Federal Universal Service Fund

The FCC has not only “failed to pursue meaningful solutions” to making sure broadband is being deployed in a timely and reasonable fashion, but exacerbated the problem by “arbitrarily raising” the broadband benchmark speed and imposing Communications Act Title II regulation on broadband in the net neutrality order, NCTA said in comments filed Friday. Responded to the agency’s January notice of inquiry (see 1501290043) on improving broadband deployment, the comments hadn't been posted in docket 14-126. USTelecom also filed comments on the NOI Friday, which, according to its blog, focused on removing “outdated legacy regulations” and “restrictive local rules and regulations.” The commission failed to “effectively implement many of its own prior recommendations,” including adding broadband to Lifeline and implementing the Remote Areas Fund (RAF) to deploy broadband to unserved areas, NCTA said. The commission should immediately revoke offers to ILECs for high-cost USF support that don't meet the new 25 Mbps download/3 Mbps upload standard, it said. The funding should be offered on a competitively neutral basis to any qualified broadband provider willing to provide the new speed, NCTA said. The agency should also implement the RAF and issue an NPRM to create a broadband Lifeline program, the filing said. An independent third party should also examine why there hasn’t been more progress extending broadband deployment to unserved areas, even though more than $28 billion in federal funding has been spent on the goal since 2010, the filing said. USTelecom urged the agency to grant its October 2014 forbearance petition (see 1410070050), reforming state and local regulations “that impede a provider’s ability to roll out broadband services,” and ensure that broadband providers can deploy fiber in multi-dwelling units. The FCC should “promote efficient and carefully targeted broadband deployment in rural areas” through the Connect America Fund and develop “’sooner rather than later’ a long-term universal service solution for rate-of-return carriers,” USTelecom said.

The net neutrality order approved Thursday (see 1502260043) prevents states for now from making broadband contribute to states' USF, an agency official told us. Commissioner Mignon Clyburn, in voting for the overall order, opposed the restriction, but NARUC General Counsel Brad Ramsay said he doesn’t expect it to cause the same kind of backlash from states as the commission’s pre-emption at the same meeting of North Carolina and Tennessee municipal broadband laws (see 1502260030).

The FCC assertion that Chairman Tom Wheeler’s draft net neutrality order would impose no taxes or fees was disputed Friday by Commissioner Ajit Pai, who claimed in a statement it “explicitly opens the door to billions of dollars in new taxes on broadband.” An economist also claimed in a Forbes op-ed that the plan would lead to at least $500 million in federal fees and potentially more in state charges. An FCC spokesman Friday stood by a Wednesday fact sheet’s assertion, telling us the Internet Tax Freedom Act (ITFA) applies to broadband, even at the state and federal level.

The FCC portrayed the reclassification of broadband in Chairman Tom Wheeler’s net neutrality proposal as a modernized Title II. But pledges from senior agency officials not to impose traditional Communications Act common-carriage regulations like rate regulation didn't ease the concerns of reclassification’s opponents.

Though widely considered to be a likely supporter of the Communications Act Title II net neutrality approach FCC Chairman Tom Wheeler is expected to unveil later this week, Commissioner Mignon Clyburn said in an interview that she wants to make sure “everyone is able to point to something in the order that benefits them.” By that, Clyburn, who acknowledged she backed Title II in the 2010 net neutrality order, said she doesn’t want only the “well-heeled” to benefit, and wants the commission to maintain a regulatory backstop if needed. She also doesn't want to damage the continued deployment of broadband, Clyburn told us Friday.

The FCC plans to fine Advanced Tel of Simi Valley, California, $1.6 million for failing to make required payments to USF and other federal telecom programs, the Enforcement Bureau said in a news release Monday. “All phone companies are required to participate in universal access programs so that consumers everywhere have access to critical telecommunications services,” Enforcement Bureau Chief Travis LeBlanc said. “Service providers who flagrantly avoid these responsibilities damage these programs and the public interest, and we demonstrate today that we will hold them accountable.” The carrier did not make payments to USF and the Telecommunications Relay Service Fund, as well as the Local Number Portability Administration, and federal regulatory fees, the release said. Advanced Tel did not immediately comment.

FCC Chairman Tom Wheeler may be moving toward basing net neutrality rules on Title II (see 1501070054), but how he goes about it has become intertwined with another controversial issue -- whether to require broadband customers to begin paying into the USF. If the FCC approves reclassification, and forbearance from Section 254, the agency could block its own ability to require broadband to contribute to the fund, an NTCA official told us. The group made the case to the agency last week. ITTA, which like NTCA has called for requiring broadband providers to begin contributing to the fund, also opposes forbearing from the section, said ITTA President Genny Morelli in an interview.

In a move FCC Chairman Tom Wheeler and the commission's Democratic majority said would bring more broadband and Wi-Fi connections to schools and libraries, commissioners on a party-line 3-2 vote Thursday raised E-rate’s annual spending cap by $1.5 billion. They signaled their intent to approve another reform aimed at giving people more access to the Internet, adding broadband to Lifeline (see 1411120026). Republican commissioners, while backing the aim of E-rate, opposed raising the spending cap.

While NCTA and Republican Florida Gov. Rick Scott joined those arguing that a Title II Communications Act net neutrality approach could lead to billions of dollars in state and local tax and fee increases on consumers, telecom attorneys and other advocates differed whether that would actually happen. That is partly because broadband may be considered an interstate service not subject to state and local tax, they said in interviews.

Communications Act Title II opponents seized on a Progressive Policy Institute study’s estimate Monday that reclassifying broadband would create $15 billion nationally in new federal, state and local taxes and fees, and predicted it would dampen public enthusiasm for basing net neutrality rules on Title II. The “sleeping giant has been awakened, and once the size of the fee increases becomes more widely understood, I think consumers will react,” said Free State Foundation President Randolph May.