Federal Universal Service Fund

As frustrated stakeholders watch an FCC drafting process that they want to be more transparent for an NPRM circulating on USF budgets, concerns about the document's details (see 1903270042) are mounting (see 1903280050). All stakeholders we interviewed this week and last wish the rulemaking had been set for consideration at a monthly commissioners' meeting, so it would be public three weeks beforehand. Or, they wanted it released another way in advance.

FCC Commissioner Mike O'Rielly again objected to E-rate overbuilding of networks and asked Universal Service Administrative Co. to clarify its understanding of the rules and detail its treatment of applications. He's "very concerned" E-rate subsidies are reportedly being used to overbuild USF-backed fiber networks in some Texas school districts. "At least three regional-based consortia (representing 'Educational Service Centers') have sought proposals, via the Form 470, for the construction of Wide Area Networks (WANs) to provide Internet access to entire school regions, each covering well over ten thousand square miles, even though multiple fiber-based providers are already capable of serving the individual schools," he wrote Thursday to USAC CEO Radha Sekar, citing a Nov. 19 filing by telco cooperatives. The consortiums have filed Form 471 and "largely been approved" for "over $100 million to lay new fiber to schools already served by fiber networks. ... partially paid for with federal funds," O'Rielly said. "This number does not even include the subsidies requested for connecting individual schools within the WAN that were already connected to existing fiber networks." In one case, "a winning bidder was approved to receive over $40 million in special construction costs for a fiber build, even though most of the district already has fiber connectivity," he added. It's "likely that support for these fiber builds will also subsidize warehousing of fiber capacity not needed for E-Rate purposes." He asked Sekar to respond by April 1 to questions, including if E-rate rules let USAC fund: (1) special construction projects, whether through self-provisioned or commercial networks, that "duplicate, in whole or in part, fiber networks" built with federal funds; and (2) consortium "construction of a WAN to provide Internet access to the entire consortium, even where fiber-based providers are already capable of serving individual consortium members." He sought answers on the number of WAN-related applications, approvals and denials, and on any USAC warnings to the FCC about "overbuilding risk" or "an apparent gap" in rules permitting overbuilding approvals. USAC and FCC spokespersons didn't comment.

Windstream expects to continue operating normally after its Chapter 11 filing Monday seeking to restructure debt in U.S. Bankruptcy Court for the Southern District of New York (see 1902250025). The FCC welcomed the assurance but vowed to remain vigilant on potential USF and 911 ramifications. Others suggested more Chapter 11 bankruptcy filings are possible and cited difficult economics for rural-oriented telcos. Some had suggested Windstream could seek Chapter 11 after a federal district court reversal in its dispute with bondholder Aurelius Capital Management (see 1902190043). Moody's Friday downgraded the carrier (see 1902220057) .

There are ways to move forward on policymaking to improve broadband deployments as the new Congress begins, federal and communications sector officials said Tuesday during a Next Century Cities-led event. Officials highlighted the potential for compromise as a contrast to the rancor over the ongoing partial government shutdown. They also noted policy disagreements. Later, the conference heard about spectrum (see 1901150043).

The federal government appeared Friday evening to be on the verge of a partial shutdown due to disagreement between the Senate and president and a supportive House majority over the inclusion of $5 billion in border wall funding in a continuing resolution to temporarily fund government through Feb. 8. A CR set to expire at midnight Friday covers funding for the FCC, FTC and the departments of Commerce and Homeland Security and others.

The FCC will investigate if top wireless carriers submitted incorrect coverage maps in violation of Mobility Fund Phase II rules, Chairman Ajit Pai said Friday. The commission suspended the window for responding to MF-II challenges until the probe’s conclusion. Carriers said they'll cooperate. FCC Commissioner Jessica Rosenworcel, state commissioners and rural competitive carriers welcomed investigation, saying more work is needed.

Parties disagreed on the FY 2019 National Defense Authorization Act's fallout for an FCC's rulemaking to protect the communications supply chain from national security threats. The Telecommunications Industry Association said NDAA Section 889 requires the commission to bar certain suppliers from participating in its funding programs. Huawei -- one of the targeted suppliers -- and others said the recently enacted provisions give the FCC no mandate to impose supplier restrictions on USF support. NCTA suggested the commission defer action and consult with other agencies. Comments were posted through Monday on a public notice (see 1810260044).

ORLANDO -- State regulators’ relationship with the FCC “needs some work,” said NARUC Second Vice President Paul Kjellander in an interview at the association’s annual conference this month. Federal USF contribution modification could raise tension next year if the FCC continues to exclude states from the process, he said. The National Association of State Utility Consumer Advocates, holding its annual event concurrently with NARUC, remains concerned about deregulation and consumers losing protection as telecom technology moves to the IP world, NASUCA President Elin Swanson Katz told us.

ORLANDO -- The FCC should extend the Mobility Fund II challenge process by more than three months to fix a deficient process, said a NARUC resolution cleared Monday by the Telecom Committee and Tuesday by the board. At NARUC's annual meeting (see 1811130035), the committee voted unanimously for the resolution after tweaking some language to address other commissioners’ concerns. Idaho Commissioner Paul Kjellander will step down as Telecom Committee chairman to join NARUC leadership, he said Monday.

The National Tribal Telecommunications Association recommended changes to USF support mechanisms for carriers serving predominantly rural tribal areas, in a report filed Thursday at the FCC in docket 10-90. NTTA "proposes a Tribal Area Solution to revise current federal universal service programs for [rate-of-return] carriers. These revisions, proposed for the High Cost Loop Support, Connect America Fund Broadband Loop Support, and Alternative Connect America Cost Model support programs, recognize the unique challenges faced by carriers serving rural Tribal areas of the lower 48 states in the country.” Efforts to help tribal areas appear on paper to be “fairly substantial,” the group said: “However, the facts are clear -- Tribal areas, especially rural Tribal areas in the lower 48 states, lag significantly behind the rest of the country in regards to broadband availability.”