~ongrcss of the tlnittd ~tatcs !tons£ or "Reprrstntati\lrs Dashington, 19~ 2o515 The Honorable Mignon Clyburn Acting Chairwoman Federal Communications Commission 445 12th Street, SW Washington, DC 20554 Dear Chairwoman Clyburn: October 4, 2013 We commend the Commission for the hard work it has undertaken and the milestones it has accomplished in carrying out its Universal Service Fund (USF) reform orders. We also commend the Commission for recently making a number of changes to its 2011 order to begin the immediate deployment of broadband to unserved consumers in rural areas served by price cap companies. However, we are concerned that the reform order is undermining the ability of small rate-of-return regulated telecom carriers, serving more than 40% of the nation's land mass, to provide rural consumers with the broadband service they need to compete in today's global economy. Instead, the reform order is resulting in declining private sector investment and, thus, failing to achieve the purposes required by Congress in the Communications Act for "access to communications services reasonably comparable in price and quality to those available in urban areas." One of the main causes of uncertainty and resultant declining investment is the reform order's "Quantile Regression Analysis" (QRA) approach to providing high-cost support for rural companies. In May 2013, several ofus asked the Government Accountability Office to conduct a study on the effects the QRA on rural carrier investments, as well as broadband speeds, adoption of services, and access to broadband. A recent analysis by former FCC Chief Economist Simon Wilkie underscores the uncertainty rural carriers have faced, noting that the QRA caps and then redistributes USF support in arbitrary and unpredictable ways; fails to provide incentives for broadband deployment; and actually generates the regulatory uncertainty that is discouraging investment. While the FCC has taken some steps recently to relieve temporarily the impacts of the QRA approach, more must be done to resolve the lingering uncertainty it creates. And many of these carriers have sought waivers from the QRA for good faith investments, but their applications have languished at the Commission for long periods. We urge the Commission to take immediate steps to re-establish predictability, sufficiency and transparency in the USF program so that these small businesses can resume critical investments in rural broadband. For example, the QRA should be reexamined and the Commission should consider the effects on small carriers when waiver requests are left unanswered for over a year. Nonetheless, the steps the Commission takes to remedy these issues should not slow progress on implementation of Phase II of the Connect America Fund for consumers in areas served by larger carriers. The benefits to health, education and economic development from robust broadband infrastructure will be postponed or denied for many rural Americans unless the Commission finds a way to re-establish predictability, sufficiency and transparency in the USF program through re-examination of the QRA approach and other common-sense steps that enable rural carriers to respond to consumer demand for broadband. If not addressed and recalibrated soon, consistent with the core statutory mandate from Congress to the Commission, the reform order will have profound and long-lasting ill effects on rural communities. Thank you for your service on the Commission and for considering our views. We look forward to your response. Bruce Braley Member of Congress ~~-p~----~~ Tim Murphy Member of Congress Member of Congress a Greg~ Member of Congress Brett Guthrie Member of Congress 1~~:.~ ~$ ; y Member of Congress IJ ~lfll Ed Wrutfield Member of Congress Co Gardner Member of Congress Billy Long Member of Congress Member of Congress >