The Wireline Infrastructure Proceeding complements another docket that is looking at wireless broadband infrastructure, also adopted at the FCC’s April 20 Open Meeting. Please review our blog and advisory on the wireless counterpart for details on those proceedings.

The FCC seeks comment in the NPRM on proposed regulatory measures to better facilitate deployment, maintenance, and upgrading of wireline broadband networks in three basic areas. First, the Commission seeks to

• reform and shorten the timelines for new attachers to gain access to poles;
• examine more extensively the use of approved third-party contractors to do make-ready work;
• create greater transparency about make-ready charges and streamline the make-ready process;
• consider a pole-attachment complaint shot clock for Commission decisions; and
• facilitate the attachments of incumbent local exchange carriers to poles at rates more comparable to competitive local exchange attachers.

The NOI focuses on issues of preemption of state and local laws affecting broadband deployment and copper retirement. The Commission makes a number of inquiries regarding the scope of its legal authority. The NOI also looks at state laws that govern copper retirement.

Finally, the RFC seeks input on several discrete issues concerning the discontinuance process under Section 214 of the Act beyond those raised by the NPRM, specifically of what constitutes the scope of a “service” for Section 214 purposes.

In our client advisory on the Commencement of the Wireline Infrastructure Proceeding, we discuss in depth key proposed modifications and topics on which the Commission seeks comment.

Comments are due 30 days after publication in the Federal Register and reply comments are due 60 days after publication.

Private lines are dedicated connections chiefly used by businesses, banks, and other institutions to transmit large amounts of sensitive data, and by wireless carriers to ease congestion by funneling traffic from cell towers to wired telephone and broadband networks. Private lines can carry solely intrastate or interstate traffic or a mix of both, and under the FCC’s rules interstate telecommunications revenues are subject to federal universal service fund (USF) contributions, while intrastate telecommunications revenues are not.

In classifying the jurisdiction of a private line, providers have long looked to the Federal Communications Commission’s (FCC or Commission) Ten Percent Rule defining interstate telecommunications. Specifically, the Commission has held that where more than ten percent of the traffic on a private line is interstate, the revenues and costs of the entire line are classified as interstate. The Commission previously agreed that the best method for confirming the traffic carried over a private line was by obtaining a customer certification regarding the traffic. Many in the telecommunications industry viewed the Ten Percent Rule as establishing a presumption that a private line was intrastate unless a customer certified that more than 10 percent of the private line’s traffic was interstate.

In its Order, the Bureau denied and remanded back to USAC long-pending requests from six carriers to review USAC audit findings that reclassified the carriers’ private line revenues from jurisdictionally intrastate to jurisdictionally interstate, thereby subjecting the carriers to significant USF contribution obligations. However, the Bureau’s Order has import for the telecommunications industry in general. The Order not only rejects the perceived intrastate jurisdiction presumption, it also clarifies that carriers are required to conduct a good faith inquiry into the nature of the traffic carried on the private line. Moreover, the Order is instructive that, for purposes of audits – and therefore relevant to a carrier’s proactive measures – examples of supporting documentation include customer certifications or other acknowledgements (such as contract terms) that more than ten percent of the traffic is interstate or that ten percent or less is interstate, provided the carrier explains to customers what constitutes intrastate and interstate traffic before relying on such certifications. Carriers also can rely on sworn declarations from a corporate officer attesting the private lines are technically unsuitable for any interstate usage and the Bureau noted that these declarations ideally would be supported with detailed engineering reports or other evidence of the service’s technical specifications. However, the Bureau acknowledged the challenges of meeting this standard in light of the difficulty for a carrier to demonstrate that the customer has not linked the private line to other network facilities that permit the private lines to carrier interstate traffic.

The key takeaway for private line providers is the importance of carefully considering the nature of the traffic carried over private lines – and retaining documentation of that nature – when classifying the jurisdiction of private line revenues. The importance of document retention was underscored by the Bureau’s statements that carriers subject to USF contributions are required to retain, for five (5) years from the contribution date, all records demonstrating compliance with the FCC’s rules regarding reporting of revenues on the FCC Form 499A. The Bureau also issued an important warning to carriers undergoing audits, that if a carrier withholds or fails to timely provide information during a USAC audit, the carrier cannot later claim that USAC failed to consider all evidence or request additional information related to a carrier’s untimely filed information. While not directly relevant to private line classifications, all carriers should take heed of the need to completely and promptly respond to audit requests.

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In just a few weeks, BroadbandUSA will host a half-day workshop on the Community Connectivity Initiative, designed to enable local leaders to better assess their community connectivity and strengthen efforts to align broadband technology with local policies and priorities. The March 22^nd workshop, to be held in Seattle, will engage stakeholders in developing meaningful measures for community broadband access, adoption, policy and use. Specifically, participants will have the opportunity to share insights and suggestions on the design of the program. Several weeks later, on March 24 and April 12, BroadbandUSA will host two follow-up webinars.

The Report recommended that NTIA, with support from the White House Office of Science and Technology Policy (OSTP) and National Economic Council (NEC):

"convene a series of stakeholder forums to develop an index program that encourages advancements and investments in community connectivity. Stakeholders will include private, public, philanthropic and nonprofit groups with interests in leveraging broadband to support innovation, economic growth and digital inclusion. The index program will identify indicators of community connectivity in a range of categories related to broadband deployment, competition, and adoption, such as average broadband speed and adoption rates, local/regional policies that support broadband, digital inclusion policies, public access points and online applications such as telehealth, digital learning or e-government."

Companies, non-profits and other entities with an interest in public-private partnerships that focus on bringing broadband to communities across the country, whether urban, rural or Tribal, as well as those seeking to use broadband as a means to improve outcomes in health, education, public safety, civic engagement and economic development should consider attending either the in-person workshop or one of the webinars to share expertise and determine whether to participate in the Community Connectivity Intuitive.

The Workshop will be held from 8:30 a.m. to 12:00 noon PST in the Chief Seattle Conference Room of the Federal Office Building (FOB), 909 1st Avenue, Seattle, WA 98174. NTIA will also host a first webinar on March 24, 2016, from 2:00 p.m. to 3:00 p.m. EST and a second webinar on April 12, 2016, from 2:00 p.m. to 3:00 p.m. EST. To attend either the in-person workshop or the webinars, participants must register in advance.

With the Council agencies implementing the recommendations from the Report, we expect to see more activity from the BroadbandUSA team and the Council member agencies in the coming months ahead and will continue to monitor its progress.

In addition, Chairman Genachowski continues to designate his Bureau and senior staff. Yesterday, Genachowski announced two appointments relevant to the scope of this blog. First, in the Wireline Competition Bureau, Genachowski announced that Sharon Gillett will become Chief of the Bureau. Ms. Gillett is Director of the Massachusetts Broadband Institute and previously served as head of the Massachusetts equivalent to the FCC and worked as a professor at M.I.T. The announcement notes her academic work maintained "a particular focus on broadband." Clearly, at least in the short term, this Commission's number 1 goal (and goals numbered 2, 3 and 4) is going to be broadband deployment. Ms. Gillett will take office on August 28.

In the Enforcement Bureau, Genachowski announced that Suzanne Tetreault will become Deputy Chief of the Enforcement Bureau. Ms. Tetreault has served in a variety of positions in the Wireline Competition Bureau, Consumer and Government Affairs Bureau and the Office of General Counsel. Kris Monteith, the current Bureau Chief, will become Deputy Chief of the Media Bureau, effective August 10. At that point, Ms. Tetreault will become Acting Chief of the Bureau. The designation of Ms. Tetreault as an Acting Chief signals that Genachowski intends to fill the Enforcement Bureau Chief slot with a person not currently employed by the Commission. I would expect that announcement fairly soon.