Ajit Pai’s first 10-plus months as FCC chairman featured contentious public interactions with congressional Democrats and favorable treatment from Republicans. Democratic lawmakers we spoke with insisted their animus overwhelmingly involves the FCC’s policy agenda. At the agency itself, Pai oversees many split votes as he pursues his deregulatory agenda (see 1711070024 and 1711050001).
The Louisiana Public Service Commission granted AT&T’s request to exit the state Lifeline program in all ILEC service areas except those in Connect America Fund II census blocks, in an order released Friday. In its petition to relinquish status as an eligible telecom carrier, AT&T said the number of Louisiana Lifeline customers declined 92 percent from 2008 to 2016 and the company now serves less than 1 percent of state Lifeline subscribers. AT&T is exiting Lifeline programs in several states due to increased competition and recent changes to the federal USF program (see 1705020049).
Alaska Communications (ACS) and General Communications (GCI) proposed separate plans to address USF rural healthcare (RHC) funding. ACS urged the FCC to alleviate the "crisis" while crafting a long-term plan to "right size" the annual budget, which the telco believes should be hiked from $400 million to $800 million. As a "stop gap measure," it suggested in a filing posted Monday in docket 02-60, the agency could tap "headroom" in the $2.279 billion Lifeline low-income budget to meet growing RHC demand, or tap undisbursed E-rate school and library funding. ACS proposed a rulemaking to increase RHC funding as if the $400 million budget adopted in 1997 was adjusted annually for inflation and start indexing it for inflation. Rival GCI called for a "stable, long-term" RHC budgetary solution, citing pro-rata budgetary reductions for rural healthcare providers (HCPs) in extremely high-cost areas as creating "unmanageable uncertainty." It said the FCC decision in funding year 2016 to allow HCPs in remote Alaska to reduce charges by pro-rata reduction amounts is unsustainable. GCI agreed the RHC cap should increase to reflect inflation since 2017, but said "other measures may also be necessary." It proposed prioritizing payments to “Highly Rural” HCPs while increasing their minimum payment requirement in the Telecommunications Program (one piece of RHC support), said a filing on a meeting with an aide to Chairman Ajit Pai.
The FCC concluded no rural telcos faced unsubsidized competition throughout their areas despite preliminary findings that 13 RLECs "potentially" were subject to complete competitive overlap that would trigger a phaseout of high-cost USF support (see 1708110049). Filed comments and replies (see 1710110024) "did not provide evidence to confirm that any of the 13 study areas preliminarily identified were in fact 100 percent served by unsubsidized broadband competitors," said a Wireline Bureau public notice Thursday in docket 10-90. "Therefore, we find that none of the study areas in our list meets the 100 percent overlap requirements." The bureau said it would do a new biennial review in 2019.
The FCC “should address the uncertainty caused by the current budget control mechanism” for the High-Cost USF program through actions like “guaranteeing at least some minimum level of support to ease the unpredictability and allow reasonable capital planning” while also “being mindful of mitigating incentives to operate inefficiently,” said FCC Chairman Ajit Pai in letters to 37 House lawmakers released Friday. Reps. Kevin Cramer, R-N.D., and Collin Peterson, D-Minn., led a letter from the lawmakers last month that urged the FCC to do a review of the program budget and proposed an interim change aimed at mitigating current budget constraints before a review (see 1710030074). The lawmakers raised similar concerns in May (see 1705020056). Pai bemoaned the FCC's 2016 rate-of-return order for not having “its intended effect,” noting his own opposition to the rule. “I repeatedly hear from small carriers that offering stand-alone broadband would put them underwater, that the rates they have to charge exceed the rates for bundled services because of the different regulatory treatment,” he said. “This is unfortunate but unsurprising.” More “fundamental reforms are needed” to address the “punch list of lingering issues” from the 2016 order, Pai said. Until that revamp happens, “I am committed to exploring how this situation can be changed and to determine the appropriate budget levels,” Pai said.
Expect lively debate about Lifeline at the NARUC annual meeting Nov. 11-15 in Baltimore, said Telecom Committee members and staff in interviews. In separate NARUC telecom draft resolutions, Nebraska Public Service Commissioner Crystal Rhoades and District of Columbia PSC Chairman Betty Ann Kane disagreed whether Lifeline should support reseller services (see 1710310051). The conflict is likely to be the “hot item” at the NARUC meeting and already is spurring discussion and lobbying, said NARUC Telecommunications Staff Subcommittee Chair Lynn Notarianni, from the Colorado Public Utilities Commission. A less contentious draft resolution aims to show a united front by states in favor of requiring direct dialing of 911 in hotels and other enterprises, said Colorado PUC Commissioner Wendy Moser.
Sprint asked the U.S. Supreme Court to review a lower court ruling that federal law doesn't pre-empt state authority to regulate non-nomadic, intrastate long-distance VoIP calls (see 1706230047). Sprint said under FCC precedent the VoIP traffic "is an 'information service' exempt from traditional common carrier regulation," whether state or federal. The 8th U.S. Circuit Court of Appeals in June -- agreeing with a 1990 9th Circuit California v. FCC ruling -- contradicted "clear FCC policy," said a Sprint cert petition this week in Sprint Communications v. Richard W. Lozier, Jr., et al. "The court below thereby both broadened and deepened the conflict, breathing new life into what had been an outlying and outdated Ninth Circuit decision." The 8th Circuit affirmed a U.S. district court ruling siding with an Iowa Utilities Board decision requiring Sprint to pay intrastate access fees to Windstream for VoIP service. Sprint said the 8th Circuit said Windstream's state tariffs apply to the VoIP calls, even if they are an information service because an enhanced service provider exemption doesn't apply. "That holding conflicts with decades of FCC decisions establishing federal policy to the contrary," said Sprint, citing actions going back to a 1980 Computer II finding by the FCC that enhanced services weren't subject to common-carrier regulation. NARUC General Counsel Brad Ramsay said the Sprint petition was wrong on the facts and the law. "The FCC in order after order for 13 years has been adamant that it has not classified VoIP as either an information service or a telecommunications service," he said. "So of course this entire petition is based on the 'fact' that facilities based VoIP service is an information service -- the one legal issue the FCC insists it has not decided." He said "states, both with and without FCC concurrence, regulate some aspects of VoIP services -- imposing USF and emergency calling fees and requirements that Congress specified (and the DC Circuit confirmed in the Verizon case) can only apply to the extent a carrier is providing a 'telecommunications service.'" The FCC didn't comment Thursday. “Windstream is not surprised by Sprint’s cert filing with the US Supreme Court since Sprint appears to be intent on endless litigation in this matter,” said Deputy General Counsel Carol Keith via statement.
States with dwindling intrastate USF revenue aren't waiting for the FCC to decide how to revamp federal contribution. The Nebraska Public Service Commission this week became the second state regulator to adopt connections-based contribution to replace a revenue-based model. A representative for small rural companies applauded and said it’s time for the FCC to act. The Utah PSC previously adopted a connections mechanism that will take effect Jan. 1 (see 1710240042). The New Mexico Public Regulation Commission may soon hold stakeholder discussions about moving to connections.
Sens. Jerry Moran, R-Kan., Pat Roberts, R-Kan., and Amy Klobuchar, D-Minn., led a letter released Wednesday urging the FCC to address high-cost USF program budget problems. Rep. Kevin Cramer, R-N.D., led House lawmakers in pressing the same issue twice this year (see 1710030074 and 1705020056). “Providers have continued to experience a significant reduction in support” from high-cost USF despite Congress' concerns, 39 senators wrote the commissioners. “While we recognize that a thoughtful long-term solution to the budget shortfall will take time and effort to identify and assess, many of the providers that serve rural consumers and businesses in our states have already begun to feel the pain of an arbitrary budget cap.” The FCC should act "as quickly as possible to ensure” high-cost USF “provides sufficient and predictable support to help deliver affordable, high-quality broadband to rural consumers,” they said: “At a minimum, we ask that you ensure that there is no reduction in funds allocated to or collected for the High-Cost program until you have reached a comprehensive solution.” The letter “highlights the continued dedication of Congress in making sure the USF mechanisms work as intended to prioritize consumers and close the digital divide for rural communities,” said NTCA CEO Shirley Bloomfield. The FCC didn't comment. The Schools, Health & Libraries Broadband (SHLB) Coalition and 35 healthcare providers and telehealth networks sent a letter Wednesday to House Commerce Committee leaders asking them to back a funding increase in the FCC's Rural Health Care Telecommunications Program, which they said was "facing an unprecedented crisis" after applications exceeding a budget cap for both FY 2016 and 2017. "This shortage has resulted in health providers canceling or downgrading broadband connections and reducing services to the public. Several telehealth networks put their plans to expand into rural markets on hold due to the uncertainty around future funding," said an SHLB release. “This is a life and death issue for Rural America,” said John Windhausen, SHLB executive director.
Puerto Rico ISP Open Mobile says hurricane-disrupted service could be fully restored to its 250,000 customers across the island by year's end, as long as electricity is similarly restored. "Nothing could prepare us for what happened," said OM Advertising Manager Ricardo Hernandez. He called Hurricane Irma, which preceded Maria, "like a dress rehearsal" that had OM working on restoring towers.