Introduction and Summary

The Information Technology and Innovation Foundation appreciates the opportunity to reply to comments on Intercarrier Compensation (ICC) Reform.[1] The record confirms that a shift away from ICC and Connect America Fund (CAF) ICC is good for consumers. The fact that some recipients of ICC and CAF ICC subsidies don’t want to lose them is understandable from the perspective of rent seeking, but it should not be the basis of FCC policy. The Commission should rapidly unwind these programs to facilitate the transition to truly market-rate service on IP-based networks.

Rebranding ICC is Not Reform

NTCA seeks a “rechristening” of ICC.[2] Ecclesiastical vocabulary misdescribes what is really a request to send ICC to witness protection: a new name and new life for the same old handout. As ITIF cautioned, the Commission “should not indulge a subsidy merry-go-round in which the demise of one type of handout becomes a reason to increase another.”[3] The name of ICC is not the problem; the policy is. The FCC should carry out the policy of rapid transition to all-IP networks, which includes timely sunsetting of old telephone network subsidies.

Moreover, a shift to explicit support for rural providers would only exemplify the problem with ICC and CAF ICC, not solve it.[4] It would highlight the way in which these programs create an unlevel playing field in which some providers get benefits other providers don’t. This request is backwards at a time when technological advancements are pushing high-quality connectivity deeper into remote areas.[5] Rather than subsidizing uneconomical networks in a way that incentivizes inaction and unfairly insulates them from competition from more economical options, the Commission should stick to its plan to eliminate ICC and CAF ICC to enable fair competition and technological upgrades to benefit consumers.

Requests for Further Delay Seek Private, Not Public Interests

Requests for delay in the transition are self-serving and anti-consumer.[6] That it will take small rural providers longer to upgrade their networks is an indictment of those ISPs, not the Commission’s reform policy. Faster upgrades are better for consumers than slower ones yet continuing to support outdated infrastructure incentivizes carriers to maintain outdated networks to continue getting support revenue.[7] If some providers are unable, even with government support, to serve their customers with up-to-date technology, that is not a reason to coddle them further.

NTCA acts as though the Commission’s job is to give its members money: “any proposal to reduce intercarrier revenues be paired with sufficient and predictable cost recovery support for RLECs.”[8] It seeks “explicit universal service support for carriers serving rural high-cost areas to avoid eliminating revenue.”[9] And indeed, some carriers are “concerned” about the effect of modernization on their bottom line.[10] But ITIF is, and the Commission should be, more concerned with promoting technological innovation and enhancing productivity. But the Commission should focus on connecting people with up-to-date IP-based services, not delay that transition at the behest of private parties simply because they are accustomed to subsidies.

Conclusion

The Commission should recall that this “revenue” rural providers is coming from the pockets of Americans not lucky enough to have a special program dedicated to propping up their businesses come what may. The Commission should lean into technological advancements that have made ICC and CAF ICC unnecessary, not delay at the expense of consumers.

Thank you for your consideration.

Endnotes