Broadband pilots, proposed by FCC Chairman Julius Genachowski as part of a revamped Lifeline program, have emerged as a likely bone of contention at the agency as work on the order continues prior to a vote Tuesday. The amount proposed by Genachowski is small -- in the $20 million range -- to be paid for by savings as the FCC clamps down on abuse, agency officials said. But some industry and FCC officials question the wisdom of looking at ways of expanding a program that is already getting bigger just paying for traditional phone service.
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.
The latest numbers emerging as the FCC pushes forward on an order addressing Lifeline funding reveal sharp growth in the cost of the Universal Service Fund program. Lifeline spending was up sharply in Q4 2011, ending in September, to $525 million, but it remains unclear whether that number is an anomaly or means real, across the board growth in the Lifeline program. Meanwhile, a senior FCC official said Chairman Julius Genachowski is committed to putting in place significant controls on the size of Lifeline program, which are projected to save $2 billion over a period of years versus the status quo.
Almost three months after the FCC approved a Universal Service Fund/intercarrier compensation reform plan, major industry players continue to seek significant changes. Comments were due last week on a further rulemaking notice approved as part of the order. How USF dollars ultimately will be divided as the fund is reconfigured to primarily pay for broadband is the key question addressed in most filings. They show that the FCC still has a huge job ahead as it continues to tackle changes to the USF. Numerous petitions for reconsideration have been filed in response to the Oct. 27 order. A second round of comments focusing on intercarrier compensation issues is due Feb. 24. Next week, the commission will begin to tackle Lifeline reform. Also looming are likely changes to the contribution side of USF.
Rural telcos have asked the White House to help save them from newly passed Universal Service Fund reforms. NARUC, meanwhile, decided to join the court challenge against October’s FCC USF reforms (CD Oct 28 p1), a state official told us.
Native Americans became the first parties to oppose petitions to reconsider last fall’s universal service reforms, the record on docket 10-90 showed. The National Congress of American Indians and Navajo telecom regulators filed separate, but similarly worded, briefs to oppose RLEC’s request for exemption of some of the new rules’ guidelines for deploying broadband in tribal areas (CD Oct 28 p1).
Civil rights and “digital divide” erasure advocates gave mixed reviews to FCC Chairman Julius Genachowski’s Lifeline reform proposals Monday. As expected (CD Jan 9 p7), Genachowski promised what he called “cost controls” and “a budget” for Lifeline and Link-Up, with most of his efforts focused on rooting out some 200,000 duplicate claims and building a database to prevent future “waste.” The draft order will circulate Tuesday, Genachowski said.
FCC Chairman Julius Genachowski plans to circulate an order on the Lifeline program as early as Tuesday, telecom and commission officials told us. As Genachowski did with the high-cost portion of the Universal Service Fund last fall (CD Oct 28 p1), the coming order is expected to put Lifeline on what the chairman will call “a budget.” It will not formally cap the Lifeline portion of USF, telecom and FCC officials said. It’s expected to address eligibility requirements and how to remove people from the Lifeline rolls if they're not eligible, telecom officials said.
The FCC understands that some companies may not be able to meet newly imposed deadlines for auditing their books under new Universal Service Fund rules, Wireline Bureau Deputy Chief Carol Mattey said Thursday. “We are well aware of the challenges of companies that have not been able to submit to a financial audit,” Mattey said in a webinar hosted by USTelecom. “I do very much appreciate the time-sensitivity of it and I think we will be able to give some guidance on the timing of that. We recognize that certain things may not be able to be implemented by the deadline of this year.”
T-Mobile USA might be ready to re-emerge as a competitor now that the deal with AT&T is over: The carrier is seeking low income-only eligible telecommunications carrier status in five states. Even as the deal with AT&T was moving forward, T-Mobile was quietly seeking certification as an ETC in four states. Meanwhile, it’s protesting the FCC’s 2011 Universal Service Fund order’s treatment of carriers designated as ETCs. Its petition for reconsideration or clarification (http://xrl.us/bmnmv4) of the FCC’s USF revamp order was the first major filing by T-Mobile since AT&T’s proposed buy of the company was officially terminated Dec. 19.
Petitions for reconsideration of the new Universal Service Fund rules came in from every corner of the telecom world. A review of docket 10-90 revealed no frontal challenges to the FCC’s October reforms (CD Oct 28 p1), but, as had occurred in the months-long runup to the reforms, each sector of industry gave a laundry lists of grievances to the FCC.