Overbuilding again?

Well, now it's moved past one Commissioner's complaints.  A trio of rural phone companies have filed a request for rule changes with the FCC, seeking to preventing overbuilding of existing fiber.

First, I'll say that they do have a point.  But their suggested rule changes are terrible.

Where do we agree?  "Because the regions include hundreds of schools and cover thousands of square miles, only select, large service providers have been able to respond to the RFPs. Smaller providers that are already serving individual schools within the region, via their USF-supported fiber networks, were unable to respond to the RFPs due to the sheer size of the requested WANs. "  Yup, that's a problem, and not unique to fiber; I have provided examples of statewide purchases excluding bidders.

I don't have a great solution to the "too big to get bids" problem.  I think the best solution is to get rid of consortia and use purchasing cooperatives; applicants combine their purchasing power, but contract individually with the selected service provider (which of course means filing their own Form 471).  So in this case, each district in the TX consortium would have to compare the consortium offering to other bids, including bids that only serve that applicant.  If there are reasons that a district would prefer to be connected to the consortium network, they can include that as an evaluation criterion.  But price has to be primary.

The problem I can't solve is that such a system is less attractive for bidders in two ways: 1) the most lucrative clients are more likely to find a better deal and not purchase through the cooperative, leaving the winning bidder to cope with the lower-quality clients; 2) if a client or two in the middle of the area drops out, it could blow a hole in the network design.

But that solution is much better than the change proposed by the trio of phone companies: "Category One services shall not include special construction costs for the construction of fiber where it has been demonstrated that fiber already exists, unless the existing fiber owner is unwilling to negotiate in good faith to lease that fiber at reasonable market-based prices."

How will USAC determine if fiber exists?  Thusly:

1. Anyone applying for Special Construction will have to have a "FCC Form 471 Special Construction Exhibit" which includes a list of locations and a map of the fiber route.  The Exhibit is posted publicly for 60 days
2. During that 60 days, anyone with fiber in the area "shall submit information to the Administrator to show that fiber already exists in the applicable locations."
3. If USAC decides there is existing fiber, the service provider on the 471 will have 120 days "to negotiate in good faith the terms, conditions and reasonable, market based price of a fiber lease agreement."

Reasons I dislike this solution, off the top of my head:

1. More forms and more review?  The application process and review process for self-provisioned fiber is already incredible onerous.
2. The process would not conclude until 180 days after the Form 471.  So the FCDL is delayed over 180 days (60 days + time for USAC to decide if fiber exists + 120 days to negotiate).  It's already a rush to get a big network lit by June 30, and this process would remove almost half the time available.
3. " fiber already exists in the applicable locations" is too vague.  If the map includes one pole that has someone else's fiber, are we going to put the application on hold for 180 days?  What if someone has fiber connecting some of a district's locations, but not others?  What if there is fiber running with a half mile of the locations?  Within a mile? Ten miles? 
4. Negotiate the "market based price"?  These 3 telecoms are trying to ensure that there is no market, by maintaining their monopoly on fiber in the area.  This whole situation arose because a new service provider can lay new cable more cheaply than the cost of leasing existing fiber.  Even when the existing fiber was installed with USF subsidies (from the High Cost program).  Because the existing fiber is at monopoly prices.
5. The new service provider won't know it's costs when it submits a bid, since the cost will be dependent on the results of negotiations, half a year after the 471 is submitted.
6. You think this won't end up in court?  Any time I hear "good faith," I think, "there's a lawsuit waiting to happen."
7. This solution assumes that only large projects will be affected.  What if the Baby Bell has fiber coming into a building, but the cable company, which has fiber on a nearby pole, will have to pay Special Construction to bring the fiber into the building?  Does the cable company have to negotiate for the existing fiber?
8. More fiber is better.  The E-Rate is not in the business of running fiber out to remote areas; that's the job of the High Cost program.  So the E-Rate should only pay for overbuilding in cases where it is cheaper.  That is currently the rule.  These new rules seek to increase the cost to the E-Rate program in order to protect a monopoly.

So I hope the FCC will not make the changes suggested.  Instead, maybe they should just stop pushing consortia.