The FCC beat the shutdown of the federal government at midnight Monday by releasing an agenda for the Oct. 22 meeting and a handful of orders. The agency is now mostly shuttered, and will stay so as long as Congress fights over the closure, which by some accounts could extend deep into October. The FCC website is all but down, with only a few documents available related to auctions and the shutdown itself.
Federal Universal Service Fund
The FCC's Universal Service Fund (USF) was created by the Telecommunications Act of 1996 to fund programs designed to provide universal telecommunications access to all U.S. citizens. All telecommunications providers are required to contribute a percentage of their end-user revenues to the Fund, which the FCC allocates for four core programs: 1. Connect America Fund, which subsidizes telecom providers for the increased costs of offering services to customers in rural and remote areas 2. Lifeline, which directly subsidizes low-income households to help pay for the cost of phone and internet service 3. Rural Health Care, which subsidizes health care providers to offer broadband telehealth services that can connect rural patients and providers with specialists located farther away 4. E-Rate, which subsidizes rural and low-income schools and libraries for internet and telecommunications costs The Universal Service Administrative Company (USAC) administers the USF on behalf of the FCC, but requires Congressional approval for its actions. Many states also operate their own universal service funds, which operate independently from the federal program.
A common theme throughout the hundreds of comments filed on the FCC E-rate program this week was the plea from school districts and state alliances for an increased cap in E-rate funding (CD Sept 17 p5). Some have asked for the cap to be increased from $2.25 billion to $5 billion a year or more to fully account for the typical requests by schools and libraries. Observers, however, question whether meeting such asks is politically feasible. Increasing E-rate funding at the expense of other universal service programs might not be the best course, they told us, with some pointing to contribution overhaul as a potential answer.
FCC members encouraged schools and libraries across the country to comment on the agency’s proposed E-rate rules -- and they got their wish. More than 250 comments from school districts, associations and individuals were filed in docket 13-184 on Friday and Monday. Several school districts asked for the program cap to be expanded to $5 billion per year -- more than twice the current cap.
Changing dynamics in Washington may influence the balance of federalism, multiple state utility commissioners told us. Commissioners from around the country will gather in Denver Sunday through Wednesday for NARUC’s summer meeting and will address questions of state-federal relations as part of NARUC’s Task Force on Telecom and Federalism and in policy debates. The state role remains critical, said the commissioners, stressing evolving technologies and consumer protections after years of what some consider federal and industry overreach. The five draft telecom resolutions being considered also speak to these changes, they said.
An FCC rulemaking on potential changes to the federal E-rate program has touched a political nerve in a Washington, where the debate takes place against the backdrop of a bigger fight between Republicans and Democrats over entitlement reform. The NPRM, teed up for a vote Friday, builds on a June speech by President Barack Obama urging the commission to make high-speed Internet available to enough schools and libraries to connect 99 percent of American students (CD June 7 p7).
Senate Republicans criticized what they called cost and service deficiencies of President Barack Obama’s recent proposal to reform the E-rate program. During a committee hearing Wednesday, Sen. John Thune, R-S.D., questioned whether the president’s proposal would unfairly benefit those in schools in more urbanized areas. Obama recently proposed to modernize the E-rate program to ensure that schools and libraries are connected through broadband of at least 100 Mbps with a target of 1 Gbps (CD June 7 p7).
House Communications Subcommittee Chairman Greg Walden, R-Ore., urged FCC acting Chairwoman Mignon Clyburn to “tread carefully” as she considers any expansion of USF, according to a letter made public on Monday (http://1.usa.gov/12QWF57). Walden said Clyburn should seek to cap the overall fund at current levels in order to “provide families some certainty and minimize fluctuations in their monthly bills,” according to the letter. Walden said any expansion proposals should be referred to the Federal-State Joint Board on “whether to adopt expansion proposals and, if so, how to implement them within the cap.”
The FCC’s USF suffers from “spectacular abuses,” researchers concluded, provoking protests and dissent. A 54-page report from George Mason University Professor Thomas Hazlett, a former FCC chief economist, and Scott Wallsten, Technology Policy Institute vice president-research, points to billions of dollars in high-cost line subsidies, tying them to what the authors characterize as a history of problems. The FCC defended the fund, pointing to November 2011 reforms, and NTCA and the Western Telecom Alliance attacked the report’s claims.
Many draft proposals focus on changes to technology and address potential federal changes in light of that. One NARUC draft proposed an update on slamming rules. The FCC should “update the current rules and regulations on slamming by (1) requiring third-party verification to include mandatory recording of any contact in which customers are solicited for consent to changes in services or providers, (2) by applying slamming rules uniformly to all voice services including traditional wireline, interconnected and over-the-top VoIP, and wireless; and (3) by requiring the prominent notice of the number the customer may call for assistance of the FCC and/or State agency.” Wireline, VoIP and wireless companies should report billing complaint trends as well as “spikes driven by activity of specific third-party vendors” to both state and federal entities, according to the draft.
Federal rules are hurting companies’ ability to deploy broadband, two Iowa executives wrote in a Monday Des Moines Register op-ed (http://dmreg.co/16jxzx6). Don Jennings, executive vice president of Partner Communications Cooperative, and Debra Lucht, general manager of Minburn Communications, focused on the effects of the FCC’s November 2011 USF order on Iowa companies and cited a recent survey of 100 Iowa telcos. “Companies responding to the survey estimated they will lose $47.1 million in high-cost Universal Service Fund compensation from 2012 to 2017” due to the order, they wrote. “Eight in 10 companies answering the survey said the order will mean a cutback of investment in network infrastructure.” The Iowa Telecom Association requested the survey, conducted by Wichita State University’s Center for Economic Development and Business Research in the School of Business. The impact will lead telcos to cut their number of employees by “almost 10 percent by 2017, resulting in a direct loss of $14.9 million in wages,” they said of the survey. Both executives noted ways the FCC order has influenced their own company decisions.