OFFICE OF
THE CHAIRMAN
FEDERAL COMMUNICATIONS CoMMissioN
WASHINGTON
July 6, 2017
The Honorable Rick Allen
U.S. House of Representatives
426 Cannon House Office Building
Washington, D.C. 20515
Dear Congressman Allen:
Thank you for your letter regarding the importance of delivering affordable access to
high-speed Internet to all Americans-including those in high-cost rural areas. As you know, I
grew up in Parsons, Kansas and during my time at the Commission have traveled to locations
ranging from Barrow, Alaska to Laurens, Iowa, and Carthage, Mississippi. Through these
experiences and meeting with countless Americans and carriers across the country, I have seen
what access to affordable high-speed Internet access can do for a community-for its schools, its
libraries, and its hospitals and for those Americans struggling to stay afloat.
Four years ago, I called on the Commission to tackle the issue of affordable broadband in
rural America head on. The problem back then was that the Universal Service Fund predicated
support on providing voice service. This meant bundled telephone/broadband offers could get
support while standalone broadband could not. The perverse result was that carriers were
incented to take universal service support and offer telephone/broadband bundles (even if
consumers could not afford them) while not offering standalone broadband. The business case
for stand-alone broadband didn't exist for some rural telephone companies-not because
consumers didn't want it, but, as you note in your letter, because our arcane rules penalized
companies for offering it.
I wish I could tell you that the FCC has fixed this problem. But as your letter rightly
points out, we have not. Despite the Commission's efforts in the 2016 Rate-of-Return Reform
Order-an effort that would not have happened but for the resounding call to action from
Congress as expressed in the letters you mention-I still hear from small carriers that offering
stand-alone broadband would put them underwater; that the rates they have to charge exceed the
rates for bundled services because of the different regulatory treatment. This is unfortunate but
unsurprising. As I said at the time, the Order needlessly complicated our rate-of-return system
and in many ways made it harder, not easier, for small providers to serve rural America.
To provide some relief, my colleagues in recent months have urged me to work through a
punch list of lingering issues from the Order. I have accordingly directed staff to work through
that list. In April, the Commission amended a rule that would have disallowed capital expenses
to any project exceeding a Commission-set threshold by even a dollar; now providers can
complete efficient projects so long as they are willing to absorb any costs above the threshold.
That month staff also resolved concerns raised by rural carriers about the "parent-trap" rule. In
May, I circulated an order to address problems with two calculations made in the Order-one
involving a "surrogate method" to avoid duplicative cost-recovery and another involving charges
Page 2-The Honorable Rick Allen
imposed on standalone broadband lines. Also in May, I circulated an order to address certain
duplicative reporting requirements imposed on rural providers. I look forward to continue
working with my colleagues on these issues.
Although I hope these changes will help, you may be right that something more
fundamental is needed. After all, if the Order is not carrying out its stated purpose of advancing
broadband deployment in rural America, we cannot ignore that problem-for time is not on the
side of rural Americans.
I appreciate your views on this matter. They will be included in the record of this
proceeding and considered as part of the Commission's review. Please let me know if I can be
of any further assistance.
Sincerely,
OAV çictAAjitV.Pai
OFFICE OF
THE CHAIRMAN
FEDERAL COMMUNICATIONS COMMISSION
WASHINGTON
July 6,2017
The Honorable Jodey Cook Arrington
U.S. House of Representatives
1029 Longworth House Office Building
Washington, D.C. 20515
Dear Congressman Arrington:
Thank you for your letter regarding the importance of delivering affordable access to
high-speed Internet to all Americans-including those in high-cost rural areas. As you know, I
grew up in Parsons, Kansas and during my time at the Commission have traveled to locations
ranging from Barrow, Alaska to Laurens, Iowa, and Carthage, Mississippi. Through these
experiences and meeting with countless Americans and carriers across the country, I have seen
what access to affordable high-speed Internet access can do for a community-for its schools, its
libraries, and its hospitals and for those Americans struggling to stay afloat.
Four years ago, I called on the Commission to tackle the issue of affordable broadband in
rural America head on. The problem back then was that the Universal Service Fund predicated
support on providing voice service. This meant bundled telephone/broadband offers could get
support while standalone broadband could not. The perverse result was that carriers were
incented to take universal service support and offer telephone/broadband bundles (even if
consumers could not afford them) while not offering standalone broadband. The business case
for stand-alone broadband didn't exist for some rural telephone companies-not because
consumers didn't want it, but, as you note in your letter, because our arcane rules penalized
companies for offering it.
I wish I could tell you that the FCC has fixed this problem. But as your letter rightly
points out, we have not. Despite the Commission's efforts in the 2016 Rate-of-Return Reform
Order-an effort that would not have happened but for the resounding call to action from
Congress as expressed in the letters you mention-I still hear from small carriers that offering
stand-alone broadband would put them underwater; that the rates they have to charge exceed the
rates for bundled services because of the different regulatory treatment. This is unfortunate but
unsurprising. As I said at the time, the Order needlessly complicated our rate-of-return system
and in many ways made it harder, not easier, for small providers to serve rural America.
To provide some relief, my colleagues in recent months have urged me to work through a
punch list of lingering issues from the Order. I have accordingly directed staff to work through
that list. In April, the Commission amended a rule that would have disallowed capital expenses
to any project exceeding a Commission-set threshold by even a dollar; now providers can
complete efficient projects so long as they are willing to absorb any costs above the threshold.
That month staff also resolved concerns raised by rural carriers about the "parent-trap" rule. In
May, I circulated an order to address problems with two calculations made in the Order-one
involving a "surrogate method" to avoid duplicative cost-recovery and another involving charges
Page 2-The Honorable Jodey Cook Arrington
imposed on stand-alone broadband lines. Also in May, I circulated an order to address certain
duplicative reporting requirements imposed on rural providers. I look forward to continue
working with my colleagues on these issues.
Although I hope these changes will help, you may be right that something more
fundamental is needed. After all, if the Order is not carrying out its stated purpose of advancing
broadband deployment in rural America, we cannot ignore that problem-for time is not on the
side of rural Americans.
I appreciate your views on this matter. They will be included in the record of this
proceeding and considered as part of the Commission's review. Please let me know if I can be
of any further assistance.
Sincerely,
Ajit V. Pai
OFFICE OF
THE CHAIRMAN
FEDERAL COMMUNICATIONS COMMISSION
WASHINGTON
July 6, 2017
The Honorable Andy Barr
U.S. House of Representatives
1427 Longworth House Office Building
Washington, D.C. 20515
Dear Congressman Barr:
Thank you for your letter regarding the importance of delivering affordable access to
high-speed Internet to all Americans-including those in high-cost rural areas. As you know, I
grew up in Parsons, Kansas and during my time at the Commission have traveled to locations
ranging from Barrow, Alaska to Laurens, Iowa, and Carthage, Mississippi. Through these
experiences and meeting with countless Americans and carriers across the country, I have seen
what access to affordable high-speed Internet access can do for a community-for its schools, its
libraries, and its hospitals and for those Americans struggling to stay afloat.
Four years ago, I called on the Commission to tackle the issue of affordable broadband in
rural America head on. The problem back then was that the Universal Service Fund predicated
support on providing voice service. This meant bundled telephone/broadband offers could get
support while standalone broadband could not. The perverse result was that carriers were
incented to take universal service support and offer telephone/broadband bundles (even if
consumers could not afford them) while not offering standalone broadband. The business case
for stand-alone broadband didn't exist for some rural telephone companies-not because
consumers didn't want it, but, as you note in your letter, because our arcane rules penalized
companies for offering it.
I wish I could tell you that the FCC has fixed this problem. But as your letter rightly
points out, we have not. Despite the Commission's efforts in the 2016 Rate-of-Return Reform
Order-an effort that would not have happened but for the resounding call to action from
Congress as expressed in the letters you mention-I still hear from small carriers that offering
stand-alone broadband would put them underwater; that the rates they have to charge exceed the
rates for bundled services because of the different regulatory treatment. This is unfortunate but
unsurprising. As I said at the time, the Order needlessly complicated our rate-of-return system
and in many ways made it harder, not easier, for small providers to serve rural America.
To provide some relief, my colleagues in recent months have urged me to work through a
punch list of lingering issues from the Order. I have accordingly directed staff to work through
that list. In April, the Commission amended a rule that would have disallowed capital expenses
to any project exceeding a Commission-set threshold by even a dollar; now providers can
complete efficient projects so long as they are willing to absorb any costs above the threshold.
That month staff also resolved concerns raised by rural carriers about the "parent-trap" rule. In
May, I circulated an order to address problems with two calculations made in the Order-one
involving a "surrogate method" to avoid duplicative cost-recovery and another involving charges
Page 2-The Honorable Andy Barr
imposed on stand-alone broadband lines. Also in May, I circulated an order to address certain
duplicative reporting requirements imposed on rural providers. I look forward to continue
working with my colleagues on these issues.
Although I hope these changes will help, you may be right that something more
fundamental is needed. After all, if the Order is not carrying out its stated purpose of advancing
broadband deployment in rural America, we cannot ignore that problem-for time is not on the
side of rural Americans.
I appreciate your views on this matter. They will be included in the record of this
proceeding and considered as part of the Commission's review. Please let me know if I can be
of any further assistance.
OFFICE OF
THE CHAIRMAN
FEDERAL COMMUNICATIONS COMMISSION
WASHINGTON
July 6,2017
The Honorable Nanette Barragan
U.S. House of Representatives
1320 Longworth House Office Building
Washington, D.C. 20515
Dear Congresswoman Barragan:
Thank you for your letter regarding the importance of delivering affordable access to
high-speed Internet to all Americans-including those in high-cost rural areas. As you know, I
grew up in Parsons, Kansas and during my time at the Commission have traveled to locations
ranging from Barrow, Alaska to Laurens, Iowa, and Carthage, Mississippi. Through these
experiences and meeting with countless Americans and carriers across the country, I have seen
what access to affordable high-speed Internet access can do for a community-for its schools, its
libraries, and its hospitals and for those Americans struggling to stay afloat.
Four years ago, I called on the Commission to tackle the issue of affordable broadband in
rural America head on. The problem back then was that the Universal Service Fund predicated
support on providing voice service. This meant bundled telephone/broadband offers could get
support while standalone broadband could not. The perverse result was that carriers were
incented to take universal service support and offer telephone/broadband bundles (even if
consumers could not afford them) while not offering standalone broadband. The business case
for stand-alone broadband didn't exist for some rural telephone companies-not because
consumers didn't want it, but, as you note in your letter, because our arcane rules penalized
companies for offering it.
I wish I could tell you that the FCC has fixed this problem. But as your letter rightly
points out, we have not. Despite the Commission's efforts in the 2016 Rate-of-Return Reform
Order-an effort that would not have happened but for the resounding call to action from
Congress as expressed in the letters you mention-I still hear from small carriers that offering
stand-alone broadband would put them underwater; that the rates they have to charge exceed the
rates for bundled services because of the different regulatory treatment. This is unfortunate but
unsurprising. As I said at the time, the Order needlessly complicated our rate-of-return system
and in many ways made it harder, not easier, for small providers to serve rural America.
To provide some relief, my colleagues in recent months have urged me to work through a
punch list of lingering issues from the Order. I have accordingly directed staff to work through
that list. In April, the Commission amended a rule that would have disallowed capital expenses
to any project exceeding a Commission-set threshold by even a dollar; now providers can
complete efficient projects so long as they are willing to absorb any costs above the threshold.
That month staff also resolved concerns raised by rural carriers about the "parent-trap" rule. In
May, I circulated an order to address problems with two calculations made in the Order-one
involving a "surrogate method" to avoid duplicative cost-recovery and another involving charges
Page 2-The Honorable Nanette Barragan
imposed on stand-alone broadband lines. Also in May, I circulated an order to address certain
duplicative reporting requirements imposed on rural providers. I look forward to continue
working with my colleagues on these issues.
Although I hope these changes will help, you may be right that something more
fundamental is needed. After all, if the Order is not carrying out its stated purpose of advancing
broadband deployment in rural America, we cannot ignore that problem-for time is not on the
side of rural Americans.
I appreciate your views on this matter. They will be included in the record of this
proceeding and considered as part of the Commission's review. Please let me know if I can be
of any further assistance.
Sincerely,
Ajit V. Pai
OFFICE OF
THE CHAIRMAN
FEDERAL COMMUNICATIONS COMMISSION
WASHINGTON
July 6,2017
The Honorable Rob Bishop
U.S. House of Representatives
123 Cannon House Office Building
Washington, D.C. 20515
Dear Congressman Bishop:
Thank you for your letter regarding the importance of delivering affordable access to
high-speed Internet to all Americans-including those in high-cost rural areas. As you know, I
grew up in Parsons, Kansas and during my time at the Commission have traveled to locations
ranging from Barrow, Alaska to Laurens, Iowa, and Carthage, Mississippi. Through these
experiences and meeting with countless Americans and carriers across the country, I have seen
what access to affordable high-speed Internet access can do for a community-for its schools, its
libraries, and its hospitals and for those Americans struggling to stay afloat.
Four years ago, I called on the Commission to tackle the issue of affordable broadband in
rural America head on. The problem back then was that the Universal Service Fund predicated
support on providing voice service. This meant bundled telephone/broadband offers could get
support while standalone broadband could not. The perverse result was that carriers were
incented to take universal service support and offer telephone/broadband bundles (even if
consumers could not afford them) while not offering standalone broadband. The business case
for stand-alone broadband didn't exist for some rural telephone companies-not because
consumers didn't want it, but, as you note in your letter, because our arcane rules penalized
companies for offering it.
I wish I could tell you that the FCC has fixed this problem. But as your letter rightly
points out, we have not. Despite the Commission's efforts in the 2016 Rate-of-Return Reform
Order-an effort that would not have happened but for the resounding call to action from
Congress as expressed in the letters you mention-I still hear from small carriers that offering
stand-alone broadband would put them underwater; that the rates they have to charge exceed the
rates for bundled services because of the different regulatory treatment. This is unfortunate but
unsurprising. As I said at the time, the Order needlessly complicated our rate-of-return system
and in many ways made it harder, not easier, for small providers to serve rural America.
To provide some relief, my colleagues in recent months have urged me to work through a
punch list of lingering issues from the Order. I have accordingly directed staff to work through
that list. In April, the Commission amended a rule that would have disallowed capital expenses
to any project exceeding a Commission-set threshold by even a dollar; now providers can
complete efficient projects so long as they are willing to absorb any costs above the threshold.
That month staff also resolved concerns raised by rural carriers about the "parent-trap" rule. In
May, I circulated an order to address problems with two calculations made in the Order-one
involving a "surrogate method" to avoid duplicative cost-recovery and another involving charges
Page 2-The Honorable Rob Bishop
imposed on stand-alone broadband lines. Also in May, I circulated an order to address certain
duplicative reporting requirements imposed on rural providers. I look forward to continue
working with my colleagues on these issues.
Although I hope these changes will help, you may be right that something more
fundamental is needed. After all, if the Order is not carrying out its stated purpose of advancing
broadband deployment in rural America, we cannot ignore that problem-for time is not on the
side of rural Americans.
I appreciate your views on this matter. They will be included in the record of this
proceeding and considered as part of the Commission's review. Please let me know if I can be
of any further assistance.
Sincerely,
FEDERAL COMMUNICATIONS COMMISSION
WASHINGTON
July 6,2017
The Honorable Rod Blum
U.S. House of Representatives
1108 Longworth House Office Building
Washington, D.C. 20515
Dear Congressman Blum:
Thank you for your letter regarding the importance of delivering affordable access to
high-speed Internet to all Americans-including those in high-cost rural areas. As you know, I
grew up in Parsons, Kansas and during my time at the Commission have traveled to locations
ranging from Barrow, Alaska to Laurens, Iowa, and Carthage, Mississippi. Through these
experiences and meeting with countless Americans and carriers across the country, I have seen
what access to affordable high-speed Internet access can do for a community-for its schools, its
libraries, and its hospitals and for those Americans struggling to stay afloat.
Four years ago, I called on the Commission to tackle the issue of affordable broadband in
rural America head on. The problem back then was that the Universal Service Fund predicated
support on providing voice service. This meant bundled telephone/broadband offers could get
support while standalone broadband could not. The perverse result was that carriers were
incented to take universal service support and offer telephone/broadband bundles (even if
consumers could not afford them) while not offering standalone broadband. The business case
for stand-alone broadband didn't exist for some rural telephone companies-not because
consumers didn't want it, but, as you note in your letter, because our arcane rules penalized
companies for offering it.
I wish I could tell you that the FCC has fixed this problem. But as your letter rightly
points out, we have not. Despite the Commission's efforts in the 2016 Rate-of-Return Reform
Order-an effort that would not have happened but for the resounding call to action from
Congress as expressed in the letters you mention-I still hear from small carriers that offering
stand-alone broadband would put them underwater; that the rates they have to charge exceed the
rates for bundled services because of the different regulatory treatment. This is unfortunate but
unsurprising. As I said at the time, the Order needlessly complicated our rate-of-return system
and in many ways made it harder, not easier, for small providers to serve rural America.
To provide some relief, my colleagues in recent months have urged me to work through a
punch list of lingering issues from the Order. I have accordingly directed staff to work through
that list. Tn April, the Commission amended a rule that would have disallowed capital expenses
to any project exceeding a Commission-set threshold by even a dollar; now providers can
complete efficient projects so long as they are willing to absorb any costs above the threshold.
That month staff also resolved concerns raised by rural carriers about the "parent-trap" rule. In
May, I circulated an order to address problems with two calculations made in the Order-one
involving a "surrogate method" to avoid duplicative cost-recovery and another involving charges
OFFICE OF
THE CHAIRMAN
Page 2-The Honorable Rod Blum
imposed on stand-alone broadband lines. Also in May, I circulated an order to address certain
duplicative reporting requirements imposed on rural providers. I look forward to continue
working with my colleagues on these issues.
Although I hope these changes will help, you may be right that something more
fundamental is needed. After all, if the Order is not carrying out its stated purpose of advancing
broadband deployment in rural America, we cannot ignore that problem-for time is not on the
side of rural Americans.
I appreciate your views on this matter. They will be included in the record of this
proceeding and considered as part of the Commission's review. Please let me know if I can be
of any further assistance.
Sincerely,
V
Ajit V. Pai
OFFICE OF
THE CHAIRMAN
FEDERAL COMMUNICATIONS COMMISSION
WASHINGTON
July 6, 2017
The Honorable Mike Bost
U.S. House of Representatives
1440 Longworth House Office Building
Washington, D.C. 20515
Dear Congressman Bost:
Thank you for your letter regarding the importance of delivering affordable access to
high-speed Internet to all Americans-including those in high-cost rural areas. As you know, I
grew up in Parsons, Kansas and during my time at the Commission have traveled to locations
ranging from Barrow, Alaska to Laurens, Iowa, and Carthage, Mississippi. Through these
experiences and meeting with countless Americans and carriers across the country, I have seen
what access to affordable high-speed Internet access can do for a community-for its schools, its
libraries, and its hospitals and for those Americans struggling to stay afloat.
Four years ago, I called on the Commission to tackle the issue of affordable broadband in
rural America head on. The problem back then was that the Universal Service Fund predicated
support on providing voice service. This meant bundled telephone/broadband offers could get
support while standalone broadband could not. The perverse result was that carriers were
incented to take universal service support and offer telephone/broadband bundles (even if
consumers could not afford them) while not offering standalone broadband. The business case
for stand-alone broadband didn't exist for some rural telephone companies-not because
consumers didn't want it, but, as you note in your letter, because our arcane rules penalized
companies for offering it.
I wish I could tell you that the FCC has fixed this problem. But as your letter rightly
points out, we have not. Despite the Commission's efforts in the 2016 Rate-of-Return Reform
Order-an effort that would not have happened but for the resounding call to action from
Congress as expressed in the letters you mention-I still hear from small carriers that offering
stand-alone broadband would put them underwater; that the rates they have to charge exceed the
rates for bundled services because of the different regulatory treatment. This is unfortunate but
unsurprising. As I said at the time, the Order needlessly complicated our rate-of-return system
and in many ways made it harder, not easier, for small providers to serve rural America.
To provide some relief, my colleagues in recent months have urged me to work through a
punch list of lingering issues from the Order. I have accordingly directed staff to work through
that list. In April, the Commission amended a rule that would have disallowed capital expenses
to any project exceeding a Commission-set threshold by even a dollar; now providers can
complete efficient projects so long as they are willing to absorb any costs above the threshold.
That month staff also resolved concerns raised by rural carriers about the "parent-trap" rule. In
May, I circulated an order to address problems with two calculations made in the Order-one
involving a "surrogate method" to avoid duplicative cost-recovery and another involving charges
Page 2-The Honorable Mike Bost
imposed on stand-alone broadband lines. Also in May, I circulated an order to address certain
duplicative reporting requirements imposed on rural providers. I look forward to continue
working with my colleagues on these issues.
Although I hope these changes will help, you may be right that something more
fundamental is needed. After all, if the Order is not carrying out its stated purpose of advancing
broadband deployment in rural America, we cannot ignore that problem-for time is not on the
side of rural Americans.
I appreciate your views on this matter. They will be included in the record of this
proceeding and considered as part of the Commission's review. Please let me know if I can be
of any further assistance.
Sincerely,
OFFICE OF
THE CHAIRMAN
FEDERAL COMMUNICATIONS COMMISSION
WASHINGTON
July 6, 2017
The Honorable Jim Bridenstine
U.S. House of Representatives
216 Cannon House Office Building
Washington, D.C. 20515
Dear Congressman Bridenstine:
Thank you for your letter regarding the importance of delivering affordable access to
high-speed Internet to all Americans-including those in high-cost rural areas. As you know, I
grew up in Parsons, Kansas and during my time at the Commission have traveled to locations
ranging from Barrow, Alaska to Laurens, Iowa, and Carthage, Mississippi. Through these
experiences and meeting with countless Americans and carriers across the country, I have seen
what access to affordable high-speed Internet access can do for a community-for its schools, its
libraries, and its hospitals and for those Americans struggling to stay afloat.
Four years ago, I called on the Commission to tackle the issue of affordable broadband in
rural America head on. The problem back then was that the Universal Service Fund predicated
support on providing voice service. This meant bundled telephone/broadband offers could get
support while standalone broadband could not. The perverse result was that carriers were
incented to take universal service support and offer telephone/broadband bundles (even if
consumers could not afford them) while not offering standalone broadband. The business case
for stand-alone broadband didn't exist for some rural telephone companies-not because
consumers didn't want it, but, as you note in your letter, because our arcane rules penalized
companies for offering it.
I wish I could tell you that the FCC has fixed this problem. But as your letter rightly
points out, we have not. Despite the Commission's efforts in the 2016 Rate-of-Return Reform
Order-an effort that would not have happened but for the resounding call to action from
Congress as expressed in the letters you mention-I still hear from small carriers that offering
stand-alone broadband would put them underwater; that the rates they have to charge exceed the
rates for bundled services because of the different regulatory treatment. This is unfortunate but
unsurprising. As I said at the time, the Order needlessly complicated our rate-of-return system
and in many ways made it harder, not easier, for small providers to serve rural America.
To provide some relief, my colleagues in recent months have urged me to work through a
punch list of lingering issues from the Order. I have accordingly directed staff to work through
that list. In April, the Commission amended a rule that would have disallowed capital expenses
to any project exceeding a Commission-set threshold by even a dollar; now providers can
complete efficient projects so long as they are willing to absorb any costs above the threshold.
That month staff also resolved concerns raised by rural carriers about the "parent-trap" rule. In
May, I circulated an order to address problems with two calculations made in the Order-one
involving a "surrogate method" to avoid duplicative cost-recovery and another involving charges
Page 2-The Honorable Jim Bridenstine
imposed on stand-alone broadband lines. Also in May, I circulated an order to address certain
duplicative reporting requirements imposed on rural providers. I look forward to continue
working with my colleagues on these issues.
Although I hope these changes will help, you may be right that something more
fundamental is needed. After all, if the Order is not carrying out its stated purpose of advancing
broadband deployment in rural America, we cannot ignore that problem-for time is not on the
side of rural Americans.
I appreciate your views on this matter. They will be included in the record of this
proceeding and considered as part of the Commission's review. Please let me know if I can be
of any further assistance.
Sincerely,
Ajit V. Pai
OFFICE OF
THE CHAIRMAN
FEDERAL COMMUNICATIONS COMMISSION
WASHINGTON
July 6, 2017
The Honorable Larry Bucshon
U.S. House of Representatives
1005 Longworth House Office Building
Washington, D.C. 20515
Dear Congressman Bucshon:
Thank you for your letter regarding the importance of delivering affordable access to
high-speed Internet to all Americans-including those in high-cost rural areas. As you know, I
grew up in Parsons, Kansas and during my time at the Commission have traveled to locations
ranging from Barrow, Alaska to Laurens, Iowa, and Carthage, Mississippi. Through these
experiences and meeting with countless Americans and carriers across the country, I have seen
what access to affordable high-speed Internet access can do for a community-for its schools, its
libraries, and its hospitals and for those Americans struggling to stay afloat.
Four years ago, I called on the Commission to tackle the issue of affordable broadband in
rural America head on. The problem back then was that the Universal Service Fund predicated
support on providing voice service. This meant bundled telephone/broadband offers could get
support while standalone broadband could not. The perverse result was that carriers were
incented to take universal service support and offer telephone/broadband bundles (even if
consumers could not afford them) while not offering standalone broadband. The business case
for stand-alone broadband didn't exist for some rural telephone companies-not because
consumers didn't want it, but, as you note in your letter, because our arcane rules penalized
companies for offering it.
I wish I could tell you that the FCC has fixed this problem. But as your letter rightly
points out, we have not. Despite the Commission's efforts in the 2016 Rate-of-Return Reform
Order-an effort that would not have happened but for the resounding call to action from
Congress as expressed in the letters you mention-I still hear from small carriers that offering
stand-alone broadband would put them underwater; that the rates they have to charge exceed the
rates for bundled services because of the different regulatory treatment. This is unfortunate but
unsurprising. As I said at the time, the Order needlessly complicated our rate-of-return system
and in many ways made it harder, not easier, for small providers to serve rural America.
To provide some relief, my colleagues in recent months have urged me to work through a
punch list of lingering issues from the Order. I have accordingly directed staff to work through
that list. In April, the Commission amended a rule that would have disallowed capital expenses
to any project exceeding a Commission-set threshold by even a dollar; now providers can
complete efficient projects so long as they are willing to absorb any costs above the threshold.
That month staff also resolved concerns raised by rural carriers about the "parent-trap" rule. In
May, I circulated an order to address problems with two calculations made in the Order-one
involving a "surrogate method" to avoid duplicative cost-recovery and another involving charges
Page 2-The Honorable Larry Bucshon
imposed on stand-alone broadband lines. Also in May, I circulated an order to address certain
duplicative reporting requirements imposed on rural providers. I look forward to continue
working with my colleagues on these issues.
Although I hope these changes will help, you may be right that something more
fundamental is needed. After all, if the Order is not carrying out its stated purpose of advancing
broadband deployment in rural America, we cannot ignore that problem-for time is not on the
side of rural Americans.
I appreciate your views on this matter. They will be included in the record of this
proceeding and considered as part of the Commission's review. Please let me know if I can be
of any further assistance.
OR
Sincerely,
Ajit V. Pai
Ov
OFFICE OF
THE CHAIRMAN
FEDERAL COMMUNICATIONS COMMISSION
WASHINGTON
July 6,2017
The Honorable Cheri Bustos
U.S. House of Representatives
1009 Longworth House Office Building
Washington, D.C. 20515
Dear Congresswoman Bustos:
Thank you for your letter regarding the importance of delivering affordable access to
high-speed Internet to all Americans-including those in high-cost rural areas. As you know, I
grew up in Parsons, Kansas and during my time at the Commission have traveled to locations
ranging from Barrow, Alaska to Laurens, Iowa, and Carthage, Mississippi. Through these
experiences and meeting with countless Americans and carriers across the country, I have seen
what access to affordable high-speed Internet access can do for a community-for its schools, its
libraries, and its hospitals and for those Americans struggling to stay afloat.
Four years ago, I called on the Commission to tackle the issue of affordable broadband in
rural America head on. The problem back then was that the Universal Service Fund predicated
support on providing voice service. This meant bundled telephone/broadband offers could get
support while standalone broadband could not. The perverse result was that carriers were
incented to take universal service support and offer telephone/broadband bundles (even if
consumers could not afford them) while not offering standalone broadband. The business case
for stand-alone broadband didn't exist for some rural telephone companies-not because
consumers didn't want it, but, as you note in your letter, because our arcane rules penalized
companies for offering it.
I wish I could tell you that the FCC has fixed this problem. But as your letter rightly
points out, we have not. Despite the Commission's efforts in the 2016 Rate-of-Return Reform
Order-an effort that would not have happened but for the resounding call to action from
Congress as expressed in the letters you mention-I still hear from small carriers that offering
stand-alone broadband would put them underwater; that the rates they have to charge exceed the
rates for bundled services because of the different regulatory treatment. This is unfortunate but
unsurprising. As I said at the time, the Order needlessly complicated our rate-of-return system
and in many ways made it harder, not easier, for small providers to serve rural America.
To provide some relief, my colleagues in recent months have urged me to work through a
punch list of lingering issues from the Order. I have accordingly directed staff to work through
that list. In April, the Commission amended a rule that would have disallowed capital expenses
to any project exceeding a Commission-set threshold by even a dollar; now providers can
complete efficient projects so long as they are willing to absorb any costs above the threshold.
That month staff also resolved concerns raised by rural carriers about the "parent-trap" rule. In
May, I circulated an order to address problems with two calculations made in the Order-one
involving a "surrogate method" to avoid duplicative cost-recovery and another involving charges
Page 2-The Honorable Cheri Bustos
imposed on stand-alone broadband lines. Also in May, I circulated an order to address certain
duplicative reporting requirements imposed on rural providers. I look forward to continue
working with my colleagues on these issues.
Although I hope these changes will help, you may be right that something more
fundamental is needed. After all, if the Order is not carrying out its stated purpose of advancing
broadband deployment in rural America, we caimot ignore that problem-for time is not on the
side of rural Americans.
I appreciate your views on this matter. They will be included in the record of this
proceeding and considered as part of the Commission's review. Please let me know if I can be
of any further assistance.
Sincerely,
OFFICE OF
THE CHAIRMAN
FEDERAL COMMUNICATIONS COMMISSION
WASHINGTON
July 6, 2017
The Honorable Liz Cheney
U.S. House of Representatives
416 Cannon House Office Building
Washington, D.C. 20515
Dear Congresswoman Cheney:
Thank you for your letter regarding the importance of delivering affordable access to
high-speed Internet to all Americans-including those in high-cost rural areas. As you know, I
grew up in Parsons, Kansas and during my time at the Commission have traveled to locations
ranging from Barrow, Alaska to Laurens, Iowa, and Carthage, Mississippi. Through these
experiences and meeting with countless Americans and carriers across the country, I have seen
what access to affordable high-speed Internet access can do for a community-for its schools, its
libraries, and its hospitals and for those Americans struggling to stay afloat.
Four years ago, I called on the Commission to tackle the issue of affordable broadband in
rural America head on. The problem back then was that the Universal Service Fund predicated
support on providing voice service. This meant bundled telephone/broadband offers could get
support while standalone broadband could not. The perverse result was that carriers were
incented to take universal service support and offer telephone/broadband bundles (even if
consumers could not afford them) while not offering standalone broadband. The business case
for stand-alone broadband didn't exist for some rural telephone companies-not because
consumers didn't want it, but, as you note in your letter, because our arcane rules penalized
companies for offering it.
I wish I could tell you that the FCC has fixed this problem. But as your letter rightly
points out, we have not. Despite the Commission's efforts in the 2016 Rate-of-Return Reform
Order-an effort that would not have happened but for the resounding call to action from
Congress as expressed in the letters you mention-I still hear from small carriers that offering
stand-alone broadband would put them underwater; that the rates they have to charge exceed the
rates for bundled services because of the different regulatory treatment. This is unfortunate but
unsurprising. As I said at the time, the Order needlessly complicated our rate-of-return system
and in many ways made it harder, not easier, for small providers to serve rural America.
To provide some relief, my colleagues in recent months have urged me to work through a
punch list of lingering issues from the Order. I have accordingly directed staff to work through
that list. In April, the Commission amended a rule that would have disallowed capital expenses
to any project exceeding a Commission-set threshold by even a dollar; now providers can
complete efficient projects so long as they are willing to absorb any costs above the threshold.
That month staff also resolved concerns raised by rural carriers about the "parent-trap" rule. In
May, I circulated an order to address problems with two calculations made in the Order-one
involving a "surrogate method" to avoid duplicative cost-recovery and another involving charges
Page 2-The Honorable Liz Cheney
imposed on stand-alone broadband lines. Also in May, I circulated an order to address certain
duplicative reporting requirements imposed on rural providers. I look forward to continue
working with my colleagues on these issues.
Although I hope these changes will help, you may be right that something more
fundamental is needed. After all, if the Order is not carrying out its stated purpose of advancing
broadband deployment in rural America, we cannot ignore that problem-for time is not on the
side of rural Americans.
I appreciate your views on this matter. They will be included in the record of this
proceeding and considered as part of the Commission's review. Please let me know if I can be
of any further assistance.
FEDERAL COMMUNICATIONS COMMISSION
WASHINGTON
OFFICE OF
THE CHAIRMAN July 6, 2017
The Honorable Tom Cole
U.S. House of Representatives
2467 Rayburn House Office Building
Washington, D.C. 20515
Dear Congressman Cole:
Thank you for your letter regarding the importance of delivering affordable access to
high-speed Internet to all Americans-including those in high-cost rural areas. As you know, I
grew up in Parsons, Kansas and during my time at the Commission have traveled to locations
ranging from Barrow, Alaska to Laurens, Iowa, and Carthage, Mississippi. Through these
experiences and meeting with countless Americans and carriers across the country, I have seen
what access to affordable high-speed Internet access can do for a community-for its schools, its
libraries, and its hospitals and for those Americans struggling to stay afloat.
Four years ago, I called on the Commission to tackle the issue of affordable broadband in
rural America head on. The problem back then was that the Universal Service Fund predicated
support on providing voice service. This meant bundled telephone/broadband offers could get
support while standalone broadband could not. The perverse result was that carriers were
incented to take universal service support and offer telephone/broadband bundles (even if
consumers could not afford them) while not offering standalone broadband. The business case
for stand-alone broadband didn't exist for some rural telephone companies-not because
consumers didn't want it, but, as you note in your letter, because our arcane rules penalized
companies for offering it.
I wish I could tell you that the FCC has fixed this problem. But as your letter rightly
points out, we have not. Despite the Commission's efforts in the 2016 Rate-of-Return Reform
Order-an effort that would not have happened but for the resounding call to action from
Congress as expressed in the letters you mention-I still hear from small carriers that offering
stand-alone broadband would put them underwater; that the rates they have to charge exceed the
rates for bundled services because of the different regulatory treatment. This is unfortunate but
unsurprising. As I said at the time, the Order needlessly complicated our rate-of-return system
and in many ways made it harder, not easier, for small providers to serve rural America.
To provide some relief, my colleagues in recent months have urged me to work through a
punch list of lingering issues from the Order. I have accordingly directed staff to work through
that list. In April, the Commission amended a rule that would have disallowed capital expenses
to any project exceeding a Commission-set threshold by even a dollar; now providers can
complete efficient projects so long as they are willing to absorb any costs above the threshold.
That month staff also resolved concerns raised by rural carriers about the "parent-trap" rule. In
May, I circulated an order to address problems with two calculations made in the Order-one
involving a "surrogate method" to avoid duplicative cost-recovery and another involving charges
Page 2-The Honorable Tom Cole
imposed on stand-alone broadband lines. Also in May, I circulated an order to address certain
duplicative reporting requirements imposed on rural providers. I look forward to continue
working with my colleagues on these issues.
Although I hope these changes will help, you may be right that something more
fundamental is needed. After all, if the Order is not carrying out its stated purpose of advancing
broadband deployment in rural America, we cannot ignore that problem-for time is not on the
side of rural Americans.
I appreciate your views on this matter. They will be included in the record of this
proceeding and considered as part of the Commission's review. Please let me know if I can be
of any further assistance.
Sincerely,
' I
	
I
U
OFFICE OF
THE CHAIRMAN
FEDERAL COMMUNICATIONS COMMISSION
WASHINGTON
July 6, 2017
The Honorable Doug Collins
U.S. House of Representatives
1504 Longworth House Office Building
Washington, D.C. 20515
Dear Congressman Collins:
Thank you for your letter regarding the importance of delivering affordable access to
high-speed Internet to all Americans-including those in high-cost rural areas. As you know, I
grew up in Parsons, Kansas and during my time at the Commission have traveled to locations
ranging from Barrow, Alaska to Laurens, Iowa, and Carthage, Mississippi. Through these
experiences and meeting with countless Americans and carriers across the country, I have seen
what access to affordable high-speed Internet access can do for a community-for its schools, its
libraries, and its hospitals and for those Americans struggling to stay afloat.
Four years ago, I called on the Commission to tackle the issue of affordable broadband in
rural America head on. The problem back then was that the Universal Service Fund predicated
support on providing voice service. This meant bundled telephone/broadband offers could get
support while standalone broadband could not. The perverse result was that carriers were
incented to take universal service support and offer telephone/broadband bundles (even if
consumers could not afford them) while not offering standalone broadband. The business case
for stand-alone broadband didn't exist for some rural telephone companies-not because
consumers didn't want it, but, as you note in your letter, because our arcane rules penalized
companies for offering it.
I wish I could tell you that the FCC has fixed this problem. But as your letter rightly
points out, we have not. Despite the Commission's efforts in the 2016 Rate-of-Return Reform
Order-an effort that would not have happened but for the resounding call to action from
Congress as expressed in the letters you mention-I still hear from small carriers that offering
stand-alone broadband would put them underwater; that the rates they have to charge exceed the
rates for bundled services because of the different regulatory treatment. This is unfortunate but
unsurprising. As I said at the time, the Order needlessly complicated our rate-of-return system
and in many ways made it harder, not easier, for small providers to serve rural America.
To provide some relief, my colleagues in recent months have urged me to work through a
punch list of lingering issues from the Order. I have accordingly directed staff to work through
that list. In April, the Commission amended a rule that would have disallowed capital expenses
to any project exceeding a Commission-set threshold by even a dollar; now providers can
complete efficient projects so long as they are willing to absorb any costs above the threshold.
That month staff also resolved concerns raised by rural carriers about the "parent-trap" rule. In
May, I circulated an order to address problems with two calculations made in the Order-one
involving a "surrogate method" to avoid duplicative cost-recovery and another involving charges
Page 2-The Honorable Doug Collins
imposed on stand-alone broadband lines. Also in May, I circulated an order to address certain
duplicative reporting requirements imposed on rural providers. I look forward to continue
working with my colleagues on these issues.
Although I hope these changes will help, you may be right that something more
fundamental is needed. After all, if the Order is not carrying out its stated purpose of advancing
broadband deployment in rural America, we cannot ignore that problem-for time is not on the
side of rural Americans.
I appreciate your views on this matter. They will be included in the record of this
proceeding and considered as part of the Commission's review. Please let me know if I can be
of any further assistance.
Sincerely,
Ajit V. Pai
OFFICE OF
THE CHAIRMAN
FEDERAL COMMUNICATIONS COMMISSION
WASHINGTON
July 6,2017
The Honorable James R. Corner
U.S. House of Representatives
1513 Longworth House Office Building
Washington, D.C. 20515
Dear Congressman Corner:
Thank you for your letter regarding the importance of delivering affordable access to
high-speed Internet to all Americans-including those in high-cost rural areas. As you know, I
grew up in Parsons, Kansas and during my time at the Commission have traveled to locations
ranging from Barrow, Alaska to Laurens, Iowa, and Carthage, Mississippi. Through these
experiences and meeting with countless Americans and carriers across the country, I have seen
what access to affordable high-speed Internet access can do for a community-for its schools, its
libraries, and its hospitals and for those Americans struggling to stay afloat.
Four years ago, I called on the Commission to tackle the issue of affordable broadband in
rural America head on. The problem back then was that the Universal Service Fund predicated
support on providing voice service. This meant bundled telephone/broadband offers could get
support while standalone broadband could not. The perverse result was that carriers were
incented to take universal service support and offer telephone/broadband bundles (even if
consumers could not afford them) while not offering standalone broadband. The business case
for stand-alone broadband didn't exist for some rural telephone companies-not because
consumers didn't want it, but, as you note in your letter, because our arcane rules penalized
companies for offering it.
I wish I could tell you that the FCC has fixed this problem. But as your letter rightly
points out, we have not. Despite the Commission's efforts in the 2016 Rate-of-Return Reform
Order-an effort that would not have happened but for the resounding call to action from
Congress as expressed in the letters you mention-I still hear from small carriers that offering
stand-alone broadband would put them underwater; that the rates they have to charge exceed the
rates for bundled services because of the different regulatory treatment. This is unfortunate but
unsurprising. As I said at the time, the Order needlessly complicated our rate-of-return system
and in many ways made it harder, not easier, for small providers to serve rural America.
To provide some relief, my colleagues in recent months have urged me to work through a
punch list of lingering issues from the Order. I have accordingly directed staff to work through
that list. In April, the Commission amended a rule that would have disallowed capital expenses
to any project exceeding a Commission-set threshold by even a dollar; now providers can
complete efficient projects so long as they are willing to absorb any costs above the threshold.
That month staff also resolved concerns raised by rural carriers about the "parent-trap" rule. In
May, I circulated an order to address problems with two calculations made in the Order-one
involving a "surrogate method" to avoid duplicative cost-recovery and another involving charges
Page 2-The Honorable James R. Corner
imposed on stand-alone broadband lines. Also in May, I circulated an order to address certain
duplicative reporting requirements imposed on rural providers. I look forward to continue
working with my colleagues on these issues.
Although I hope these changes will help, you may be right that something more
fundamental is needed. After all, if the Order is not carrying out its stated purpose of advancing
broadband deployment in rural America, we cannot ignore that problem-for time is not on the
side of rural Americans.
I appreciate your views on this matter. They will be included in the record of this
proceeding and considered as part of the Commission's review. Please let me know if I can be
of any further assistance.
Sincerely,
Ajit V. Pai
OFFICE OF
THE CHAIRMAN
FEDERAL COMMUNICATIONS COMMISSION
WASHINGTON
July 6, 2017
The Honorable Paul Cook
U.S. House of Representatives
1222 Longworth House Office Building
Washington, D.C. 20515
Dear Congressman Cook:
Thank you for your letter regarding the importance of delivering affordable access to
high-speed Internet to all Americans-including those in high-cost rural areas. As you know, I
grew up in Parsons, Kansas and during my time at the Commission have traveled to locations
ranging from Barrow, Alaska to Laurens, Iowa, and Carthage, Mississippi. Through these
experiences and meeting with countless Americans and carriers across the country, I have seen
what access to affordable high-speed Internet access can do for a community-for its schools, its
libraries, and its hospitals and for those Americans struggling to stay afloat.
Four years ago, I called on the Commission to tackle the issue of affordable broadband in
rural America head on. The problem back then was that the Universal Service Fund predicated
support on providing voice service. This meant bundled telephone/broadband offers could get
support while standalone broadband could not. The perverse result was that carriers were
incented to take universal service support and offer telephone/broadband bundles (even if
consumers could not afford them) while not offering standalone broadband. The business case
for stand-alone broadband didn't exist for some rural telephone companies-not because
consumers didn't want it, but, as you note in your letter, because our arcane rules penalized
companies for offering it.
I wish I could tell you that the FCC has fixed this problem. But as your letter rightly
points out, we have not. Despite the Commission's efforts in the 2016 Rate-of-Return Reform
Order-an effort that would not have happened but for the resounding call to action from
Congress as expressed in the letters you mention-I still hear from small carriers that offering
stand-alone broadband would put them underwater; that the rates they have to charge exceed the
rates for bundled services because of the different regulatory treatment. This is unfortunate but
unsurprising. As I said at the time, the Order needlessly complicated our rate-of-return system
and in many ways made it harder, not easier, for small providers to serve rural America.
To provide some relief, my colleagues in recent months have urged me to work through a
punch list of lingering issues from the Order. I have accordingly directed staff to work through
that list. In April, the Commission amended a rule that would have disallowed capital expenses
to any project exceeding a Commission-set threshold by even a dollar; now providers can
complete efficient projects so long as they are willing to absorb any costs above the threshold.
That month staff also resolved concerns raised by rural carriers about the "parent-trap" rule. In
May, I circulated an order to address problems with two calculations made in the Order-one
involving a "surrogate method" to avoid duplicative cost-recovery and another involving charges
Page 2-The Honorable Paul Cook
imposed on stand-alone broadband lines. Also in May, I circulated an order to address certain
duplicative reporting requirements imposed on rural providers. I look forward to continue
working with my colleagues on these issues.
Although I hope these changes will help, you may be right that something more
fundamental is needed. After all, if the Order is not carrying out its stated purpose of advancing
broadband deployment in rural America, we cannot ignore that problem-for time is not on the
side of rural Americans.
I appreciate your views on this matter. They will be included in the record of this
proceeding and considered as part of the Commission's review. Please let me know if I can be
of any further assistance.
Sincerely,
Pt
Ajit V. Pai
OFFICE OF
THE CHAIRMAN
FEDERAL COMMUNICATIONS COMMISSION
WASHINGTON
July 6, 2017
The Honorable Jim Costa
U.S. House of Representatives
2081 Rayburn House Office Building
Washington, D.C. 20515
Dear Congressman Costa:
Thank you for your letter regarding the importance of delivering affordable access to
high-speed Internet to all Americans-including those in high-cost rural areas. As you know, I
grew up in Parsons, Kansas and during my time at the Commission have traveled to locations
ranging from Barrow, Alaska to Laurens, Iowa, and Carthage, Mississippi. Through these
experiences and meeting with countless Americans and carriers across the country, I have seen
what access to affordable high-speed Internet access can do for a community-for its schools, its
libraries, and its hospitals and for those Americans struggling to stay afloat.
Four years ago, I called on the Commission to tackle the issue of affordable broadband in
rural America head on. The problem back then was that the Universal Service Fund predicated
support on providing voice service. This meant bundled telephone/broadband offers could get
support while standalone broadband could not. The perverse result was that carriers were
incented to take universal service support and offer telephone/broadband bundles (even if
consumers could not afford them) while not offering standalone broadband. The business case
for stand-alone broadband didn't exist for some rural telephone companies-not because
consumers didn't want it, but, as you note in your letter, because our arcane rules penalized
companies for offering it.
I wish I could tell you that the FCC has fixed this problem. But as your letter rightly
points out, we have not. Despite the Commission's efforts in the 2016 Rate-of-Return Reform
Order-an effort that would not have happened but for the resounding call to action from
Congress as expressed in the letters you mention-I still hear from small carriers that offering
stand-alone broadband would put them underwater; that the rates they have to charge exceed the
rates for bundled services because of the different regulatory treatment. This is unfortunate but
unsurprising. As I said at the time, the Order needlessly complicated our rate-of-return system
and in many ways made it harder, not easier, for small providers to serve rural America.
To provide some relief, my colleagues in recent months have urged me to work through a
punch list of lingering issues from the Order. I have accordingly directed staff to work through
that list. In April, the Commission amended a rule that would have disallowed capital expenses
to any project exceeding a Commission-set threshold by even a dollar; now providers can
complete efficient projects so long as they are willing to absorb any costs above the threshold.
That month staff also resolved concerns raised by rural carriers about the "parent-trap" rule. In
May, I circulated an order to address problems with two calculations made in the Order-one
involving a "surrogate method" to avoid duplicative cost-recovery and another involving charges
Page 2-The Honorable Jim Costa
imposed on stand-alone broadband lines. Also in May, I circulated an order to address certain
duplicative reporting requirements imposed on rural providers. I look forward to continue
working with my colleagues on these issues.
Although I hope these changes will help, you may be right that something more
fundamental is needed. After all, if the Order is not carrying out its stated purpose of advancing
broadband deployment in rural America, we cannot ignore that problem-for time is not on the
side of rural Americans.
I appreciate your views on this matter. They will be included in the record of this
proceeding and considered as part of the Commission's review. Please let me know if I can be
of any further assistance.
Sincerely,
Ajit V. Pai
OFFICE OF
THE CHAIRMAN
FEDERAL COMMUNICATIONS COMMISSION
WASHINGTON
July 6, 2017
The Honorable Kevin Cramer
U.S. House of Representatives
1717 Longworth House Office Building
Washington, D.C. 20515
Dear Congressman Cramer:
Thank you for your letter regarding the importance of delivering affordable access to
high-speed Internet to all Americans-including those in high-cost rural areas. As you know, I
grew up in Parsons, Kansas and during my time at the Commission have traveled to locations
ranging from Barrow, Alaska to Laurens, Iowa, and Carthage, Mississippi. Through these
experiences and meeting with countless Americans and carriers across the country, I have seen
what access to affordable high-speed Internet access can do for a community-for its schools, its
libraries, and its hospitals and for those Americans struggling to stay afloat.
Four years ago, I called on the Commission to tackle the issue of affordable broadband in
rural America head on. The problem back then was that the Universal Service Fund predicated
support on providing voice service. This meant bundled telephone/broadband offers could get
support while standalone broadband could not. The perverse result was that carriers were
incented to take universal service support and offer telephone/broadband bundles (even if
consumers could not afford them) while not offering standalone broadband. The business case
for stand-alone broadband didn't exist for some rural telephone companies-not because
consumers didn't want it, but, as you note in your letter, because our arcane rules penalized
companies for offering it.
I wish I could tell you that the FCC has fixed this problem. But as your letter rightly
points out, we have not. Despite the Commission's efforts in the 2016 Rate-of-Return Reform
Order-an effort that would not have happened but for the resounding call to action from
Congress as expressed in the letters you mention-I still hear from small carriers that offering
stand-alone broadband would put them underwater; that the rates they have to charge exceed the
rates for bundled services because of the different regulatory treatment. This is unfortunate but
unsurprising. As I said at the time, the Order needlessly complicated our rate-of-return system
and in many ways made it harder, not easier, for small providers to serve rural America.
To provide some relief, my colleagues in recent months have urged me to work through a
punch list of lingering issues from the Order. I have accordingly directed staff to work through
that list. In April, the Commission amended a rule that would have disallowed capital expenses
to any project exceeding a Commission-set threshold by even a dollar; now providers can
complete efficient projects so long as they are willing to absorb any costs above the threshold.
That month staff also resolved concerns raised by rural carriers about the "parent-trap" rule. In
May, I circulated an order to address problems with two calculations made in the Order-one
involving a "surrogate method" to avoid duplicative cost-recovery and another involving charges
Page 2-The Honorable Kevin Cramer
imposed on stand-alone broadband lines. Also in May, I circulated an order to address certain
duplicative reporting requirements imposed on rural providers. I look forward to continue
working with my colleagues on these issues.
Although I hope these changes will help, you may be right that something more
fundamental is needed. After all, if the Order is not carrying out its stated purpose of advancing
broadband deployment in rural America, we cannot ignore that problem-for time is not on the
side of rural Americans.
I appreciate your views on this matter. They will be included in the record of this
proceeding and considered as part of the Commission's review. Please let me know if I can be
of any further assistance.
FEDERAL COMMUNICATIONS CoMMIsSIoN
WASHINGTON
OFFICE OF
THE CHAIRMAN July 6, 2017
The Honorable Rick Crawford
U.S. House of Representatives
2422 Rayburn House Office Building
Washington, D.C. 20515
Dear Congressman Crawford:
Thank you for your letter regarding the importance of delivering affordable access to
high-speed Internet to all Americans-including those in high-cost rural areas. As you know, I
grew up in Parsons, Kansas and during my time at the Commission have traveled to locations
ranging from Barrow, Alaska to Laurens, Iowa, and Carthage, Mississippi. Through these
experiences and meeting with countless Americans and carriers across the country, I have seen
what access to affordable high-speed Internet access can do for a community-for its schools, its
libraries, and its hospitals and for those Americans struggling to stay afloat.
Four years ago, I called on the Commission to tackle the issue of affordable broadband in
rural America head on. The problem back then was that the Universal Service Fund predicated
support on providing voice service. This meant bundled telephone/broadband offers could get
support while standalone broadband could not. The perverse result was that carriers were
incented to take universal service support and offer telephone/broadband bundles (even if
consumers could not afford them) while not offering standalone broadband. The business case
for stand-alone broadband didn't exist for some rural telephone companies-not because
consumers didn't want it, but, as you note in your letter, because our arcane rules penalized
companies for offering it.
I wish I could tell you that the FCC has fixed this problem. But as your letter rightly
points out, we have not. Despite the Commission's efforts in the 2016 Rate-of-Return Reform
Order-an effort that would not have happened but for the resounding call to action from
Congress as expressed in the letters you mention-I still hear from small carriers that offering
stand-alone broadband would put them underwater; that the rates they have to charge exceed the
rates for bundled services because of the different regulatory treatment. This is unfortunate but
unsurprising. As I said at the time, the Order needlessly complicated our rate-of-return system
and in many ways made it harder, not easier, for small providers to serve rural America.
To provide some relief, my colleagues in recent months have urged me to work through a
punch list of lingering issues from the Order. I have accordingly directed staff to work through
that list. In April, the Commission amended a rule that would have disallowed capital expenses
to any project exceeding a Commission-set threshold by even a dollar; now providers can
complete efficient projects so long as they are willing to absorb any costs above the threshold.
That month staff also resolved concerns raised by rural carriers about the "parent-trap" rule. In
May, I circulated an order to address problems with two calculations made in the Order-one
involving a "surrogate method" to avoid duplicative cost-recovery and another involving charges
Page 2-The Honorable Rick Crawford
imposed on stand-alone broadband lines. Also in May, I circulated an order to address certain
duplicative reporting requirements imposed on rural providers. I look forward to continue
working with my colleagues on these issues.
Although I hope these changes will help, you may be right that something more
fundamental is needed. After all, if the Order is not carrying out its stated purpose of advancing
broadband deployment in rural America, we cannot ignore that problem-for time is not on the
side of rural Americans.
I appreciate your views on this matter. They will be included in the record of this
proceeding and considered as part of the Commission's review. Please let me know if I can be
of any further assistance.
OFFICE OF
THE CHAIRMAN
FEDERAL COMMUNICATIONS COMMISSION
WASHINGTON
July 6, 2017
The Honorable Henry Cuellar
U.S. House of Representatives
2209 Raybum House Office Building
Washington, D.C. 20515
Dear Congressman Cuellar:
Thank you for your letter regarding the importance of delivering affordable access to
high-speed Internet to all Americans-including those in high-cost rural areas. As you know, I
grew up in Parsons, Kansas and during my time at the Commission have traveled to locations
ranging from Barrow, Alaska to Laurens, Iowa, and Carthage, Mississippi. Through these
experiences and meeting with countless Americans and carriers across the country, I have seen
what access to affordable high-speed Internet access can do for a community-for its schools, its
libraries, and its hospitals and for those Americans struggling to stay afloat.
Four years ago, I called on the Commission to tackle the issue of affordable broadband in
rural America head on. The problem back then was that the Universal Service Fund predicated
support on providing voice service. This meant bundled telephone/broadband offers could get
support while standalone broadband could not. The perverse result was that carriers were
incented to take universal service support and offer telephone/broadband bundles (even if
consumers could not afford them) while not offering standalone broadband. The business case
for stand-alone broadband didn't exist for some rural telephone companies-not because
consumers didn't want it, but, as you note in your letter, because our arcane rules penalized
companies for offering it.
I wish I could tell you that the FCC has fixed this problem. But as your letter rightly
points out, we have not. Despite the Commission's efforts in the 2016 Rate-of-Return Reform
Order-an effort that would not have happened but for the resounding call to action from
Congress as expressed in the letters you mention-I still hear from small carriers that offering
stand-alone broadband would put them underwater; that the rates they have to charge exceed the
rates for bundled services because of the different regulatory treatment. This is unfortunate but
unsurprising. As I said at the time, the Order needlessly complicated our rate-of-return system
and in many ways made it harder, not easier, for small providers to serve rural America.
To provide some relief, my colleagues in recent months have urged me to work through a
punch list of lingering issues from the Order. I have accordingly directed staff to work through
that list. In April, the Commission amended a rule that would have disallowed capital expenses
to any project exceeding a Commission-set threshold by even a dollar; now providers can
complete efficient projects so long as they are willing to absorb any costs above the threshold.
That month staff also resolved concerns raised by rural carriers about the "parent-trap" rule. In
May, I circulated an order to address problems with two calculations made in the Order-one
involving a "surrogate method" to avoid duplicative cost-recovery and another involving charges
Page 2-The Honorable Henry Cuellar
imposed on stand-alone broadband lines. Also in May, I circulated an order to address certain
duplicative reporting requirements imposed on rural providers. I look forward to continue
working with my colleagues on these issues.
Although I hope these changes will help, you may be right that something more
fundamental is needed. After all, if the Order is not carrying out its stated purpose of advancing
broadband deployment in rural America, we cannot ignore that problem-for time is not on the
side of rural Americans.
I appreciate your views on this matter. They will be included in the record of this
proceeding and considered as part of the Commission's review. Please let me know if I can be
of any further assistance.
Sincerely,
	
L'
v'-1
Ajit V. Pai
OFFICE OF
THE CHAIRMAN
FEDERAL COMMUNICATIONS COMMISSION
WASHINGTON
July 6, 2017
The Honorable Rodney Davis
U.S. House of Representatives
1740 Longworth House Office Building
Washington, D.C. 20515
Dear Congressman Davis:
Thank you for your letter regarding the importance of delivering affordable access to
high-speed Internet to all Americans-including those in high-cost rural areas. As you know, I
grew up in Parsons, Kansas and during my time at the Commission have traveled to locations
ranging from Barrow, Alaska to Laurens, Iowa, and Carthage, Mississippi. Through these
experiences and meeting with countless Americans and carriers across the country, I have seen
what access to affordable high-speed Internet access can do for a community-for its schools, its
libraries, and its hospitals and for those Americans struggling to stay afloat.
Four years ago, I called on the Commission to tackle the issue of affordable broadband in
rural America head on. The problem back then was that the Universal Service Fund predicated
support on providing voice service. This meant bundled telephone/broadband offers could get
support while standalone broadband could not. The perverse result was that carriers were
incented to take universal service support and offer telephone/broadband bundles (even if
consumers could not afford them) while not offering standalone broadband. The business case
for stand-alone broadband didn't exist for some rural telephone companies-not because
consumers didn't want it, but, as you note in your letter, because our arcane rules penalized
companies for offering it.
I wish I could tell you that the FCC has fixed this problem. But as your letter rightly
points out, we have not. Despite the Commission's efforts in the 2016 Rate-of-Return Reform
Order-an effort that would not have happened but for the resounding call to action from
Congress as expressed in the letters you mention-I still hear from small carriers that offering
stand-alone broadband would put them underwater; that the rates they have to charge exceed the
rates for bundled services because of the different regulatory treatment. This is unfortunate but
unsurprising. As I said at the time, the Order needlessly complicated our rate-of-return system
and in many ways made it harder, not easier, for small providers to serve rural America.
To provide some relief, my colleagues in recent months have urged me to work through a
punch list of lingering issues from the Order. I have accordingly directed staff to work through
that list. In April, the Commission amended a rule that would have disallowed capital expenses
to any project exceeding a Commission-set threshold by even a dollar; now providers can
complete efficient projects so long as they are willing to absorb any costs above the threshold.
That month staff also resolved concerns raised by rural carriers about the "parent-trap" rule. In
May, I circulated an order to address problems with two calculations made in the Order-one
involving a "surrogate method" to avoid duplicative cost-recovery and another involving charges
Page 2-The Honorable Rodney Davis
imposed on stand-alone broadband lines. Also in May, I circulated an order to address certain
duplicative reporting requirements imposed on rural providers. I look forward to continue
working with my colleagues on these issues.
Although I hope these changes will help, you may be right that something more
fundamental is needed. After all, if the Order is not carrying out its stated purpose of advancing
broadband deployment in rural America, we cannot ignore that problem-for time is not on the
side of rural Americans.
I appreciate your views on this matter. They will be included in the record of this
proceeding and considered as part of the Commission's review. Please let me know if I can be
of any further assistance.
Sincerely,
Ajit V. Pai
OFFICE OF
THE CHAIRMAN
FEDERAL COMMUNICATIONS COMMISSION
WASHINGTON
July 6, 2017
The Honorable Peter A. DeFazio
U.S. House of Representatives
2134 Rayburn House Office Building
Washington, D.C. 20515
Dear Congressman DeFazio:
Thank you for your letter regarding the importance of delivering affordable access to
high-speed Internet to all Americans-including those in high-cost rural areas. As you know, I
grew up in Parsons, Kansas and during my time at the Commission have traveled to locations
ranging from Barrow, Alaska to Laurens, Iowa, and Carthage, Mississippi. Through these
experiences and meeting with countless Americans and carriers across the country, I have seen
what access to affordable high-speed Internet access can do for a community-for its schools, its
libraries, and its hospitals and for those Americans struggling to stay afloat.
Four years ago, I called on the Commission to tackle the issue of affordable broadband in
rural America head on. The problem back then was that the Universal Service Fund predicated
support on providing voice service. This meant bundled telephone/broadband offers could get
support while standalone broadband could not. The perverse result was that carriers were
incented to take universal service support and offer telephone/broadband bundles (even if
consumers could not afford them) while not offering standalone broadband. The business case
for stand-alone broadband didn't exist for some rural telephone companies-not because
consumers didn't want it, but, as you note in your letter, because our arcane rules penalized
companies for offering it.
I wish I could tell you that the FCC has fixed this problem. But as your letter rightly
points out, we have not. Despite the Commission's efforts in the 2016 Rate-of-Return Reform
Order-an effort that would not have happened but for the resounding call to action from
Congress as expressed in the letters you mention-I still hear from small carriers that offering
stand-alone broadband would put them underwater; that the rates they have to charge exceed the
rates for bundled services because of the different regulatory treatment. This is unfortunate but
unsurprising. As I said at the time, the Order needlessly complicated our rate-of-return system
and in many ways made it harder, not easier, for small providers to serve rural America.
To provide some relief, my colleagues in recent months have urged me to work through a
punch list of lingering issues from the Order. I have accordingly directed staff to work through
that list. In April, the Commission amended a rule that would have disallowed capital expenses
to any project exceeding a Commission-set threshold by even a dollar; now providers can
complete efficient projects so long as they are willing to absorb any costs above the threshold.
That month staff also resolved concerns raised by rural carriers about the "parent-trap" rule. In
May, I circulated an order to address problems with two calculations made in the Order-one
involving a "surrogate method" to avoid duplicative cost-recovery and another involving charges
Page 2-The Honorable Peter A. DeFazio
imposed on stand-alone broadband lines. Also in May, I circulated an order to address certain
duplicative reporting requirements imposed on rural providers. I look forward to continue
working with my colleagues on these issues.
Although I hope these changes will help, you may be right that something more
fundamental is needed. After all, if the Order is not carrying out its stated purpose of advancing
broadband deployment in rural America, we cannot ignore that problem-for time is not on the
side of rural Americans.
I appreciate your views on this matter. They will be included in the record of this
proceeding and considered as part of the Commission's review. Please let me know if I can be
of any further assistance.
Sincerely,,1
Ajit V. Pai
OFFICE OF
THE CHAIRMAN
FEDERAL COMMUNICATIONS COMMISSION
WASHINGTON
July 6, 2017
The Honorable Diana DeGette
U.S. House of Representatives
2368 Rayburn House Office Building
Washington, D.C. 20515
Dear Congresswoman DeGette:
Thank you for your letter regarding the importance of delivering affordable access to
high-speed Internet to all Americans-including those in high-cost rural areas. As you know, I
grew up in Parsons, Kansas and during my time at the Commission have traveled to locations
ranging from Barrow, Alaska to Laurens, Iowa, and Carthage, Mississippi. Through these
experiences and meeting with countless Americans and carriers across the country, I have seen
what access to affordable high-speed Internet access can do for a community-for its schools, its
libraries, and its hospitals and for those Americans struggling to stay afloat.
Four years ago, I called on the Commission to tackle the issue of affordable broadband in
rural America head on. The problem back then was that the Universal Service Fund predicated
support on providing voice service. This meant bundled telephone/broadband offers could get
support while standalone broadband could not. The perverse result was that carriers were
incented to take universal service support and offer telephone/broadband bundles (even if
consumers could not afford them) while not offering standalone broadband. The business case
for stand-alone broadband didn't exist for some rural telephone companies-not because
consumers didn't want it, but, as you note in your letter, because our arcane rules penalized
companies for offering it.
I wish I could tell you that the FCC has fixed this problem. But as your letter rightly
points out, we have not. Despite the Commission's efforts in the 2016 Rate-of-Return Reform
Order-an effort that would not have happened but for the resounding call to action from
Congress as expressed in the letters you mention-I still hear from small carriers that offering
stand-alone broadband would put them underwater; that the rates they have to charge exceed the
rates for bundled services because of the different regulatory treatment. This is unfortunate but
unsurprising. As I said at the time, the Order needlessly complicated our rate-of-return system
and in many ways made it harder, not easier, for small providers to serve rural America.
To provide some relief, my colleagues in recent months have urged me to work through a
punch list of lingering issues from the Order. I have accordingly directed staff to work through
that list. In April, the Commission amended a rule that would have disallowed capital expenses
to any project exceeding a Commission-set threshold by even a dollar; now providers can
complete efficient projects so long as they are willing to absorb any costs above the threshold.
That month staff also resolved concerns raised by rural carriers about the "parent-trap" rule. In
May, I circulated an order to address problems with two calculations made in the Order-one
involving a "surrogate method" to avoid duplicative cost-recovery and another involving charges
Page 2-The Honorable Diana DeGette
imposed on stand-alone broadband lines. Also in May, I circulated an order to address certain
duplicative reporting requirements imposed on rural providers. I look forward to continue
working with my colleagues on these issues.
Although I hope these changes will help, you may be right that something more
fundamental is needed. After all, if the Order is not carrying out its stated purpose of advancing
broadband deployment in rural America, we cannot ignore that problem-for time is not on the
side of rural Americans.
I appreciate your views on this matter. They will be included in the record of this
proceeding and considered as part of the Commission's review. Please let me know if I can be
of any further assistance.
Sincerely,
Ajit V. Pai
OFFICE OF
THE CHAIRMAN
FEDERAL COMMUNICATIONS CoMMIssIoN
WASHINGTON
July 6, 2017
The Honorable Sean P. Duffy
U.S. House of Representatives
2330 Rayburn House Office Building
Washington, D.C. 20515
Dear Congressman Duffy:
Thank you for your letter regarding the importance of delivering affordable access to
high-speed Internet to all Americans-including those in high-cost rural areas. As you know, I
grew up in Parsons, Kansas and during my time at the Commission have traveled to locations
ranging from Barrow, Alaska to Laurens, Iowa, and Carthage, Mississippi. Through these
experiences and meeting with countless Americans and carriers across the country, I have seen
what access to affordable high-speed Internet access can do for a community-for its schools, its
libraries, and its hospitals and for those Americans struggling to stay afloat.
Four years ago, I called on the Commission to tackle the issue of affordable broadband in
rural America head on. The problem back then was that the Universal Service Fund predicated
support on providing voice service. This meant bundled telephone/broadband offers could get
support while standalone broadband could not. The perverse result was that carriers were
incented to take universal service support and offer telephone/broadband bundles (even if
consumers could not afford them) while not offering standalone broadband. The business case
for stand-alone broadband didn't exist for some rural telephone companies-not because
consumers didn't want it, but, as you note in your letter, because our arcane rules penalized
companies for offering it.
I wish I could tell you that the FCC has fixed this problem. But as your letter rightly
points out, we have not. Despite the Commission's efforts in the 2016 Rate-of-Return Reform
Order-an effort that would not have happened but for the resounding call to action from
Congress as expressed in the letters you mention-I still hear from small carriers that offering
stand-alone broadband would put them underwater; that the rates they have to charge exceed the
rates for bundled services because of the different regulatory treatment. This is unfortunate but
unsurprising. As I said at the time, the Order needlessly complicated our rate-of-return system
and in many ways made it harder, not easier, for small providers to serve rural America.
To provide some relief, my colleagues in recent months have urged me to work through a
punch list of lingering issues from the Order. I have accordingly directed staff to work through
that list. In April, the Commission amended a rule that would have disallowed capital expenses
to any project exceeding a Commission-set threshold by even a dollar; now providers can
complete efficient projects so long as they are willing to absorb any costs above the threshold.
That month staff also resolved concerns raised by rural carriers about the "parent-trap" rule. In
May, I circulated an order to address problems with two calculations made in the Order-one
involving a "surrogate method" to avoid duplicative cost-recovery and another involving charges
Page 2-The Honorable Sean P. Duffy
imposed on stand-alone broadband lines. Also in May, I circulated an order to address certain
duplicative reporting requirements imposed on rural providers. I look forward to continue
working with my colleagues on these issues.
Although I hope these changes will help, you may be right that something more
fundamental is needed. After all, if the Order is not carrying out its stated purpose of advancing
broadband deployment in rural America, we caimot ignore that problem-for time is not on the
side of rural Americans.
I appreciate your views on this matter. They will be included in the record of this
proceeding and considered as part of the Commission's review. Please let me know if I can be
of any further assistance.
Sincerely,
OFFICE OF
THE CHAIRMAN
FEDERAL COMMUNICATIONS COMMISSION
WASHINGTON
July 6, 2017
The Honorable Jeff Duncan
U.S. House of Representatives
2229 Rayburn House Office Building
Washington, D.C. 20515
Dear Congressman Duncan:
Thank you for your letter regarding the importance of delivering affordable access to
high-speed Internet to all Americans-including those in high-cost rural areas. As you know, I
grew up in Parsons, Kansas and during my time at the Commission have traveled to locations
ranging from Barrow, Alaska to Laurens, Iowa, and Carthage, Mississippi. Through these
experiences and meeting with countless Americans and carriers across the country, I have seen
what access to affordable high-speed Internet access can do for a community-for its schools, its
libraries, and its hospitals and for those Americans struggling to stay afloat.
Four years ago, I called on the Commission to tackle the issue of affordable broadband in
rural America head on. The problem back then was that the Universal Service Fund predicated
support on providing voice service. This meant bundled telephone/broadband offers could get
support while standalone broadband could not. The perverse result was that carriers were
incented to take universal service support and offer telephone/broadband bundles (even if
consumers could not afford them) while not offering standalone broadband. The business case
for stand-alone broadband didn't exist for some rural telephone companies-not because
consumers didn't want it, but, as you note in your letter, because our arcane rules penalized
companies for offering it.
I wish I could tell you that the FCC has fixed this problem. But as your letter rightly
points out, we have not. Despite the Commission's efforts in the 2016 Rate-of-Return Reform
Order-an effort that would not have happened but for the resounding call to action from
Congress as expressed in the letters you mention-I still hear from small carriers that offering
stand-alone broadband would put them underwater; that the rates they have to charge exceed the
rates for bundled services because of the different regulatory treatment. This is unfortunate but
unsurprising. As I said at the time, the Order needlessly complicated our rate-of-return system
and in many ways made it harder, not easier, for small providers to serve rural America.
To provide some relief, my colleagues in recent months have urged me to work through a
punch list of lingering issues from the Order. I have accordingly directed staff to work through
that list. In April, the Commission amended a rule that would have disallowed capital expenses
to any project exceeding a Commission-set threshold by even a dollar; now providers can
complete efficient projects so long as they are willing to absorb any costs above the threshold.
That month staff also resolved concerns raised by rural carriers about the "parent-trap" rule. In
May, I circulated an order to address problems with two calculations made in the Order-one
involving a "surrogate method" to avoid duplicative cost-recovery and another involving charges
Page 2-The Honorable Jeff Duncan
imposed on stand-alone broadband lines. Also in May, I circulated an order to address certain
duplicative reporting requirements imposed on rural providers. I look forward to continue
working with my colleagues on these issues.
Although I hope these changes will help, you may be right that something more
fundamental is needed. After all, if the Order is not carrying out its stated purpose of advancing
broadband deployment in rural America, we cannot ignore that problem-for time is not on the
side of rural Americans.
I appreciate your views on this matter. They will be included in the record of this
proceeding and considered as part of the Commission's review. Please let me know if I can be
of any further assistance.
Sincerely,
Ajit V. Pai
OFFICE OF
THE CHAIRMAN
FEDERAL COMMUNICATIONS COMMISSION
WASHINGTON
July 6, 2017
The Honorable Tom Emmer
U.S. House of Representatives
315 Cannon House Office Building
Washington, D.C. 20515
Dear Congressman Emmer:
Thank you for your letter regarding the importance of delivering affordable access to
high-speed Internet to all Americans-including those in high-cost rural areas. As you know, I
grew up in Parsons, Kansas and during my time at the Commission have traveled to locations
ranging from Barrow, Alaska to Laurens, Iowa, and Carthage, Mississippi. Through these
experiences and meeting with countless Americans and carriers across the country, I have seen
what access to affordable high-speed Internet access can do for a community-for its schools, its
libraries, and its hospitals and for those Americans struggling to stay afloat.
Four years ago, I called on the Commission to tackle the issue of affordable broadband in
rural America head on. The problem back then was that the Universal Service Fund predicated
support on providing voice service. This meant bundled telephone/broadband offers could get
support while standalone broadband could not. The perverse result was that carriers were
incented to take universal service support and offer telephone/broadband bundles (even if
consumers could not afford them) while not offering standalone broadband. The business case
for stand-alone broadband didn't exist for some rural telephone companies-not because
consumers didn't want it, but, as you note in your letter, because our arcane rules penalized
companies for offering it.
I wish I could tell you that the FCC has fixed this problem. But as your letter rightly
points out, we have not. Despite the Commission's efforts in the 2016 Rate-of-Return Reform
Order-an effort that would not have happened but for the resounding call to action from
Congress as expressed in the letters you mention-I still hear from small carriers that offering
stand-alone broadband would put them underwater; that the rates they have to charge exceed the
rates for bundled services because of the different regulatory treatment. This is unfortunate but
unsurprising. As I said at the time, the Order needlessly complicated our rate-of-return system
and in many ways made it harder, not easier, for small providers to serve rural America.
To provide some relief, my colleagues in recent months have urged me to work through a
punch list of lingering issues from the Order. I have accordingly directed staff to work through
that list. In April, the Commission amended a rule that would have disallowed capital expenses
to any project exceeding a Commission-set threshold by even a dollar; now providers can
complete efficient projects so long as they are willing to absorb any costs above the threshold.
That month staff also resolved concerns raised by rural carriers about the "parent-trap" rule. In
May, I circulated an order to address problems with two calculations made in the Order-one
involving a "surrogate method" to avoid duplicative cost-recovery and another involving charges
Page 2-The Honorable Tom Emmer
imposed on stand-alone broadband lines. Also in May, I circulated an order to address certain
duplicative reporting requirements imposed on rural providers. I look forward to continue
working with my colleagues on these issues.
Although I hope these changes will help, you may be right that something more
fundamental is needed. After all, if the Order is not carrying out its stated purpose of advancing
broadband deployment in rural America, we cannot ignore that problem-for time is not on the
side of rural Americans.
I appreciate your views on this matter. They will be included in the record of this
proceeding and considered as part of the Conimission' s review. Please let me know if I can be
of any further assistance.
Sincerely,
OFFICE OF
THE CHAIRMAN
FEDERAL COMMUNICATIONS COMMISSION
WASHINGTON
July 6, 2017
The Honorable Blake Farenthold
U.S. House of Representatives
2331 Rayburn House Office Building
Washington, D.C. 20515
Dear Congressman Farenthold:
Thank you for your letter regarding the importance of delivering affordable access to
high-speed Internet to all Americans-including those in high-cost rural areas. As you know, I
grew up in Parsons, Kansas and during my time at the Commission have traveled to locations
ranging from Barrow, Alaska to Laurens, Iowa, and Carthage, Mississippi. Through these
experiences and meeting with countless Americans and carriers across the country, I have seen
what access to affordable high-speed Internet access can do for a community-for its schools, its
libraries, and its hospitals and for those Americans struggling to stay afloat.
Four years ago, I called on the Commission to tackle the issue of affordable broadband in
rural America head on. The problem back then was that the Universal Service Fund predicated
support on providing voice service. This meant bundled telephone/broadband offers could get
support while standalone broadband could not. The perverse result was that carriers were
incented to take universal service support and offer telephone/broadband bundles (even if
consumers could not afford them) while not offering standalone broadband. The business case
for stand-alone broadband didn't exist for some rural telephone companies-not because
consumers didn't want it, but, as you note in your letter, because our arcane rules penalized
companies for offering it.
I wish I could tell you that the FCC has fixed this problem. But as your letter rightly
points out, we have not. Despite the Commission's efforts in the 2016 Rate-of-Return Reform
Order-an effort that would not have happened but for the resounding call to action from
Congress as expressed in the letters you mention-I still hear from small carriers that offering
stand-alone broadband would put them underwater; that the rates they have to charge exceed the
rates for bundled services because of the different regulatory treatment. This is unfortunate but
unsurprising. As I said at the time, the Order needlessly complicated our rate-of-return system
and in many ways made it harder, not easier, for small providers to serve rural America.
To provide some relief, my colleagues in recent months have urged me to work through a
punch list of lingering issues from the Order. I have accordingly directed staff to work through
that list. In April, the Commission amended a rule that would have disallowed capital expenses
to any project exceeding a Commission-set threshold by even a dollar; now providers can
complete efficient projects so long as they are willing to absorb any costs above the threshold.
That month staff also resolved concerns raised by rural carriers about the "parent-trap" rule. In
May, I circulated an order to address problems with two calculations made in the Order-one
involving a "surrogate method" to avoid duplicative cost-recovery and another involving charges
Page 2-The Honorable Blake Farenthold
imposed on stand-alone broadband lines. Also in May, I circulated an order to address certain
duplicative reporting requirements imposed on rural providers. I look forward to continue
working with my colleagues on these issues.
Although I hope these changes will help, you may be right that something more
fundamental is needed. After all, if the Order is not carrying out its stated purpose of advancing
broadband deployment in rural America, we cannot ignore that problem-for time is not on the
side of rural Americans.
I appreciate your views on this matter. They will be included in the record of this
proceeding and considered as part of the Commission's review. Please let me know if I can be
of any further assistance.