February 16, 2017
The United States Telecom Association (USTelecom) opposes the Petition for Reconsideration (Petition) filed by Sandwich Isles Communications, Inc. (SIC) seeking to set aside the December 5, 2016 Order in WC Docket No. 10-90. SIC has filed the Petition solely in an effort to avoid the penalties associated with the related Notice of Apparent Liability for Forfeiture and Order that resulted from the findings in this Order and was released on the same day. Unfortunately for SIC, there are no new facts or arguments presented in their Petition that refutes the facts already presented.
USTelecom has been active in this proceeding as a supporter of both the National Exchange Carriers Association, Inc.’s (NECA) request for guidance4 and AT&T’s Application for Review, both of which sought the Federal Communications Commission’s (FCC or Commission) assistance in reigning in what was widely viewed as rampant abuse of the Universal Service Fund by SIC. In September 2010, the Wireline Competition Bureau (WCB) of the FCC granted SIC a special 50 percent allowance in the revenue requirements of the NECA for “disputed lease expenses” associated with a submarine cable and land-based network (cable system). This special allowance was granted, even though the Commission recognized that the expenses were not justified by current and expected future customer demand. In response to the WCB’s Order, AT&T filed its Application for Review, arguing that, among other things, the Order “saddles ratepayers of Sandwich Isles’ regulated services with millions of dollars in expenses that do not – and will not ever – benefit them in any way.”
Subsequent to the WCB Order, the SIC lease was the subject of dispute before the Commission on a number of other occasions in this ongoing matter and a separate proceeding seeking waiver of the $250 per line cap on universal service funds. After discovering that SIC had discontinued making lease payments to the closely-related Paniolo Cable, despite submitting the lease expenses as a legitimate revenue requirement expense, NECA sought guidance from the Commission as to whether those missed lease payments should have been included in the revenue requirement pursuant to the Order.