Federal Universal Service Fund

Eight libraries, including those in Hartford, Memphis, New York and Seattle, protested FCC Chairman Tom Wheeler’s proposed E-rate changes, which FCC officials said would fund libraries based on their square footage, in filings posted in docket 13-184 Wednesday and Thursday. CenturyLink protested another element of the plan to eliminate E-rate funding for voice services, arguing funding of the services is required by the Telecom Act. Under Wheeler’s draft, libraries would receive $1-per-square foot, said Reed Hundt, who represents the Urban Libraries Council, though FCC Managing Director Jon Wilkins said during a media call Tuesday (CD July 2 p2) the figure is still being negotiated. Seattle public libraries total 633,000 square feet, and the cost of delivering Wi-Fi over five years is $4 to $5 per square foot, said Seattle Public Library Director-Information Technology Jim Loter in a letter (http://bit.ly/1vBUh09). Using square footage “is unfair to urban libraries, and to our patrons who are disproportionately low-income, unemployed or underemployed. ... Wi-Fi is essential to our urban patrons,” the filing said. “If square footage is used as the basis to allocate E-rate funding for Wi-Fi, we fear urban libraries will not be adequately funded,” the New York Public Library said in a letter (http://bit.ly/1zaJdMc). While supportive of E-rate modernization, “it would be a mistake to discontinue support for voice services -- which actually are required by statute,” CenturyLink officials told aides to commissioners Ajit Pai and Michael O'Rielly on June 30, said an ex parte filing (http://bit.ly/1xmZEmG). Any reduction in voice support should be phased in over time and must apply equally to all types of voice services, including all technologies and bundled services, the telco said. Universal service support extends to the services of “telecommunications carriers” that “are supported by Federal universal service support mechanisms, the company said. “Standalone voice is among them, and in the USF/[Intercarrier Compensation] ICC Transformation Order, the Commission explained that voice, not broadband, is the USF-supported service, and it expressly required eligible telecommunications carriers to offer standalone voice service.” Wheeler’s plan calls for funding Wi-Fi connections within schools partly through eliminating funding for some services including voice, FCC officials said during the media call on the plan.

More than six weeks after passage, the text of the Connect America Fund order was released Tuesday (http://bit.ly/1pl9HHQ). Many of the changes to the CAF order (CD June 9 p7) were primarily focused on responding to Commissioner Ajit Pai’s dissent, FCC officials told us. An FCC spokesman declined to comment on the internal editing process or whether substantive changes were made, but said the fact sheet given to reporters at the April meeting “accurately reflects the final draft.”

The 10th U.S. Circuit Court of Appeals decision upholding the FCC 2011 USF/intercarrier compensation order (CD May 27 p1) (http://1.usa.gov/1r18uaa) won’t have an immediate impact on state utilities commissions that had been taking administrative steps to incorporate the order in rules, particularly reductions in intrastate access rates, said officials at NARUC and several regulatory commissions in interviews. Barring an appeal and a reversal, there could be long-term ramifications, they continued to caution, by weakening the authority of state regulators, while forcing the commissions to deal with the order’s ramifications. Ohio, where Middle Point Home Telephone Co. is seeking state permission to raise residential rates by nearly a half in response to the FCC order, is an early example, said David Bergmann, a National Association of State Utility Consumer Advocates attorney on its 10th Circuit petition for review of that order. State interests or perhaps other losers have indicated an appeal is all but certain (CD May 28 p3).

Using Title II of the Communications Act to ensure nondiscrimination on the Internet wouldn’t work, would lead to massive litigation and would be a “ticking time bomb” that would reverberate throughout the Internet ecosystem, said panelists at a Thursday FCBA event. It would also raise thorny USF issues as regulators try to determine which high-tech companies should pay into the fund if broadband becomes a telecom service and thus regulated under Title II, some said. But not everyone agreed that Title II classification would lead to the suggested parade of horribles.

The FCC scored a court victory Friday as a three-judge panel held unanimously that petitioners were “unpersuasive” in their “host of challenges” to the 2011 USF/intercarrier compensation order (http://1.usa.gov/1r18uaa). The 31 consolidated petitions for review were denied by the 10th U.S. Circuit Court of Appeals. It’s a validation of the agency’s power to condition the receipt of USF money on the promise of broadband buildout. The decision also affirms the agency’s authority over access charges on all telecom traffic. NARUC General Counsel Brad Ramsay told us he'd be “stunned” if no one appealed this to the Supreme Court, something others predicted (CD Nov 21 p6) after almost five hours of USF oral argument in November.

FCC Chairman Tom Wheeler will recommend raising the USF contribution rate and sending more money to schools and libraries, if that’s necessary, he told a meeting of the Council of Chief State School Officers in Washington Monday. “I will recommend this to my colleagues if warranted,” Wheeler said, according to prepared remarks (http://fcc.us/1qMDLLo) for the event, which was not open to the public. “But my colleagues and I can’t just pour more money into the program as it presently stands,” he said. “The first step in expansion is introspection."

The White House included provisions on school and rural broadband, spectrum license fees, the FCC’s USF and more in its proposed $3.9 trillion 2015 budget, partially revealed Tuesday in a 218-page document and requiring the approval of Congress (http://1.usa.gov/1c5yFWg). It would include a $56 billion Opportunity, Growth, and Security Initiative, which promises funding toward various goals in this sphere. The administration will roll out its budget in two phases, the first of which started Tuesday, and then post some other parts a week later. Congressional Republicans have already complained of the broader details.

The FCC would receive $339.84 million for its salaries and expenses under a consolidated 2014 appropriations deal, lawmakers said this week as details of the legislation were unveiled. The FCC had requested a budget of $359.3 million for FY2014 (http://fcc.us/1aC0J0L). The $1.012-trillion spending package’s details were released in several documents covering how different government branches and agencies are funded by 12 appropriations bills. The continuing resolution and sequestration had left the FCC with $322 million for FY2013, despite a request for $346.8 million for that year (http://fcc.us/1alfuos). “The bill provides that $339,844,000 be derived from offsetting collections, resulting in no net appropriation,” said the explanatory document covering the FCC (http://1.usa.gov/1a4fY4A). It said the total includes $300,000 for “consultation with federally recognized Indian tribes, Alaskan Native villages, and entities related to Hawaiian Home Lands, and $11,090,000 for the FCC Office of Inspector General.” It also included provisions on in-flight mobile services emphasizing that the FCC can determine its rulemaking only from a technical perspective and cannot determine the “social or security implications,” the text said. “The FCC is directed to consult with the Secretaries of Transportation and Homeland Security, and the Federal Bureau of Investigation prior to a final rulemaking,” it said. “The Chairman of the FCC shall keep the House and Senate Committees on Appropriations apprised of any developments in this rulemaking.” There are also administrative provisions for the FCC in sections 510 and 511. The first extends an exemption for the USF and the second prevents the agency from “changing rules governing the Universal Service Fund regarding single connection or primary line restrictions,” it said. The same statement mentions the FTC, which would receive $298 million for salaries and expenses, under the act. NTIA would receive $46 million and the National Institute of Standards and Technology $850 million, according to a different explanatory statement (http://1.usa.gov/1hTJ2xY). “This appropriation is partially offset by premerger filing fees estimated at $103,300,000 and $15,000,000 from fees to implement the Telemarketing Sales Rule,” it said of the FTC appropriations.

Rural ILECs urged the Pennsylvania House Consumer Affairs Committee to eliminate carrier-of-last-resort (COLR) obligations and revise the state Universal Service Fund, at a hearing Thursday. CenturyLink, Frontier and Windstream were among the companies whose executives testified on House Bill 1608 at the hearing, sponsored by Rep. Warren Kampf (R). The committee also heard testimony from AT&T, AARP and the 60 Plus Association. This hearing was the continuation of one last month (CD Nov 22 p14) where Verizon, two Pennsylvania public utility commissioners and the state’s consumer advocate testified.

Pennsylvania residents could see major changes to their wireline services in the state if the Legislature votes for a bill that would eliminate carrier of last resort obligations (COLR) for local exchange carriers in competitive areas and limit the USF, said industry, two Pennsylvania Public Utility commissioners, the state’s consumer advocate and other interested parties at a House Consumer Affairs Committee hearing Thursday. House Bill 1608, sponsored by Rep. Warren Kampf (R), would remove the PUC’s oversight of ILECs, and it would allows ILECs to self-declare whole exchanges as competitive. The bill would end the state’s USF on Jan. 1, 2019, and prevent the PUC from raising the amount of money contributed to the fund each year.