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NARUC Mulls USF Update

Pa. PUC Chairman Urges ACP Renewal

LA QUINTA, Calif. -- Congress should continue “lifeblood connectivity” provided through the affordable connectivity program (ACP), Pennsylvania Public Utility Commission Chairman Stephen DeFrank said in an interview at this week’s NARUC meeting. Expect broadband, universal service and pole attachments to be key issues for the state PUC in the year ahead, he said. Industry officials debated possible USF changes during a Tuesday panel.

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Pennsylvania Gov. Josh Shapiro (D) appointed DeFrank as PUC chairman Aug. 30, replacing term-expired Gladys Brown Dutrieuille. DeFrank subsequently joined NARUC’s Telecom Committee. Telecom “is a new area [for me] that I really want to learn more about,” particularly since the PUC chairman has a seat on the Pennsylvania Broadband Development Authority, he told us Monday. “The pandemic has shown us that connectivity is essential today,” said DeFrank. “In our society, it’s a necessity just like every other utility we have.”

All five Pennsylvania PUC members signed a Sept. 7 letter to the state’s congressional delegation urging ACP reauthorization, said DeFrank. More than 600,000 Pennsylvanians participate in ACP, he said. It shouldn’t be a partisan issue, since the unserved and underserved live in rural areas and inner cities, he said. “Both sides of the political aisle have constituents that are impacted by it.” If Congress lets funding expire, DeFrank expects there would be a “conversation” with Gov. Shapiro and the legislature about what the state can do. “I would hope there’s support for continuing the program at least in Pennsylvania if we don’t have the federal program.”

Pennsylvania aims to start driving dollars to broadband by Q2 2023, DeFrank said. The state’s $1.2 billion allocation from NTIA’s broadband, equity, access and deployment (BEAD) program will connect many unserved and underserved residents, he said. While that amount of money will make a “dent,” it probably won’t be enough to connect 100% of the state, said the PUC chairman: The state will start with “low-hanging fruit,” but as you get “further up that tree it becomes more and more expensive.”

Pennsylvania’s new pole attachment authority could be critical for getting the most bang for the buck with broadband spending, said DeFrank. The state reverse-preempted the FCC’s pole-attachment powers in 2020 (see 2003190032), putting “control in our hands,” he said. Also, the state will likely look at wireless options to further extend connectivity into more remote areas, said the chairman: For some, “wireless is going to be the most efficient and economical solution.”

The Pennsylvania PUC approved an advance notice of proposed rulemaking in August to amend state USF rules (see 2308240072). The commission will consider contribution and distribution issues, and how to update the program to account for technology changes, said DeFrank. “We always have folks that don’t think they should be paying into it,” but the commission wants “to make sure we're maximizing dollars into that program and driving them out as well.”

DeFrank hopes to complete a separate rulemaking in Q2 or Q3 2024 on simplifying the application process for the state’s low-income universal service programs, which cover multiple types of regulated utilities, said DeFrank. It might make sense to use a single application and share data among the currently siloed programs, he said. Verizon urged the PUC not to include telecom in the review (see 2306080025).

DeFrank became PUC chairman at a time of transition for the Pennsylvania agency, he noted. “We have a number of bureau directors … approaching retirement age, and so these next five to 10 years are going to be critical.”

USF, COLR Changes Sought

With federal USF changes possibly on the horizon, telephone and cable industry officials on a NARUC panel Tuesday disagreed on what to tackle first. They also debated the continuing need for states’ eligible telecom carrier (ETC) designation process and carrier of last resort (COLR) obligations.

The first thing we need to look at is the distribution side” of USF, said Alex Minard, NCTA's lead legislative counsel. About $160 billion coming for broadband is “going to have an impact” on what the USF should do going forward, the cable industry official said. One shouldn’t assume ongoing support will be needed in an area that received a deployment grant, Minard said. Support shouldn’t be based on the type of provider, he added.

Tackle contribution first, disagreed NTCA, USTelecom and Brightspeed officials. “All options are on the table,” said USTelecom Vice President-Strategic Initiatives and Partnerships Lynn Follansbee. However, she said making USF subject to appropriations could be too volatile. Consider making edge internet companies pay in, she said. Once more companies contribute, there might be additional money to create a relief fund for rebuilding networks after natural disasters, Follansbee said.

More than a deployment program, USF helps with affordability and network sustainability, said NTCA Executive Vice President Mike Romano. Without the high-cost fund, NTCA members on average would have to increase rates by $100 monthly, he said. The association remains concerned about cases in U.S. appeals courts for the 5th, 6th, 11th and D.C. circuits on USF’s legality, said Romano: Decisions against the fund could put rural networks at risk.

ETC designation remains important for accountability, as shown when the state process revealed problems with Rural Digital Opportunity Fund (RDOF) winners, said Romano. Minard disagreed that the process remains necessary. All the RDOF problems found by states would have been uncovered anyway by the FCC as it reviewed long-form applications, the NCTA official said. BEAD and ACP programs have no ETC requirement, he added. Romano countered that BEAD includes significant state involvement in a different way, while ACP features a more competitive marketplace.

Industry panelists also called for a COLR update. “We have to address the regulatory lag that is still applying to the legacy voice networks,” said Brightspeed Vice President-Regulatory Pamela Sherwood. BEAD will subsidize broadband with the assumption that customers can get voice over the top, she said. But after BEAD-funded networks are deployed, Brightspeed will still have COLR obligations on copper voice networks in many states, she said. Romano said the FCC and states “will have to figure out what a provider of last resort regime looks like in the 21st century where the primary purpose is broadband with a voice component … in those areas where there’s a market failure.”

It’s hard for me to sit here and hear that COLR [is] this big obstacle” when companies are finding ways around it, responded Massachusetts Department of Telecommunications and Cable Commissioner Karen Charles. ILECs in her state let copper go bad and, rather than repair it, force customers onto a different technology like wireless that lacks the same state oversight, she said. It would be great if the FCC and states could work on shifting COLR obligations to VoIP and wireless, said Charles: Such protections “are still needed and consumers believe that they still have them.”

NARUC Notebook

NARUC is “focused on the future,” the state regulator association’s incoming President Julie Fedorchak said Tuesday. Communications got a mention in the North Dakota Republican commissioner’s energy-focused opening remarks. “Telecom investments will never be satisfied, yet are essential to connect everything,” she said. Fedorchak will take over as president from Connecticut Commissioner Michael Caron.