State officials want to promote mobile coverage and broadband deployment, said Lukas, Nace attorney David LaFuria at an FCBA panel Friday on state universal service issues. “They all have a desire to do something,” said LaFuria, who represents wireless carriers in FCC and state proceedings. He said some state regulators face statutory limitations but states could “regulate” broadband USF by following an FCC approach that combined “voluntary” industry acceptance of support with broadband conditions. States can help by removing regulatory barriers to broadband deployment, said Micah Caldwell, ITTA vice president-regulatory affairs. Jennifer Schneider, vice president-legislative affairs for Frontier Communications, said more states should reduce ILEC voice regulations, including carrier-of-last-resort (COLR) obligations.
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 FCC appears to be nearing a vote on a key AT&T spectrum buy -- the carrier’s planned acquisition of lower 700 MHz B-block licenses in California from Club 42, industry officials said. Competitive carriers view the order as a key test of the 2014 mobile spectrum holdings order (see 1405160030). It committed the agency to give extra scrutiny to deals where a company already owns more than one-third of the low-band spectrum in a market.
The first days under House Speaker Paul Ryan, R-Wis., should encourage telecom industry stakeholders, Washington veterans told us. The 45-year-old Ryan, a 2012 vice presidential candidate and most recently Ways and Means Committee chairman, kept a low profile on telecom issues since election to the House in 1998. But his focus on tax and regulation has often led to backing certain telecom measures over the years, with focuses ranging from E-rate to USF to the fairness doctrine. He assumed the speakership after the retirement of Rep. John Boehner, R-Ohio, at October’s end, following weeks of GOP leadership uncertainty, and a crucial hire in Ryan’s leadership office showcases strong ties to industry.
WTA members voiced doubts about a broadband cost model and some other aspects of a potential FCC overhaul of high-cost USF mechanisms for rural rate-of-return telcos. Arvig Enterprises, 3 Rivers Communications and the Range family of telecom companies said they have yet to determine the likely impact of possible future USF support on their operations “due to the number of significant details that remain unresolved” in two-track proposals to give rural telcos the option of receiving support based on a broadband cost model or based on updated USF mechanisms. The companies “expressed concerns regarding the general accuracy of the price cap-based model for rural companies, as well as their present inability to determine the amount of Model-based support they might receive and their associated build-out obligations,” said a WTA filing posted Monday in docket 10-90 on their meeting with an FCC staffer. They said their ability to serve remote, high-cost customers would be undercut if the FCC reduces a cap on model-based support per location. “They also noted that many state universal service funds are tied to the existing federal mechanisms, such that shifts to Model-based support could mean loss of state support by some rural carriers,” the filing said. “The companies also expressed concern that the proposed bifurcated rate-of-return path was being developed in a rapid and untested manner, and could well entail a number of unforeseen consequences. They pointed particularly to the increased recordkeeping and accounting complexities and costs and the difficulties of accurately and equitably allocating investments and associated operating expenses.” In addition, they suggested the FCC’s current 10/1 Mbps broadband USF definition won't be “reasonably comparable to urban broadband speeds and applications for very long” (such reasonable comparability is a statutory USF standard). Whatever high-cost support changes the FCC makes, the companies stressed the need for “stability, predictability and sufficiency." WTA made similar filings (here and here) on behalf of Range and Volcano Communications after meetings with other FCC staffers.
The FCC should get going on reforming its USF contribution system, ITTA and the Montana Telecommunications Association (MTA) said Friday. There is “growing pressure on the Universal Service Fund as the Commission considers expanding the scope of services supported by USF programs,” said midsize-telco group ITTA in a filing posted in docket 10-90 summarizing an Oct. 28 meeting with Gigi Sohn, counselor to FCC Chairman Tom Wheeler. “We urged the Commission to undertake USF contribution reform and broaden the base of contributors before taking any further steps to modify the Lifeline program to include support for broadband services.” MTA also urged the FCC to address contribution reform, “particularly given the increasing pressure on the high cost reform efforts caused by budgetary restraints and the shrinking contributions base,” the association said in a filing on its meetings with aides to Wheeler and Commissioners Mike O'Rielly and Jessica Rosenworcel. An FCC spokesman said the issue was before a federal-state joint board. Carriers currently contribute 16.7 percent of their interstate and international telecom revenue to USF, a rate that has trended up over the years as subsidies have increased and the industry revenue base has eroded. Carriers generally pass the fees along to consumers.
Few fireworks erupted during the Senate Commerce Committee reconfirmation hearing of FCC Commissioner Jessica Rosenworcel Wednesday. The White House nominated the former Democratic staffer for the committee for another five-year term this summer. Senators used the hearing to ask her about the agency’s progress on programs like Lifeline and E-rate, stand-alone broadband, spectrum policy and net neutrality.
Sen. Jerry Moran, R-Kan., fears the effects of the FCC’s direction on USF and what it has done to rural telecom companies’ ability to invest. Moran. a member of the Commerce Committee, also chairs the Appropriations Agriculture Subcommittee, where he held a hearing on rural development Wednesday and aired many concerns about how FCC policies may affect investment.
Industry parties and others continued to support FCC proposals to Lifeline USF subsidies to broadband service and revamp administrative oversight, but divisions remain over specifics. In reply comments filed in docket 11-42 responding to initial comments on the FCC’s NPRM (see 1509010073 and 1509040045), parties generally backed giving low-income consumers expanded choice and shifting responsibility for verifying Lifeline subscriber eligibility from telecom carriers to a third party. But there was disagreement over whether the FCC should establish minimum Lifeline standards for broadband/voice service. Numerous tribal groups also filed reply comments urging the FCC to retain and even increase enhanced Lifeline tribal support.
Commenters voiced substantial support for FCC proposals to extend Lifeline USF subsidies to broadband and restructure oversight, with differences over some priorities and many implementation details, including among the Bells. Expanding Lifeline support would boost broadband adoption and shifting administrative responsibility away from telecom providers would increase efficiency, many said in comments in docket 11-42 responding to a Further NPRM (see 1506180029). Some said the FCC should proceed carefully and focus on enforcing budget discipline and streamlining program administration. Monday was the filing deadline for initial comments, but some comments hadn't been posted on the commission’s website Tuesday, while some parties filed comments early (see 1508180069).
Some regulators and telcos want state and federal USF contribution revisions, while others representing wireless ISPs would rather see the entire system shut down and overhauled, said speakers during a National Regulatory Research Institute tele-seminar. Speaking Thursday, the deadline day for telcos to accept FCC Connect America Fund Phase II offers (see 1508270068), experts said the funds wouldn't cover building out all networks to FCC standards, so it’s up to states to try to supplement that spending to improve the networks' reach to rural areas. The companies are aware the investment needed will be more than the funding, so they're ready to work with each state on how far it will go and whether other assistance is available, telco representatives said.