Top telecom issues set for discussion at NARUC’s annual meeting this week in San Francisco include states’ authority under Communications Act Section 706, 911 reliability, the USF contribution base and municipal broadband, NARUC members said in interviews.
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.
Going into more detail about the issues he sees facing a Title II approach than he has said publicly, FCC Chairman Tom Wheeler told public interest advocates that the agency would have to grapple with its legal authority to impose net neutrality rules on wireless, given a section of the Communications Act that some say prohibits treating mobile as common carriers, said three people who attended the Nov. 10 meeting. Wheeler also raised questions about the impact reclassification would have on privacy, according to the attendees, as well as an issue commissioners Mike O'Rielly and Ajit Pai brought up Friday at a Free State Foundation panel discussion on net neutrality: Would broadband providers have to begin paying into the USF?
Eighteen seats on 10 states’ public utilities commissions (PUCs) were up for election Tuesday. Industry observers said in recent interviews that the results of elections to the Montana Public Service Commission and Nebraska Public Service Commission are the ones that could have the most impact on telecom regulation. Two Montana PSC seats were up for a vote, and one Nebraska PSC seat was on the ballot.
Congress received divided views on how important state authorities should be in any new communications regimen, in comments due Friday to the House Commerce Committee on a white paper about overhauling Communications Act USF policy (CD Sept 22 p7). Groups representing smaller telecom companies and state regulators emphasized the importance of an ongoing state role, and several commenters pointed to the FCC Federal-State Joint Board on Universal Service and its potential importance for federal-state cooperation. Bigger industry groups such as CTIA advocated more limited state involvement.
Industry officials urged Congress to reconsider many elements of USF support policy, despite lauding the broad principles that have guided it. House Communications Subcommittee Republicans issued a white paper last month (http://1.usa.gov/1pmX66c) asking several questions about USF, seeking responses by Friday. It was the fifth white paper the subcommittee issued as part of efforts to overhaul the Communications Act, an initiative announced in December. Initial responses, which the committee has not posted online but were shared with us, were on what parties considered necessary changes to the USF contribution mechanism.
Calls by education and library groups, and FCC Commissioner Jessica Rosenworcel in a speech Wednesday, to increase E-rate funding are running into opposition from telcos, in comments filed in the E-rate modernization Further NPRM. The Independent Telephone and Telecommunications Alliance and USTelecom said they worry expanding E-rate could cut into other USF programs like the Connect America Fund.
USF contribution reform “should not be seen as a backdoor way of increasing the size of the universal service fund or imposing new fees on the Internet,” FCC Commissioner Mike O'Rielly said in a statement. The agency asked the Federal-State Joint Board on Universal Service Thursday to recommend how to modify contribution methodology (CD Aug. 7 p5). The commission approved the referral (http://bit.ly/1oh17cQ) unanimously. It referred the joint board to the commission’s 2012 Further Notice of Proposed Rulemaking on the issue, and asked for recommendations “with a particular focus on how any modifications to the contribution system would impact achievement of the statutory principle that there be state as well as federal mechanisms to preserve and advance universal service.” Network convergence and technological innovation “have transformed the telecommunications industry, and the contribution system has become increasingly complex and difficult to administer,” said the order, which asked for the recommendations by April 7. “The Joint Board process ensures that the agency will receive expert recommendations from the States officials closest to the consumers affected by changes to the Universal Service program,” said NARUC Telecommunications Chairman Chris Nelson in a statement. Nelson, vice chairman of the South Dakota Public Utilities Commission, is on the state board.
An FCC order on circulation would generically ask the agency’s Federal-State Joint Board on Universal Service to examine changes to USF contribution methodology without recommending how the group should proceed, said agency and industry officials in interviews this week.
Basing net neutrality rules on Communications Act Title II would mean small- and medium-sized ISPs would be “burdened with the costs required to retain lawyers” and “to administer the reporting and other rules that would no doubt go along with it,” 99 companies wrote Commerce Secretary Penny Pritzker, hoping to push President Barack Obama’s administration to oppose treating the companies as common carriers. “We want to get the president’s ear,” said Alex Phillips, FCC committee chairman for the Wireless Internet Service Providers Association, of the letter to the cabinet-level agency from WISPA members.
FCC Chairman Tom Wheeler has sidestepped likely partisan Capitol Hill battles surrounding E-rate for now due to the nature of his overhaul, apparently focusing on Wi-Fi and not immediately touching the fund’s contribution rate and size, lobbyists and observers told us. They predict political rancor will come in later phases of the E-rate revamp when those parts will be inevitably addressed. The prime Hill critics now are Democratic architects of the original 1996 Telecom Act E-rate provisions, who question the proposal in more granular ways and urge the agency to listen as E-rate beneficiaries express fears, sending a critical letter Tuesday. The FCC will vote on Wheeler’s item Friday, and it’s been controversial among FCC Republicans. (See separate report in this issue.)