Federal Telecom Issues: What s Going on in D.C.? Montana Telecoms. Assn. 9/01/15

Federal Telecom Issues: What s Going on in D.C.? Montana Telecoms. Assn. 9/01/15

Federal Issues - Connect America Fund - Technology Transition - Call Completion - IntraMTA Petition - Net Neutrality - Municipal Broadband - Video Reform - Lifeline Modernization - E-rate Modernization - Cybersecurity - Taxation - Other Issues 2

CenturyLink Network 3 rd largest U.S. telecom provider based on access lines. Service territory of nearly 600,000 sq. mi. 11M access lines; 6M broadband subs.; 2M video customers. 3

CenturyLink in Montana $1.2 billion in network investment. 191,000 access lines. $13.5 million annual payroll. Local Territory Core Fiber 4

Connect America Fund Price cap carriers accepted $1.5B or 90% of CAF II funding offered. AT&T $428M CenturyLink $505M Cincinnati Bell $2.2M Consolidated $14M FairPoint $37M Frontier $283M Hawaiian Telcom $4.4M Micronesian Telecom $2.6M Verizon $49M Windstream $175M 5

Connect America Fund CenturyLink accepted 33 of 37 statewide offers of CAF II support. $505M in annual support for six years. Brings 10/1 Mbps broadband to 1.2M rural households, incl. 33,000 in Montana. 6-year buildout plan now under development. CenturyLink CEO Glen Post 8/27/15: From the earliest days of our Company, CenturyLink has had deep roots in rural markets across the country. Even as we have expanded into major metropolitan markets and increased our focus on large business customers, we have remained committed to the strength and well-being of our smaller communities. 6

Connect America Fund Next steps: Winding down of intercarrier compensation transition, terminating access to $0.0007. Reverse auction process for unclaimed Price Cap areas. A-CAM model option for RLECs in 2016. New version released 8/31/15. A-CAM v1.1 substitutes Form 477 data for state/nbm. Potential FCC incentives for rate-of-return LECs to elect to receive model-based support? 7

Technology Transition 8/07/15 Technology Transition Order. Requires notice to FCC, state, interconnectors, retails customers, DoD. Removal or disabling of copper loops, subloops, feeder. Replacement with FTTH or FTTC loops. Failure to maintain (de facto retirement). Interconnecting entities may request additional information; ILEC must work in good faith. Specifies content of notice. ILECs/CLECs must undertake meaningful evaluation of impact on all end users. ILECs must provide reasonably comparable wholesale access on reasonable comparable terms. 8

Technology Transition 8/06/15 Backup Power Order. Providers of modern home voice service must: Inform customers of service limitations during power outage. Offer backup power options for purchase. Providers must offer option with 8 hours backup. Within 3 years, providers must offer 24-hour backup option. Installation is at customer expense. Not required to provide backup option to existing subscribers, but must provide annual disclosure. 9

Call Completion 11/08/13 Rural Call Completion Order newly implemented nationwide. Record-keeping and reporting rules now in effect. CenturyLink and AT&T are the only IXCs meeting FCC Safe Harbor standards. CenturyLink filed its 1 st declarations and reporting 7/31/15. 10

IntraMTA Petition Sprint, Verizon filed dozens of lawsuits against hundreds of LECs. Seek refund of switched access charges. Sprint, Level3 have withheld payments. On referral to the FCC. 11/10/14 petition for declaratory ruling. LECs (incl. CenturyLink) ask FCC to confirm intramta rule doesn t apply to LEC charges billed to an IXC terminating or receiving traffic from a LEC via tariffed switched access. Comments filed in Feb./Mar. 2015. FCC action pending. 11

Net Neutrality 3/12/15 Open Internet Order reclassifies broadband Internet access as Title II service (incl. wireless). Claims authority under Title II and Sec. 706. Prohibits blocking, throttling, paid prioritization. Allows ISPs reasonable network management. Retains/extends transparency rules. FCC will hear interconnection complaints. Forbears from rate regulation, tariffing, unbundling. Many parties (incl. CenturyLink) are challenging parts of the order. Petitioners briefs filed 7/30/15; FCC brief due 9/14/15. D.C. Cir. argument 12/04/15. 12

Municipal Broadband FCC s 2/26/15 order preempted NC, TN state laws. Grants petitions by Chattanooga s Electric Power Board and the City of Wilson. Finds the laws are barriers to broadband deployment, investment and competition. Claims preemption authority under Section 706. NC and TN AGs challenging FCC. Consolidated appeals pending at 6 th Circuit. Opening briefs due 9/18/15; FCC response 11/05/15. 13

Video Reform Retransmission consent at FCC. FCC Chmn.: Fees rose 8600% in 2005-2012. 3/03/11 NPRM remains pending. Latest FCC Video Competition Report; comments filed Aug. 21. FCC arranged end to Sinclair/Dish blackout 139 stations in 36 states. CenturyLink advocates reasonable notice, default extension, good faith requirement, level field. STELA Reauthorization enacted 12/04/14. 14

Lifeline Modernization FCC rulemaking underway. Expecting to add broadband option. Considering cap, increase in spending. Proposes 3 rd party eligibility administration. Comments filed 8/31/15; replies due 9/30/15. Major changes expected 2016. 4/23/15 GAO report critical of Lifeline. Despite reforms to reduce duplicates, program inefficient and costly. 15

E-rate Modernization 7/1/14 E-Rate Modernization Order Phases out support for voice; ends support for secondary services. Shifts emphasis to high-cap connectivity. Adopts ConnectED bandwidth targets 100Mbps/1000 users short-term. 1Gbps/1000 users and 10 Gbps WAN long term. Sets funding target to $1B for Category 2 (Wi-Fi). Encourages consortia and bulk purchasing. Simplifies application process. 16

E-rate Modernization 12/11/14 Second E-Rate Modernization Order More flexible payment options for special construction, NRCs. Makes dark fiber eligible. Permits self-construction of fiber networks when most cost-effective. Increases funding to $3.9B (indexed). Extends Category 2 $1B commitment to 5 years. Performance improvements at USAC. 17

Cybersecurity Cybersecurity Information Sharing Act. Enables sharing of threat information among companies and with agencies. Approved by Sen. Intelligence Committee. House passed related bill in April 2015. Executive Order 13636. Directs executive agencies to promote cybersecurity, improve sharing, encourage best practices. FCC, FTC enforcement activities. Terracom/YourTel -- $3.5M FCC consent decree. Wyndham v. FTC (3 rd Cir.) -- Poor data security may be unfair/deceptive trade practice. 18

Taxation 50% Bonus Depreciation Extension. Extension would allow telecoms to accelerate investment. House cleared legislation to make permanent; Senate Finance Committee included 2-year extension (retro 2015 through 2016). Potential action in fall 2015. Internet Tax Freedom. Permanent Internet Tax Freedom Act would extend federal moratorium on state and local Internet access taxes. Current moratorium expires 10/01/15. 19

Other Issues - Telecom Act Rewrite/Regulatory Reform - 911 and outage reporting. - Special access. - Robocalling. - Regulatory fees. - Local Number Portability administration. - Federal and tribal lands. - Contributions - Wireless issues. - Merger review. 20

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