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Feb. 11-13, 2013 1. 2 ETC DESIGNATION Feb. 11-13, 2013 3 ETC Designation  What is an Eligible Telecommunications Carrier (ETC)?  Carrier designated.

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Presentation on theme: "Feb. 11-13, 2013 1. 2 ETC DESIGNATION Feb. 11-13, 2013 3 ETC Designation  What is an Eligible Telecommunications Carrier (ETC)?  Carrier designated."— Presentation transcript:

1 Feb ,

2 2 ETC DESIGNATION

3 Feb , ETC Designation  What is an Eligible Telecommunications Carrier (ETC)?  Carrier designated by the PUC or FCC that:  Offers the supported services using it’s own facilities or a combination of it’s own facilities and resale  Advertises the availability of supported services  Only ETCs are eligible to receive federal USF  All ILECs have been designated as ETCs  Competitive providers (CETCs) must receive designation from the PUC or FCC

4 Feb , ETC Designation  What are the requirements of an ETC?  Voice grade access to the PSTN  Local minutes of use at no additional charge  Access to 911 or E911  Toll limitations for eligible low income customers  FCC’s Transformation Order added broadband  4 Mbps/1 Mbps broadband speeds  Latency sufficient for real time applications  Usage limits comparable to urban areas

5 Feb , ETC Designation  How does a carrier get designated as an ETC?  All ILECs were initially designated as ETCs without having to apply  New ILECs have been granted ETC status with their study area waiver  Competitive providers must file an application with the state PUC or the FCC  Rural Areas – “may” designate more than one ETC  Other Areas – “shall” designate more than one ETC  Public Interest determination

6 Feb , ETC Designation  Impacts of FCC Reform on ETC Designation  Elimination of Identical Support Rule  Phased out over 5 years  One wireline ETC  Rural Areas – ILEC continues as ETC  Non-Rural Areas – ILEC has right of first refusal  One wireless ETC  Replaces multiple wireless ETCs in many areas

7 Feb , ETC Designation  Designation as an ETC by the FCC  Comply with service requirements  5-Year Service Quality Improvement Plan  Ability to remain functional in emergencies  Satisfy consumer protection and service quality standards  Lifeline Only CETCs  Demonstrate financial and technical capability  Submit terms, conditions and pricing of services

8 Feb , ETC Designation  How does a carrier receive annual certification as an ETC?  Annual submission to FCC, PUC & Tribal Authority  Progress report on 5-year Service Quality Improvement Plan  Report on service outages affecting 10% of end users or a 911 special facility  Number of unfulfilled service requests  Number of complaints  Compliance with service quality standards and consumer protection rules  Ability to function in emergency situations

9 Feb , ETC Designation  How does a carrier receive annual certification as an ETC?  Annual submission to FCC, PUC & Tribal Authority  Price offerings  Names of holding company, operating company, affiliates and branding (“dba”)  Evidence of Tribal engagement  Pricing no more than 2 standard deviations above national average  Network performance test results

10 Feb , ETC Designation  What is Tribal Engagement?  Discussions with Tribal government that includes:  Needs assessment and deployment planning focused on Tribal community institutions  Feasibility and sustainability planning  Marketing services in a culturally sensitive manner  Rights of way, land use permitting, facilities siting, environmental and cultural preservation review processes  Compliance with Tribal business and licensing requirements

11 Feb , BECOMING A TELECOM CARRIER

12 Feb , Becoming a Telecom Carrier  How is the process of becoming a telecom carrier relevant to ETC designation?  Process of becoming a telecom carrier  Network design  Financial forecasting  Lender approval  FCC waivers & approval  Commence operations  Financial & regulatory reporting  We’ll focus on lender and FCC approval

13 Feb , Becoming a Telecom Carrier  How does the loan process work?  Each lender will be different, but most Tribal carriers are financed through RUS  Application involved a variety of information  Company description  Network design  Customer survey  Service pricing  5-Year financial forecast  Full set of financial statements  Settlements & USF  Impacts of FCC Reform  Explanation of assumptions

14 Feb , Becoming a Telecom Carrier  How does the loan process work?  Application will include a variety of assumptions, including approval of FCC waivers  Traditional FCC waivers  Study Area Waiver  Entry to NECA Pools  Expedited USF Support  Etc.  FCC Transformation Order  Revenue Baseline  Switched Access transition to Bill & Keep  USF Limitations

15 Feb , Becoming a Telecom Carrier  How does the loan process work?  Loan review and FCC waiver process will run concurrently  Somewhat of a chicken or the egg scenario  Will the loan be granted without the FCC waivers?  Will the FCC waivers be granted without the loan?  May result in a request for conditional approval of the loan and/or waivers to keep them moving

16 Feb , Thank You Chad Duval, Principal Moss Adams LLP

17 Feb , Becoming a Telecom Carrier  Wireline ETC Petitions  Application will include a variety of FCC waiver requests  Traditional FCC waivers  Study Area Waiver  Entry to NECA Pools  Expedited USF Support  FCC Transformation Order  Transition to Bill & Keep  USF Limitations

18 Feb , Becoming a Telecom Carrier  Traditional Waiver - Study Area Waiver  Study Area: the geographic area in which a carrier provides service  State PUCs and the FCC share jurisdiction over study areas  If you seek ETC designation for only a portion of a study area, you will need:  FCC approval to revise the study area boundaries  Public interest demonstration  Ruling by the state PUC that it does not object to the revised study area  Tip: Try to submit the study area waiver jointly with the affected ILEC

19 Feb , Becoming a Telecom Carrier  Traditional Waiver - Entry to NECA Pools  National Exchange Carrier Association (“NECA”) is an association of ILECs which administers interstate tariffs for carriers that participate in NECA’s pools  Rationale for participation: Cost efficiency  Barrier to participation: FCC’s rules limit participation in NECA’s pools to those ILECs in existence as of 1996  Solution: Request a waiver of 47 C.F.R. § 69.2(hh) to allow the new carrier to participate in NECA’s pools

20 Feb , Becoming a Telecom Carrier  Traditional Waiver - Expedited USF  Many of FCC’s USF support rules are based on a carrier’s historical costs  Problem: New carriers don’t have historical costs  Solution: Request a waiver of 47 C.F.R. §§ , , and (a)(3) to recover costs based on projected costs

21 Feb , Becoming a Telecom Carrier  FCC Transformation Order Waiver – Transition to Bill-and-Keep  Old intercarrier compensation rule: Carriers pay one another to connect calls based on the cost of connecting the call  New bill-and-keep rule: Carrier on whose network a call originates bills its customer and keeps the entire proceeds  Problem #1: Tribal carriers were net winners under the old rule, so bill-and-keep will reduce overall revenues  Problem #2: New bill-and-keep rules provide many carriers with additional federal support based on historical intercarrier compensation revenues

22 Feb , Becoming a Telecom Carrier  FCC Transformation Order Waiver – Transition to Bill-and-Keep (cont.)  Solution: Request a short term waiver of the transition to bill-and-keep (47 C.F.R. § )  Benefits:  Increase revenues during initial years of operations  Provides historical intercarrier compensation revenues to allow new carriers to qualify for additional federal support when the short term waiver expires

23 Feb , Becoming a Telecom Carrier  FCC Transformation Order Waiver – USF Limitations  Old USF rules: Carriers with the highest costs were reimbursed generally with full USF support  New USF rules: New rules limit USF support  $250 per line per month limit on High Cost Loop Support (“HCLS”)  Limit reimbursable capital and operating expenses for HCLS (“CapEx and OpEx Limits”) based on expenses of similarly situated carriers  Reduced limits on corporate operations expenses (i.e., management salaries, legal and engineering fees, etc.)  Problem: Tribal carriers have high expenses in initial years of operations, and new USF rules subject new carriers to unpredictable USF support levels  Solution: Request a short term waiver of the new USF rules to increase level and predictability of USF revenues during initial years of operations

24 Feb , Thank You Sean Conway, Associate Akin Gump Strauss Hauer & Feld LLP

25 Feb , TRIBAL MOBILITY FUND

26 Feb , Introduction: Mobility Fund and Tribal Mobility Fund  Purpose:  Provide funding to deploy and maintain mobile broadband infrastructure in unserved and underserved areas of the country  Mobility Fund: Phases 1 and 2  Support for unserved and underserved areas, including Tribal lands  Tribal Mobility Fund: Phases 1 and 2  Support dedicated exclusively for unserved and underserved Tribal lands

27 Feb , Mobility Fund – 2 Phases  Mobility Fund: Phase 1  $300 million of one-time support to deploy mobile broadband infrastructure to unserved areas  Funding awarded through a “reverse auction” that occurred in 2012  Standing Rock was one of the auction winners  Mobility Fund: Phase 2  $500 million of ongoing annual support for mobile broadband networks in high-cost areas  FCC currently considering rules for awarding support through competitive bidding

28 Feb , Tribal Mobility Fund – 2 Phases  Tribal Mobility Fund: Phase 1  $50 million of one-time support to deploy mobile broadband infrastructure on unserved Tribal lands  Tribal Mobility Fund: Phase 2  Up to $100 million annually to expand and sustain mobile broadband networks on Tribal lands in which service would be unavailable absent federal support  FCC currently considering rules for awarding support through competitive bidding

29 Feb , Tribal Mobility Fund Phase 1  When?  Sometime in 2013; FCC has not announced date  How?  Reverse Auction  Funding awarded to bidders that will serve the most unserved locations (i.e., households and places of business) on Tribal lands at the lowest cost  Tribal Bidding Credit  Eligibility: Tribally-owned or controlled carriers seeking support to serve their associated Tribal lands  Mechanics: Reduces the bid amount by 25% for the purpose of comparing it to other bids

30 Feb , Tribal Mobility Fund Phase 1 (cont.)  Wh0?  ETC Designated Carrier  Caveat: Tribally-owned or controlled entities that have pending ETC applications may participate in the auction; however, such entities cannot receive support until it becomes ETC designated  Access to Spectrum  Hold a wireless license for the service area  Lease of spectrum for at least 5 years  Financially and Technically Qualified  Certification Requirement

31 Feb , Tribal Mobility Fund Phase 1 (cont.)  Where?  Unserved Tribal lands  Additional Auction Application Requirements  Detailed Project Description  Description of network  Identification of technology  Demonstration of technical feasibility  Detailed budget  Certification of Tribal Engagement Requirements

32 Feb , Tribal Mobility Fund Phase 1 (cont.)  Post-Auction Requirements  Winning Bidders will be subject to post-auction public interest requirements, including:  Construction Deadlines  Annual Service Reports  Stay Tuned  The FCC will be releasing more information on the Tribal Mobility Fund in 2013

33 Feb , Thank You Tom Davidson, Partner Akin Gump Strauss Hauer & Feld LLP


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