Including resolution of some Mobility Fund Phase II petitions and setting a deadline for comments on USF budgeting, numerous FCC notices are to appear in Wednesday's Federal Register. In a final rule to be effective May 25, the agency said it's resolving remaining petitions for reconsideration on Mobility Fund Phase II by revising the language of its collocation rule and reducing the value of the letter of credit a Phase II support recipient has to hold after Universal Service Administration Co. and the agency verify the recipient "achieved significant progress" on buildout and service provision requirements. Effective Wednesday is a three-year information collection requirement for its NET 911 Improvement Act order of 2009, it said. The FCC said the Office of Management and Budget approved the information collection mandates that were part of its reporting requirements for U.S. providers of international services report and order from its 2016 biennial review of telecom regulations. It said comments are due May 25, replies July 24 on a proposed rule on establishing a budget allowing for "robust broadband deployment" in rate of return areas while "minimizing the burden" on ratepayers of USF contribution while bringing "greater certainty and stability to rate-of-return high-cost funding." It sought comments on other reforms to increase broadband deployment.
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.
States should be able to shift to connections-based USF contribution to stabilize funds, said the state chair of the Federal-State Joint Board on Universal Service Thursday after CTIA filed its second lawsuit against states making that change. CTIA sued the Utah Public Service Commission Tuesday for its Jan. 1 shift to connections-based contribution, arguing the 36-cent fee violates federal Lifeline requirements and illegally discriminates against prepaid wireless services. CTIA urged the U.S. District Court in Salt Lake City to decide federal law pre-empts the Utah rule and to stop the state commission from enforcing it.
The Competitive Carriers Association, NTCA and the Rural Wireless Association raised questions about an NPRM set for a vote at the April 17 commissioners’ meeting proposing to bar use of money in any USF program to buy equipment or services from companies that “pose a national security threat” to U.S. communications networks or the communications supply chain. But that hasn’t translated into ex parte meetings at the FCC. RWA raised concerns Monday in a filing in new docket 18-89. China experts said concerns are legitimate.
The digital divide is the FCC's “top policy priority” and the Connect America Fund reverse auction is “a milestone” in modernizing a key USF program, FCC Chairman Ajit Pai told an American Cable Association conference Wednesday. Pai slammed Title II Communications Act regulation of broadband service, which he said was the result of “Silicon Valley giants” claiming small ISPs such as ACA's members “posed a greater threat to a free and open internet” than Google, Facebook and Twitter.
The FCC approved a notice proposing rules implementing Section 7 of the Communications Act, designed to speed review of “innovative” technologies and services, over objections by Commissioners Jessica Rosenworcel and Mignon Clyburn Thursday. Chairman Ajit Pai said the goal is simple -- get out of the way of innovation. “Bureaucratic inertia” is a common barrier, he said. The agency has been taking steps on his watch to promote innovation, from approving the first LTE-unlicensed devices to approving ATSC 3.0 standards to greenlighting a power-at-a-distance wireless transmitter, Pai said: “We have stood on the side of innovation, but these are ad hoc measures.”
FCC Commissioner Mignon Clyburn said USF contributions should assess broadband because subsidies target broadband and the current long-distance voice revenue base is unsustainable. The current approach is much like a game of Jenga, she said at NARUC Wednesday, tracking written remarks: "We keep removing pieces from the base, and keep adding more to the top. Eventually, that tower will come tumbling down." She hopes a federal-state joint board will propose changes, but if not, it could invite new, outside experts to analyze the situation and provide fresh ideas.
State regulators face competing Lifeline draft resolutions at NARUC's winter meeting on an FCC proposal to target low-income USF subsidies to facilities-based providers (see 1801300023 and 1801300023). A draft resolution to urge the FCC to continue allowing resellers to receive Lifeline funding appears to have more support than a draft that welcomed the proposed shift, some told us Friday, though compromise or postponement of consideration is always possible. Competing Lifeline draft resolutions were pulled from the last meeting (see 1711130035). At the winter meeting, which was to begin Sunday and run through Wednesday, NARUC is also to consider draft telecom resolutions on nationwide number portability and pole-attachment overlashing.
FCC Commissioner Mike O'Rielly said USF contributions won't target broadband while he's chairman of a federal-state joint board that advises the agency. Although open to other approaches to shoring up the eroding USF industry contribution base, O'Rielly said he's focused on bringing fiscal discipline to USF programs. The FCC "should set a topline budget and then ensure that spending increases are paired with offsets elsewhere," he said at a Hudson Institute event Tuesday. He also explained his libertarian-tinged conservativism, backed serious cost-benefit analysis in the new Office of Economics and Analytics, and voiced optimism Congress will remove a legal hurdle to new spectrum auctions.
Many stakeholders backed hiking USF rural health care program funding support, while industry parties focused more on improving RHC efficiency and oversight. Dozens of comments were filed at the FCC Monday and last week in docket 17-310 on an NPRM on possibly increasing the program's $400 million annual cap and creating a prioritization mechanism if demand exceeds the cap, among other potential changes. The Schools, Health & Libraries Broadband Coalition urged increasing the cap to $800 million to reflect that potential participating providers more than doubled since 1997 when the current cap began. The American Hospital Association said the cap should be "significantly increased to keep pace with growing connectivity demand." Other healthcare interests and Alaskan entities, including tribal groups, backed an increase, citing the need to at least account for inflation. The NPRM "overlooks the significantly greater need for support on a per-location basis in Alaska's rural areas than in the rest of the nation," said Alaska Communications. USTelecom shared some FCC concerns with how the RHC program has operated in the lower 48 states, where "cases of waste, fraud, or abuse have come to light." The commission should focus on helping Universal Service Administrative Co. "detect and reject applications where federal universal service support is not needed" to meet statutory proposes, the telco group said. NCTA supported the promotion of telehealth in rural America "based on evidentiary data with a principal focus on defined needs and desired outcomes." NTCA said the FCC should provide better guidance to applicants, including on the specificity needed to describe requests for service support. "Ensure that satellite broadband services are eligible to equitably compete" for such money, said the Satellite Industry Association.
Democratic Commissioners Mignon Clyburn and Jessica Rosenworcel dissented Tuesday on an order creating a new Office of Economics and Analytics (OEA) within the FCC, which was approved 3-2 (see 1801230066). Commissioner Mike O’Rielly said the order was strengthened since it was circulated to ensure the office plays a major role in policy formation. Officials told reporters after the meeting the office likely would have under 100 staffers.