D.C. Circuit to Consider Second Case Pitting CETCs Against FCC
The FCC and small and mid-sized wireless carriers are headed to court in November in a case that examines whether the agency acted improperly in a December order that redirected high-cost Universal Service Fund money to a fund that will pay for broadband buildout (CD Jan 4 p2). The carriers challenging the order complain that while the reserved funds may ultimately be used for broadband, the commission does not place them under one of the four existing USF programs. Oral argument before the U.S. Court of Appeals for the D.C. Circuit is scheduled for Nov. 15 in Rural Cellular Association v. FCC.
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"The Order on review should be vacated because neither the Act nor the agency’s own rules authorize the FCC to divert and hold mandatory universal service contributions for future use at an unspecified time for unspecified purposes,” the carriers told the court in recent reply briefs. “The FCC’s attempts to avoid review of the Order by this Court and to provide post hoc explanations cannot save the … Order.” Section 254 of the Communications Act makes clear that the FCC must establish programs before mandating industry contributions to support them, petitioners said. They noted the commission’s own regulations for calculating the contribution factor, going back to 1997, have always based contributions on the Universal Service Administrative Co.’s quarterly projections of demand for existing programs.
The carriers differentiate the December order from the FCC’s 2008 interim cap on payments to competitive eligible telecommunications carriers under the high-cost USF program, later upheld by the D.C. court. “The FCC’s attempt to bootstrap from the Interim Cap Order … is unavailing because the Interim Cap Order and the Order on review had very different effects that required independent analyses and explanations,” petitioners contend. “The Interim Cap Order imposed an emergency interim cap that limits CETC [Competitive Eligible Telecommunications Carrier] support in any given state to a fixed level during the very short time until the FCC could adopt long-term universal service reform, which the FCC represented to this Court would be completed by the end of 2008."
The FCC counters that the December order merely “amended the interim-cap rule, which the Commission had adopted in 2008 to rein in the explosive growth of high-cost support disbursements to competitive ETCs.” The agency concluded in the order that “there is no reason to redistribute high-cost support relinquished by a competitive ETC to other carriers,” the commission said. “Instead, reducing the interim cap would enable any excess funds to be used more effectively to implement upcoming universal service reforms.”
The carriers are incorrect in how they characterize Section 254, the FCC said. “No statutory provision prohibits [the commission] from collecting in advance the contributions necessary to fund those services and mechanisms. Like its interpretation of its own rules, the Commission’s reasonable interpretation of the Communications Act is entitled to deference by the Court.”