STATEMENT OF
COMMISSIONER MICHAEL O’RIELLY
Re: Connect America Fund, WC Docket No. 10-90, ETC Annual Reports and Certifications, WC 
Docket No. 14-58, Developing a Unified Intercarrier Compensation Regime, CC Docket No. 01-
92.
Today the Commission adopts timely and meaningful reforms to the rate-of-return portion of the 
universal service high-cost program.  In doing so, it furthers the goal of universal service in all regions of 
the nation.  The actions taken in this order will provide stability and certainty for carriers to invest in 
broadband and expand service for consumers in rural America.  It is the right thing to do, and I am proud 
to support this order.
For more than a year, we have worked on a specific effort to achieve a long-lasting, fiscally 
responsible, and forward-leaning system that enables all rate-of-return carriers to obtain Federal support 
to build out broadband and connect many unserved Americans in their communities.  From the start, I 
was convinced that with some hard work, creative thinking, and compromise from everyone – including 
FCC Commissioners – we could find a path forward.  Therefore, considerable time was spent with rate-
of-return carriers and their associations to understand detailed concerns and potential issues with a myriad 
of proposals.  I personally traveled around the country to meet with the small carriers that serve some of 
the most rural and remote parts of America.  It was a privilege to hear their unique perspectives.  I also 
credit the trade associations who put in a tremendous effort on behalf of their members to distill, refine, 
and test various ideas.  To date, this has been the most open, inclusive, and collaborative process I have 
experienced at the FCC.
With more than 1,100 rate-of-return study areas involved, it was clear that no single approach to 
reform would work.  Carriers vary immensely in terms of size, geography, service offerings, investment 
and deployment cycles, and policy preferences.  For instance, some providers felt that standalone 
broadband would be critical to their future success while others I spoke with had no plans to offer it.  
Certain carriers were adamant about moving to a model-generated support system while others could not 
fathom operating under a different regulatory structure than the one they are familiar with today.  
Therefore, we needed to provide optionality, while ensuring that all paths contain appropriate incentives 
to deploy broadband, and in a cost-effective manner.  
Thanks to many productive conversations, we created a package of reforms designed to resolve 
the standalone broadband issue while at the same time fixing existing problems with the current system, 
providing flexibility for carriers, and including appropriate transitions.  In particular, this effort will
improve incentives to invest in broadband, establish requirements to extend rate-of-return carriers’ reach 
to unserved consumers, better target funding to where it is needed most while being cognizant of prior 
investments, prevent funding areas where competition exists, and provide a completely voluntary path to 
model-based support for carriers who have actively sought it.  
I am particularly grateful that we were able to reach agreement on defined buildout obligations 
for both the legacy and model paths.  This will ensure steady progress in connecting unserved Americans, 
which was a chief goal of mine in undertaking this reform effort since we are stewards for the 
contributions made by American ratepayers.  Moreover, carriers will be reporting geocoded locations as 
they build out, which will enable us to map progress nationwide, providing more accountability and 
transparency, including to consumers that pay in to universal service, as to how the funding is being used.  
It also means we will be able to further streamline existing reporting requirements, removing additional 
burdens from small providers.
In addition, the item provides all carriers with a totally voluntary option to self-identify areas that 
would be uneconomic for them to serve within the next 10 years.  These are the rate-of-return “RAF-like” 
areas that I have spoken of in the past.  By providing carriers complete discretion to identify at least some 
2of these areas now instead of waiting up to 10 years from now to inventory who didn’t get served, the 
Commission may be able to find another way to bring service to those consumers sooner.    
As is expected with any compromise document, there are certain things I would have done 
differently, and it is only natural that others would feel the same.  For example, I am hesitant to commit to
additional reforms for Tribal lands until we can understand the impact of the reforms we adopt today in 
better targeting funding to unserved areas, or until the Remote Areas Fund is finalized, as that too is 
sufficiently intertwined with bringing service to American Indians.  Moreover, I pushed hard to include 
reforms particularly pertinent to the Alaskan rate-of-return carriers.  In the end, my colleagues and I 
settled on a slightly delayed timeline of completing it by the second quarter of this year, which turned out 
to be acceptable to the affected carriers and the Alaska Congressional delegation.  Further, while I support 
the rulemaking to eliminate specific, bright-line categories of expenses that are not tied to the provision of 
service (e.g., artwork and cafeterias), other accounting proposals could possibly lead us down an over-
regulatory path or may be just unnecessary.  In addition, I have previously expressed skepticism regarding 
the Commission’s use of predictive judgments, which is contained within the item.  On balance, however, 
the benefits of specific components combined with finally completing a meaningful set of reforms easily 
mitigates these concerns in my view.
It is my hope that this solid foundation will provide the predictability so desperately needed by 
rate-of-return carriers, eliminating the need revisit the issue in the near future.  At the same time, I 
commit to working with the providers and their associations to promptly address any legitimate issues 
that arise after the order is released.
In closing, I extend a special thanks to my colleagues, Chairman Wheeler and Commissioner 
Clyburn, for being patient with me.  More importantly, this item couldn’t have been completed without 
the small but able and hardworking team within the Wireline Competition Bureau, especially Carol 
Mattey, who deserve our appreciation for the work they have done and the implementation issues they 
now have before them.