Partner Communications Cooperative WC Docket No Page 1 of 2

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1 Law Offices of Bennet & Bennet, PLLC Maryland 6124 MacArthur Boulevard Bethesda, Maryland Tel: (202) Fax: (202) District of Columbia 5185 MacArthur Boulevard NW, Suite 729 Washington, DC Caressa D. Bennet Daryl A. Zakov Michael R. Bennet Robert A. Silverman Marjorie G. Spivak* Anthony K. Veach # Kenneth C. Johnson Erin P. Fitzgerald Howard S. Shapiro Of Counsel Tara B. Shostek * Admitted in DC & PA Only Admitted in DC & WA Only Admitted in DC & VA Only #Admitted in DC & FL Only October 29, 2014 Via ECFS Marlene H. Dortch, Secretary Office of the Secretary Federal Communications Commission th Street, S.W. Washington, DC Dear Ms. Dortch: Re: WC Docket No On Tuesday, October 28, 2014, Donald Jennings, Executive Vice President of Partner Communications Cooperative ( Partner ) in Iowa, Jill Canfield, Vice President of Legal & Industry at the National Telecommunications Cooperative Association ( NTCA ), and Kenneth Johnson of Bennet & Bennet, PLLC, counsel for Partner, met with Amy Bender, Legal Advisor to Federal Communications Commission ( FCC or Commission ) Commissioner Michael O Rielly to discuss Partner s concerns about universal service reform and, specifically, the obsolete parent trap rule. Attached is the presentation Partner discussed during these meetings. Partner noted that the FCC s parent trap rule has created a neglected stepchild subset of rural, high-cost exchanges that falls neither under price cap rules nor under rate-of-return rules. Partner stated that the small subclass of parent trap exchanges should be subject to rural, rate-of-return rules as the Commission moves forward with its Connect America Fund ( CAF ) rules. Partner also discussed how the parent trap rule is a disincentive to consolidation in the rural telecommunications industry. Partner pointed out that its parent trap exchanges were indeed as high-cost as its rate-of-return exchanges and that providing service in the parent trap exchanges was financially challenging. Further, the parent trap rule has a deleterious effect on the provision of broadband in Partner s parent trap exchanges, as reflected in Partner s FCC Form 477 filings. Partner suggested that the Commission either eliminate the parent trap rule in its next universal service order or, in the alternative, ask the following questions in its next universal service further notice of proposed rulemaking ( FNPRM ): Partner Communications Cooperative WC Docket No Page 1 of 2

2 October 29, 2014 Page 2 of 2 Bennet & Bennet, PLLC Should the Commission eliminate the parent trap rule? Is the original rationale for the parent trap rule still applicable? Should the Commission transition rural, high-cost parent trap exchanges to its rate-of-return CAF regime? Should you have any questions or require additional information, please do not hesitate to contact the undersigned. Respectfully submitted, /s/ Kenneth C. Johnson Kenneth C. Johnson Attachment cc: Amy Bender

3 1Fiber to the Home 10/29/2014 Parent Trap Rural Communities left behind in Broadband Deployment Prepared by: Don Jennings, Executive Vice President Partner Communications Cooperative

4 Introduction Objective Discuss the impact of the Parent Trap Rule on Broadband Deployment for the rural Iowa Communities of Baxter, State Center, Melbourne and Rhodes. Outcome FCC should create a mechanism within the Connect America Fund for small rate-of-return carriers which will fix the Parent Trap issue: 1. Provide sufficient and predictable support for low density rural service areas. 2. Remove outdated rules that require voice services and preclude access by certain consumers to affordable broadband. 3. Remove the Parent Trap - a roadblock to consolidation of rural low density exchanges resulting in expanded broadband deployment. 4. Promote effective broadband deployment rural exchanges where investment has long been lacking. 2

5 Situation Overview Partner Communications Cooperative serves low density rural exchanges in Iowa Gilman, Kellogg, Baxter, State Center Melbourne, and Rhodes Gilman & Kellogg received full USF support and have been upgraded to FTTH. Baxter, State Center, Melbourne, and Rhodes acquired in 2006 for Iowa Telecom Services, are limited under the Parent Trap Rule for USF support. 3

6 Plant Characteristics Partner Communications Cooperative Exchange Project Estimated Mileage Subtotal Town Subtotal Rural Total Cable Mileage Baxter, Iow a State Center, Iow a Rhodes, Iow a Melbourne, Iow a System Total Subscriber Lines 1,662 Subscribers per Route Mile

7 Broadband Characteristics PCC TOTAL Census blocks = 1040 Census blocks served = 880 Census blocks not fully served = all located in the Parent Trap Exchanges 100% Census block coverage for the Gilman and Kellogg exchanges that are FTTH. This reporting cycle Partner serves 85% of the total blocks. 5

8 Aging Copper Plant Acquired rural exchanges should be eligible for sufficient and predictable support that will enable the deployment and ongoing operations of robust broadband-capable networks. Fiber optics is the solutions for upgrading aging copper distribution facilities. Approved USDA RUS Loan to extend fiber from the CO to the edge in order to provide last mile citizens with broadband access. Partner built 14 miles of FTTH facility in in State Center investing $800,000. 6

9 Challenges to Upgrading Acquired Exchanges A roadmap to upgrading these communities has been hindered, if not precluded, by a lack of sufficient and predictable USF support for a committed local company, like Partner Communications Cooperative, wanting to invest for its members. 7

10 Comments In order to serve underserved and unserved customers on the edge of the exchange, facility must be updated and thus all customers would receive an upgrade. CAF II and the Experimental Broadband Program do not provide a systematic program that a potential buyer can factor into an acquisition. Under USF, a systematic system, business plans can be developed, so qualified rural ETCs can purchase small rural exchanges and make improvements. This meets the goals of the National Broadband Plan. 8