The FCC circulated a draft order that would extend Lifeline USF support to broadband coverage and to streamline administration of the program that subsidizes low-income telecom service, as expected. The draft is expected to be considered at the agency's March 31 meeting, as Communications Daily first reported. The order would allow Lifeline support to be used for stand-alone broadband or bundled broadband/voice packages in addition to current voice service. The order would phase out the support for stand-alone mobile voice service and phase in broadband minimum standards over the next few years, said an FCC fact sheet.
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.
FCC Chairman Tom Wheeler faced many questions about his set-top box proposal during Wednesday's Senate Commerce Committee oversight hearing. Both committee leaders questioned the merits. But there was little rancor at the two-and-a-half-hour hearing, with much attention devoted to spectrum policy and relatively little to the agency’s net neutrality order.
Senate Commerce Committee members filed 25 amendments, not released publicly, to Mobile Now (S-2555) ahead of its Thursday markup. Some of the amendments would raise the broadcaster repacking relocation fund by $1 billion, force a national unlicensed spectrum strategy, and include stronger dig once provisions. But Senate Commerce Committee Chairman John Thune, R-S.D., told us Tuesday that he doesn’t expect too many up-or-down votes during the markup and he anticipates a possible manager’s package to address some of the members’ concerns. Thune filed a substitute amendment text, as expected (see 1602290069), proposing some technical changes to Mobile Now.
A year after the FCC approved its net neutrality order in a contentious 3-2 vote, tensions remain high. Commissioner Ajit Pai, who voted against the order, said in a speech at the Heritage Foundation Friday that the order has led to a reduction in spending by ISPs on their networks, a result he said he had predicted. Small ISPs in particular have cut investments, he said.
The FCC should include an Alaska Plan in a looming rate-of-return USF overhaul, General Communications Inc. (GCI) and other Alaska telecom interests are telling commission officials. The plan is aimed at supporting broadband deployment in rural Alaska, and time is of the essence, given the state's construction season, they say. Native American groups are separately pushing for including a Tribal Broadband Factor, citing a projected reduction of almost $33 million in support for carriers serving tribal lands under a draft FCC order. Alaska Communications Systems (ACS) also has asked the FCC to adopt its price-cap USF proposal for Alaska.
State and federal regulators need to be focused on making broadband work, experts said during a National Regulatory Research Institute webinar Wednesday. The NRRI event expanded on a panel -- with the same participants -- held at a NARUC meeting in Washington last week (see 1602160004).
The FCC would reduce rural telcos’ rate of return from 11.25 percent to 9.75 percent over six years under a USTelecom and NTCA proposal to revamp USF mechanisms for broadband coverage. The groups also proposed broadband buildout obligations requiring RLECs to reach up to 80 percent of unserved locations over five years and a screen for phasing out USF support in high-cost areas where unsubsidized competitors reach 85 percent of locations, said a filing posted Monday in docket 10-90. It summarized a meeting last week with senior FCC officials, including Chairman Tom Wheeler. NTCA, WTA and individual RLECs made separate filings citing concerns and offering proposals. Wheeler is said to be interested in circulating a draft order soon (see 1602040055).
Large telcos are seeking renewed USF voice support in remote areas where funding was cut off but their obligations to provide phone service continue under a transition to broadband-oriented mechanisms. Representatives of AT&T, CenturyLink, Frontier Communications, Verizon, Windstream and USTelecom jointly discussed the issue with FCC officials in a series of recent meetings, and Frontier sought relief in separate meetings with two commissioners, according to filings in docket 14-192. “It will happen, with some sort of path to broadband,” USTelecom Senior Vice President Jon Banks told us.
The Supreme Court could eventually review USF False Claim Act (FCA) litigation, a lawyer in one of the cases said at an FCBA seminar Wednesday. Vinson & Elkins attorney Jeremy Marwell said fraud allegations against recipients of USF support don’t qualify under the FCA, but he acknowledged it’s a “close question,” particularly in light of mixed court rulings to date. While Marwell was on the winning side of a July 2014 E-rate decision by the 5th U.S. Circuit Court of Appeals, which ruled the FCA doesn’t apply to USF programs (United States ex rel. Shupe v. Cisco, No. 13-40807), other cases are pending in the 7th Circuit and D.C. Circuit, which could create a circuit split. Marwell said he “wouldn’t be surprised” if the cases go to the high court.
AT&T compared FCC partial relief for telcos to a kid shoveling only half a sidewalk after a snowstorm. In a blog post Wednesday, Vice President-Federal Regulatory Hank Hultquist noted the FCC in December partially denied a USTelecom petition that the agency forbear from applying various regulations, including a request that price-cap ILECs be relieved of universal service obligations where they no longer receive USF support (see 1512170052). “In explaining this denial, the FCC sounds an awful lot like a kid explaining why he shoveled only part of the sidewalk,” he said. “Of course, the FCC knows that it has not provided sufficient universal service support for these high-cost and extremely high-cost areas. But it hopes to escape its responsibility by invoking the farcical claim that price cap ILECs continue to be 'eligible' for other universal service support (e.g., Lifeline) in these areas.” Hultquist termed “ridiculous” FCC arguments that USTelecom didn't make the case for USF relief and that AT&T data was lacking because the agency didn’t adopt a related cost model. "If the FCC doesn’t want to fund universal service obligations in these areas, it should just get rid of them, as USTelecom asked it to do,” he said. “Unfortunately, the FCC appears determined to try to maintain the obligations without taking responsibility for them. I think it’s time for someone -- like an appellate court or Congress -- to tell them to pick up the shovel and do the job right.” AT&T has challenged the order and a related previous order in court (see 1601110036). The FCC had no comment Wednesday. Chairman Tom Wheeler had proposed some extra USF voice support for carriers, but Commissioner Ajit Pai said it was inadequate and an agency majority didn't vote for it.