Up to $4.5 billion per year for broadband connectivity in new FCC fund

A new Canadian regime for interconnecting IP-based telco services “will probably be a model for all of North America,” CRTC chair Konrad von Finckenstein says. Von Finckenstein made the statement this week during a CRTC hearing into Canada’s telco interconnection regime, during which telcos from across the country argued that IP-based telecommunications are the way of the future. Telcos must first agree to interconnection arrangements that will allow customers on one IP-based voice network to communicate with those on other networks, and the CRTC is now weighing what regulations, if any, will be imposed to ensure those interconnections are made. Pointing to an announcement made last week by the U.S. Federal Communications Commission (FCC), von Fickenstein said at a hearing this week that there is evidence the U.S. will be watching what Canada does to encourage IP-based interconnections. Von Fickenstein drew attention to the last lines of the announcement, where the FCC announced intentions to draft rules to govern IP-to-IP interconnections made between American telcos. “Obviously it's not only a concern of ours but of our brothers to the South,” von Finckenstein said at the hearing. He noted that the FCC is likely pay close attention to whatever the CRTC decides. “Since our economy is always very much influenced by the U.S. economy, I think it's very timely that the Americans are looking at this too and I'm sure they will watch what we do with great interest,” he said. “I just wanted to make everybody aware that what we are doing will not only affect us but will probably be a model for all of North America. Hopefully can be.” Jean Brazeau, who attended the CRTC interconnection hearings as Shaw Communications Inc.’s senior vice-president of regulatory affairs, said the FCC’s decision to look at IP-based interconnections was telling. “It certainly demonstrates the importance and the direction where we’re heading as to IP as a dominant protocol in all our networks,” Brazeau said in an interview Wednesday. As one of Canada’s largest IP-based wireline telcos, Shaw primarily connects to American networks using IP interconnections, Brazeau said. Whatever the CRTC and FCC decide, he said, he wants to see the industry move quickly towards more cost-efficient connections. “That is the platform of choice in a free market and a competitive marketplace. It’s only in a regulated environment where it’s not,” Brazeau said. “Whatever the commission can do to encourage us to get there as quickly as possible will only make us more globally competitive in this new digital economy.” Meanwhile, in an effort to help bring reliable Internet access to remote American households and businesses, the FCC announced in the same decision that it intends to overhaul a grant program for rural telephone services and to pledge the money to increasing broadband services. “To spur immediate broadband buildout, we will provide additional funding for price cap carriers to extend robust, scalable broadband to hundreds of thousands of unserved Americans beginning in early 2012,” the FCC wrote in its decision, ratified by a 4-0 vote by commissioners. “To enable this deployment, all existing legacy high-cost support to price cap carriers will be frozen,” the commission added, referring to funding previously used to help subsidize the buildout of traditional telephony networks in remote regions. Totalling up to $4.5 billion US per year over the next six years, the funding will be directed through a new Connect America Fund that the commission created through a decision last week. The new fund, which will eventually replace the FCC's Universal Service Fund, will be dedicated to bringing broadband services to Americans in remote and rural areas that would not otherwise have broadband access, the FCC said. Carriers looking to secure shares of the funding must offer broadband services with actual speeds of at least 4 Mbps downstream and at least 1 Mbps upstream “with latency suitable for real-time applications” such as Internet-based phone calls, the commission said in a brief overview of the new program. Approximately 18 million Americans lack access to fixed, residential broadband Internet that matches these speeds, the FCC said, with 83 per cent of them living areas where the cost of telecom services is regulated by subsidized price caps. Rural providers will also be required to offer monthly usage caps comparable to those offered in urban areas. “The CAF will help make broadband availablet to homes, businesses, and community anchor institutions in areas that do not, or would not otherwise, have broadband, including mobile voice and broadband networks in areas that do not, or would not otherwise, have mobile service, and broadband in the most remote areas of the nation,” the commission said. “The CAF will rely on incentive-based, market-driven policies, including competitive bidding, to distribute universal service funds as efficiently and effectively as possible.” Money will also be dedicated to help bring mobile broadband networks to “areas where a private-sector business case is lacking,” the FCC said. That aspect of the fund will offer carriers “up to $300 million in one-time support to immediately accelerate deployment of networks for mobile voice and broadband services in unserved areas.” The fund will offer up to $500 million a year to expand and maintain mobile voice and broadband services in these areas. Up to $100 million of that money will go towards aboriginal reservations, the FCC noted. The new fund will also help pay for a redeveloped American interconnection regime to regulates how telcos connect calls to customers on other networks. The FCC announced a new national “bill-and-keep” framework for all interconnecting telcos, requiring each company to waive most of the costs associated with terminating calls that originate from customers on other telcos’ networks. “We reject the notion that only the calling party benefits from a call and therefore should bear the entire cost of originating, transporting, and terminating a call,” the commission wrote. The changes are expected to increase the average consumer’s monthly phone bill by as much as 50 cents US a month immediately and by up to $2.50 US per month within five years. nkyonka@thewirereport.ca

Up to $4.5 billion per year for broadband connectivity in new FCC fund

News | November 2, 2011

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