commission created the Mobility Fund to ensure availability of mobile broadband networks in areas where a private-sector business case for those networks was lacking. The Commission announced that it would award by reverse auction up to $300 million in one-time support to immediately accelerate deployment of current and next generation networks providing mobile voice and broadband services in areas not presently covered by such networks. The auction is scheduled for September 27, and applications are due July 11. Applicants, except for Tribally-owned and controlled entities, must be designated as ETCs in the areas on which they wish to bid prior to filing their auction applications.

When a competitive carrier seeks to serve an area already served by a rural telephone company, Section 214(e)(5) of the Act requires that the competitive ETC's service area must conform to the rural telephone company's service area. Commenters pointed out that the service area conformance requirement could create uncertainty for potential Mobility Fund applicants and discourage participation, and suggested that the Commission take steps to prevent this from happening.

Forbearance for Speed.

In response, the Commission chose to grant blanket forbearance from conformance of service areas because of the short time available to applicants and the high priority placed on broadband deployment in unserved and poorly served areas. Handling petitions on an individual basis would clearly not have been feasible under the circumstances.

While forbearing from the conformance requirements eliminates the need for redefinition of any rural telephone company service areas in the context of Mobility Fund Phase I, the Commission emphasized that it did not change the requirements that apply if a party petitions to be an ETC for other purposes in part of a service area served by a rural telephone company.

“By granting blanket forbearance of the conformance requirement for the limited purpose of petitions for conditional designation to participate in the auction, we seek to prevent that requirement from creating an obstacle to participation by any carrier considering it. Removing such disincentives to participation may increase competition in the auction resulting in lower bids for support and enabling greater coverage within the Mobility Fund Phase I budget,” the Commission declared.

The Commission's forbearance decision did not address redefinition of the service areas of existing ETCs with respect to new targeted support mechanisms other than Mobility Fund Phase I. “To the extent that an existing ETC seeks Mobility Fund Phase I support for areas within its existing service area, the new obligations will apply only to the portion of their existing service area for which they win such support and will not have any impact on pre-existing obligations and support mechanisms with respect to the existing service area.”

The Commission was not concerned that an ETC serving only a relatively low cost portion of a rural carrier's service area might “cream skim” by receiving per line support based on the rural carrier's costs of serving the entire area, because the amount of Mobility Fund Phase I support is not linked to the support received by an overlapping rural carrier but is determined by the results of competitive bidding for support.

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