Funding Broadband & Net Neutrality Implications for the State Lynn Notarianni PUC Telecom Section Chief

2014 Telecom Reform - Recap  HB – modified § & 502 & added § (3) Creates the Broadband Deployment Board & Fund Allows the PUC to allocate monies from the Colorado High Cost Support Mechanism(HCSM) for the deployment of broadband in unserved areas of the state where monies are no longer needed to support high cost voice service Also allows for all monies that the general assembly may appropriate to the fund  HB – modified § & 502 Revises the policies and guidance regarding the HCSM for voice service & disallows support if an area is found to be effectively competitive (ECA)  PUC Proceeding No. 13M-422T First round of 56 CenturyLink wire centers found to be ECAs. Just over $3 million to be allocated to the Broadband Fund. Is currently being disputed in district court however $200K has been allocated for administrative expenses

CO Broadband Board- Update  16 Member Board appointed  Broadband Board Activity Administrative funding received Multiple Board meetings held Board has intervened in HCSM District Court proceeding In process of obtaining staffing support & defining grant process BrianShepherdGovernor's Office of information Technology* (Chair) CharlesUnseldColorado Department of Local Affairs DavidShipleyRye Telephone Company EdmondBostickCO Telehealth Network JaneBlackstoneSteamboat Chamber of Commerce JeffBrownViaero Wireless JeremyWeathersStormy Productions Lisa R.ScalponeViaSat, Inc. LynnNotarianniPublic Utilities Commission* (non-voting) MeridithMarshallOffice of Economic Development and International Trade MichaelNelsonComcast MikeBrazellPark County Commissioner* (Secretary) RichardSmithMayor of Bayfield* (Vice Chair) RobertaRobinette ATT Colorado MarkSoltesCenturyLink RogerPartridgeDouglas County Commissioner

PUC ECA- Update  Proceeding No. 14M-0947T – ECA Round II 104 CenturyLink wire centers being evaluated in two phases. Forty-eight wire-centers are in the first phase & 56 will be in the second phase  PUC Staff has filed initial recommendation & supporting data 46 of 48 Wire centers recommended for ECA designation as having sufficient competition for voice service. Other parties will file responses in early July, 2015  Four Public Comment Hearings scheduled for July 13-16, 2015 Denver Delta Colorado Springs Fort Morgan  PUC Hearing scheduled to begin November 9, 2015

PUC ECA- Round II 104 CenturyLink Wire centers

PUC ECA- Round II Phase I 48 CenturyLink Wire centers

PUC 2015 HCSM- Update  Multiple factors impacting 2015 HCSM distributions Legal Policy Structural/Operational  PUC Proceeding No. 15M-0158T – opened in 3/2015 to provide guidance on distributions including 1Q2015 interim distributions  Any additional allocations from the PUC to the Broadband Fund will be guided by: ECA outcomes 15M-0158T decisions HCSM contributions level

FCC Connect America Fund (CAF) Activity  CAF I – Colorado CenturyLink was allocated $6.1 million in CAF I Phase I support $1.7 million in CAF I Phase II to support broadband in unserved locations  CAF II – Colorado The FCC is providing an offer of support to CenturyLink in Colorado of $26, 509,143 for six years. The offer must be accepted or declined by August 27,  Key FCC CAF II documents: WCB Announcement – Phase II support offered CAF Cost Model Final Results Report – Offer by Carrier & State List of Census Blocks Funded by Final Connect America Cost Model Guide to Working with the Census Block List Connect America Phase II – Final Eligible Areas Map

Contributions Conundrum  Steady decline of contributions to both the State HCSM & Federal USF pose significant challenges to both voice & broadband funds HCSM has experienced declining contributions for the past three years ranging from 8% to 5% There is a legislative cap of 2.6% of intrastate revenues within which funds, if available, can be allocated to the Broadband Fund The current USF fee of 16.8% continues to climb in order to sustain the program at total current funding levels The FCC has recently opened a general contributions proceeding & a rulemaking to address shifting rural incumbent phone companies USF to a broadband fund. Preliminary estimates appear to have Colorado losing several million dollars in USF funding potentially putting further pressure on the State HCSM  Key Proceedings CO PUC – 15M-0158T – 2015 HCSM FCC Contributions (FCC & WC Docket No ) FCC Broadband (FCC & DA )

FCC Report & Order On Remand, Declaratory Ruling & Order Protecting and Promoting the Open Internet  Reclassified Broadband from an information service to a Title II Common Carrier telecommunications service  Focuses narrowly & specifically on the principle that individuals should be free to access legal content and applications equally, regardless of the source, without broadband service providers discriminating against specific online services or websites, or “Net Neutrality”  Prohibits additional universal service fund contribution assessments from Broadband service providers at this time Released March 12, 2015

Net Neutrality Defined &–FCC Rules  Simply Put – Internet openness & the disallowance of blocking, throttling and paid prioritization of internet traffic for fixed & mobile broadband  FCC Bright Line Rules (see Blocking - broadband providers may not block access to legal content, applications, services, or non-harmful devices* Throttling - broadband providers may not impair or degrade lawful Internet traffic on the basis of content, applications, services, or non-harmful devices* Paid Prioritization - broadband providers may not favor some lawful Internet traffic over other lawful traffic in exchange for consideration of any kind—in other words, no "fast lanes." This rule also bans ISPs from prioritizing content and services of their affiliates *Allows for “reasonable network management”

Broadband Internet Access Service – Sources of Legal Authority  Telecommunications Act SEC ADVANCED TELECOMMUNICATIONS INCENTIVES (a) In General: The Commission and each State commission with regulatory jurisdiction over telecommunications services shall encourage the deployment on a reasonable and timely basis of advanced telecommunications capability to all Americans (including, in particular, elementary and secondary schools and classrooms) by utilizing, in a manner consistent with the public interest, convenience, and necessity, price cap regulation, regulatory forbearance, measures that promote competition in the local telecommunications market, or other regulating methods that remove barriers to infrastructure investment  Communications Act – Title II 47 U.S. Code Part I - Common Carrier Regulation Prescribes the requirements for wireline & wireless telecommunications services & providers including but not limited to just & reasonable rates, terms & conditions, complaints, privacy, accessibility, & interconnection

No Forbearance Does not forbear from a limited number of sections of statute necessary to ensure consumer protection, & promote competition & universal access §201 - requiring terms of service to be just and reasonable ¶ §202 - generally bans unreasonable discrimination ¶ §208 - complaint procedures ¶ Along with § 206, § 207 & § 209 §§216 & extends Title II obligations to carrier successors in interests/agents ¶ §222 - customer privacy protections §224 - provides telecom carriers with regulated access to poles, ducts, conduits, and rights-of-way; §§225, 255, & 251(a)(2) - access for persons with disabilities §224 - promoting universal access to broadband but do not immediately mandate USF contributions

Forbearance  Yes – 27 Provisions of Title II & 700 FCC Rules & Regulations including generally: Federal Tariff filing Ex ante rate regulation Network unbundling rules for last mile facilities §214 discontinue service notice requirements 252 interconnection arbitrations procedure but will handle interconnection disputes if they come up Requiring BIAS to contribute to universal service fund at this time

FCC Stated Impact to States  States are bound by forbearance directives in the decision, for example: May not “tax” the internet May not impose a state-level contribution on broadband providers that do not presently contribute  But……. “finding that this service is jurisdictionally interstate does not by itself preclude all possible state requirements regarding this service. Given the specific federal recognition of a State role in broadband data collection, we anticipate that such State efforts will not necessarily be incompatible with the federal efforts or inevitably stand as an obstacle to the implementation of valid federal policies.”

QUESTIONS? Lynn Notarianni PUC Telecom Section Chief