Recent days have not been kind to small telecommunications companies. And that is a vast understatement! For example, last year the FCC used its Business Data Proceeding (BDS) to deregulate price cap ILEC special access services even in markets with no actual competition. This practically guarantees small special access customers without the means to purchase volume or term discounts will face increased prices. 

Not content with raising special access prices, ILECs recently filed a Petition requesting the FCC to forbear from the requirements they provide unbundled network elements and total service resale at cost-based rates. In other words, the large ILECs are cutting off all avenues small competitors can utilize their facilities at prices that enable them to effectively compete. 

But that's just last generations' time-division multiplexed (TDM) services. This week the net neutrality rules ended, meaning small edge providers could soon find themselves at a disadvantage, facing larger competitors willing to pay more for priority Internet service.

Moreover, we haven't even touched on the industry mergers that have been approved or may be in the offering between transmission companies and content providers. Small companies, if they are not bought out, may soon find competing with these mega companies is impossible.

However, there is one set of small companies that must continue to survive and even thrive. That is the hundreds of small ILECs serving rural areas sometimes as the only provider. Thankfully, the FCC continues to take steps to keep viable. 

In 2017, the FCC enabled many rural ILECs to receive guaranteed Connect America Fund (CAF) payments, if they meet their broadband obligations, through a cost model just like their larger brethren. 

More recently the Commission began a proceeding to enable ROR ILECs to deregulate their special access services. 

Now the agency has taken an additional step to help rural ILECs compete, forbearing from the requirement that they contribute to the Universal Service Fund (USF) for stand-alone broadband service offered they offer on a common carrier basis.  Here are the details.

In an Order released on June 8, 2018 in Docket 17-206, the Commission responded to a joint Petition for Forbearance (Petition) filed by NCTA and USTelecom by leveling the field between rural ILECs and other Internet service providers.  Under the current rules, common carriers that provide interstate telecommunications for a fee must contribute to the Universal Service Fund based on their interstate and international end-user telecommunications revenues. But this results in a competitive disadvantage for rural ILECs.

Although the Commission does not, and has never, imposed contribution obligations on retail broadband Internet access service, current rules carve out one component of that service for potential contribution. Specifically, rural LECs that choose to offer broadband Internet access transmission service as a common-carriage service in order to participate in the National Exchange Carrier Association, Inc. (NECA) pooling arrangements or other tariffed rate structures that reflect rate-of-return regulations must contribute based on their revenues from these common-carriage offerings. Notably, our federal universal service rules require such treatment for these small, legacy rate-of-return carriers alone—otherwise, expenditures for broadband services would be excluded from support. By contrast, carriers supported by other mechanisms (such as those receiving model-based support) may instead integrate their transmission services into their finished broadband Internet access service offerings, rendering them exempt from contribution requirements. (Order, para. 4).

In their Petition, NCTA and USTelecom requested 

targeted, temporary forbearance from USF contribution requirements applied pursuant to section 254(d) of the Act and section 54.706 of the Commission’s rules for rural LEC-provided broadband Internet access transmission services, until the Commission reaches a decision on the contribution obligations of any and all broadband services (Id., at para 5).

The Commission agreed:

The vast majority of broadband services provided by all other types of carriers are not subject to our contribution rules, and we do not find good cause to treat certain rural LECs any differently from these other providers solely because they provide a separate broadband Internet access transmission service on a common carriage basis. Doing so frustrates the Commission’s universal service objective by distorting the competitive landscape and subjecting certain consumers to higher prices for broadband services...By forbearing from application of USF contribution requirements to rural LEC-provided broadband Internet access transmission services, we eliminate the disparate treatment of these services and level the playing field to allow rural LECs to compete more effectively with other broadband providers. (Id., at para 15).

The new rules will be effective for the third quarter of 2018, beginning July 3, 2018 to coincide with the effective date of the 2018 annual access charge tariff filings. Hopefully this will enable rural ILECs to make broadband available to more customers at reasonable prices.