FCC Raises OpEx Cap for RoR Carriers Serving Mainly Tribal Lands

Over the partial dissents of the two Democratic Commissioners, the FCC today raised the cap on operating expenses recoverable through federal high-cost support for carriers that “predominantly serve Tribal lands … in recognition that they are likely to have higher costs than carriers not serving Tribal lands.”

The FCC had imposed the recoverable opex limit on rate-of-return carriers in a 2016 order which was “calculated by comparing each study area’s opex cost per location to the regression model-generated opex per location plus 1.5 standard deviations,” the FCC noted in a report and order adopted March 27 and released today in Wireline Competition docket 10-90.  In a further notice of proposed rulemaking released with the 2016 order, the FCC had asked whether the opex limitations should be modified for carriers serving tribal lands.

Under today’s order, the limit will be raised to 2.5 standard deviations above the per-location opex generated by the regression model, the order says.

“We are persuaded based on the record before us that there is good reason to increase the opex limitation for carriers receiving legacy high-cost support that primarily serve Tribal lands because of the increased costs of providing service on Tribal lands. Both NTTA and Gila River Telecommunications, Inc. (GRTI) cite a number of unique costs faced by carriers serving Tribal lands. They explain that carriers generally must invest significant time and financial resources in securing rights-of-way and easements to install new broadband facilities on Tribal lands due to the number of permissions that must be obtained. Such permissions include the consent of multiple owners of allotted lands, as well as the consent of Tribal authorities, the Bureau of Indian Affairs (BIA), and other administrators and managers of Native trust lands. In some cases, letters of support from Tribal villages in or near the construction areas are also required. NTTA and GRTI represent that the process of obtaining Tribal cultural clearances, as well as the cost of compliance with the Archeological Resources Protection Act of 1979 and the National Historic Preservation Act of 1966, and coordination of National Environmental Protection Act compliance with BIA, are often significant. Commenters also point out that Tribal sovereignty issues require additional negotiation and legal review, that many Tribes require that qualified members of the Tribe be given preference in hiring and promotion, and that some Tribal authorities require construction observation by a Tribal member,” the order says.

The relaxation of the recoverable opex limitation applies to “those study areas most in need where a majority of the housing units are on Tribal lands, as determined by the Bureau using U.S. Census data,” the order says.

“In addition, we limit this relief to those carriers meeting the following conditions. First, the carrier has not deployed broadband service of 10 Mbps download/1 Mbps upload to 90 percent or more of the housing units on the Tribal lands in its study area. Second, unsubsidized competitors have not deployed broadband service of 10 Mbps download/1 Mbps upload to 85 percent or more of the housing units on the Tribal lands in its study area. We believe that these conditions will limit this relief to those carriers with the greatest need to accelerate broadband deployment,” it adds.

“Bureau staff estimates in 2017 and/or 2018 that five carriers that have been affected by the opex cap are eligible for the relief,” it says.

In her statement approving in part and dissenting in part, Commissioner Mignon L. Clyburn said that the “item should have gone further. We could have comprehensively addressed not only the Tribal Broadband Factor and operational expenditure limitations, but sought comment on additional incentives for Tribal broadband deployment, removing barriers to infrastructure deployment on Tribal lands, and improving Tribal Lifeline. We should not have tied the relief to the deployment levels on Tribal lands which now means some carriers that provide service to Tribal lands will not receive relief. This represents a significant departure from the Chairman’s original proposal which extended support to all carriers that serve Tribal lands.

“I supported this aspect of the original proposal then, and I continue to support it now. The purpose of this Order should be about increasing the amount of operating costs that carriers serving Tribal lands can recover from the USF – recognizing that they are likely to have higher costs than carriers not serving Tribal lands. Operating cost involves ongoing expenses for sustainable level of service offerings. Excluding some carriers from this relief, despite a finding that the operating costs are higher on Tribal lands, does not promote fully a rapid and sustainable broadband service deployment on these lands,” she added.

In her statement, also approving in part and dissenting in part, Commissioner Jessica Rosenworcel said, “What we have here is not a full plan. We provide a bit of relief to a handful of carriers serving a subset of Tribal lands. These providers will be partially shielded from the effect of the operational expense caps put in place two years ago. In practice, it will allow a few carriers to keep the lights on and ensure their staff can come in each day. This action is limited and imprecise. But I support it, because the challenge of providing service on Tribal lands is so great that the power of even small measures is real.

“I dissent in part, however, because there is so much more to do and I regret that we are not doing it here and now. Over the last two years, the Commission has had an active proceeding concerning the application of a Tribal Broadband Factor for legacy carriers that would more broadly assist with deployment in Tribal lands. The record is complete. The data is in. It’s past time for the Commission to resolve what is outstanding and develop a bigger plan to address the unacceptable state of broadband deployment on Tribal lands,” she added.

In his statement approving in part and concurring in part, Chairman Ajit Pai said, “To be sure, this Order is not the one I originally proposed over a year ago in February 2017, shortly after becoming Chairman. Were the pen solely my own, I would have extended support to even more carriers that serve Tribal lands. And for many months, we actually had three votes for this approach. Unfortunately, our office was informed that one of those votes was set in quicksand, and would disappear were the vote actually called. Therefore, in the interest of finally getting something done, I chose to find agreement with those commissioners who were willing to work in good faith on ways to help carriers serving Tribal lands. The agreement we were able to reach—the agreement reflected in this Order—thus doesn’t help certain carriers that my original proposal would have benefited, such as Mescalero Apache Telecom, Inc. in New Mexico.

Commissioner Mike O’Rielly, who supported the item fully, emphasized his ongoing support for budgetary efficiency, saying, “It is important to recognize that under the Commission’s rate-of-return budgetary limits, every dollar spent inefficiently comes at the expensive of the hundreds of other rate-of-return carriers and their customers’ ability to obtain voice and/or broadband services, including other rate-of-return carriers serving Tribal lands that would not qualify for additional funds. Therefore, when a revised item pertaining to this subject was circulated earlier this year, I immediately sought out the appropriate facts, data, and details to make a sound decision. Upon review, it became clear that broadly approving additional subsidies would be an inefficient use of scarce USF funding. Appropriately, this item better targets relief and ensures that funding would be provided consistent with well-established principles in the high-cost program.”

Commissioner O’Rielly added that “some have argued that the Commission should provide dedicated funding for Tribal lands — a Tribal broadband fund as some have termed it. Under this concept, a rate-of-return carrier serving Tribal lands would receive added subsidies for the mere fact that they serve a Tribal area, potentially without regard to whether an area already has service or could be served without additional funding. While thankfully not included in this order, I want to make clear that I am concerned that funding financially stable Tribal areas at the expense of Tribal lands that need assistance or non-Tribal areas that have little to no broadband access would be harmful to those unserved Americans and weaken the market-based reforms instituted in the overall Connect America Fund (CAF) program. Instead, the Commission must remain focused on bringing the benefits of broadband to whomever is in need, not because of a certain classification of carrier which may serve an area. I have championed the cause of bringing broadband to unserved areas since I joined the Commission, but we need to tackle it in a thoughtful and holistic manner.”

Commissioner Brendan Carr, who also supported the item in its entirety, said, “In my meetings with leaders of Tribal communities, the lack of broadband deployment has been a top area of concern. I have pledged my efforts to work with all stakeholders on addressing this issue because access to broadband means access to economic opportunity, education, and healthcare. Everyone should have a fair shot at digital opportunity.”

“That is why, back in August 2017, I was pleased to cast one of my first votes as an FCC Commissioner in favor of this order. It recognizes that carriers deploying broadband infrastructure on Tribal lands face unique challenges—from tough terrain to sparse populations—and thus higher deployment costs. We address this today by increasing the amount of operating expenses that carriers can recover from the Universal Service Fund. This decision will provide additional funding to carriers providing both voice and broadband services, and thus provide greater incentives for providers to serve Tribal lands,” he continued.

“While I would have preferred for the full Commission to move more quickly in acting on this important item, I am glad that it is now across the finish line. And I am glad that this step will help encourage broadband deployment in some of the areas where it is most lacking. I look forward to continuing to work with all stakeholders on ways that we can continue to incentivize broadband infrastructure deployment,” Commissioner Carr added. —Lynn Stanton, lynn.stanton@wolterskluwer.com

Courtesy TRDaily