A draft order by FCC Chairman Tom Wheeler that would provide nearly $500 million in support every year for five years for Phase II of a mobility fund is facing some problems on the eighth floor with a vote scheduled for next week’s commissioners' meeting, agency and industry officials said Tuesday. One FCC official said the order could potentially be held for a later vote, possibly at the December meeting.
Network Services Solutions and its CEO may be fined nearly $21.7 million by the FCC for wire fraud and overbilling the USF Rural Health Care (RHC) program. Also, the commission plans to order the company to refund $3.5 million in improper payments received through the program, the agency said in a Friday news release announcing the notice of apparent liability. Network Services and CEO Scott Madison allegedly used forged and false documents to seek funding from the program, violating the federal wire fraud statute and the program’s competitive bidding rules, the FCC said. Never before has the agency issued an enforcement action involving the RHC program or proposed a fine for wire fraud related to a USF program, the commission said. “Forgery, bribery, bid rigging, and fraud are absolutely unacceptable in any federal program,” said Enforcement Bureau Chief Travis LeBlanc. “The Commission calls on Network Services Solutions and its CEO to account for any misuse of federal funds in this vital program that assists rural communities with access to critical services for health care.” Commissioners Ajit Pai and Mike O’Rielly approved in part and dissented in part. In a statement, Pai agreed that the FCC should recover the unlawfully taken funds, bar the company from getting any further USF subsidies and levy a “hefty fine.” But he questioned the legal reasoning supporting the amount. The NAL “fatally compromises our ability to impose a lawful forfeiture of more than $189,361 upon the carrier,” the Republican commissioner said. Lukas Nace's Russell Lukas, lead attorney for Network Services Solutions, said the company "has cooperated with the FCC in this investigation and looks forward to a full and complete review of the facts underlying the allegations."
A draft order on a new mobility fund, circulated by FCC Chairman Tom Wheeler for the Nov. 17 commissioners' meeting (see 1610270054), is raising some concerns in industry. AT&T complained about the approach in a Monday blog post. Other industry players are reporting on recent meetings with officials prior to an expected sunshine notice cutting off further lobbying. The agency approved a one-time mobility fund in 2011 and five years later is moving forward on Phase II, as Wheeler promised the Competitive Carriers Association in September (see 1609200058).
Tuesday's elections could spell the end of line for some of Capitol Hill’s prominent voices on telecom and tech policy, particularly in the Senate but also the House. Senate Commerce Committee members up for re-election have been particularly vulnerable in a chamber where Democrats are believed to have a decent chance of retaking power, while lawmakers of both parties on the House Communications Subcommittee are virtually all safe. Telecom has seeped into some campaigning.
The Wireline Bureau sought public advice after demand for Alternative Connect America Cost Model (A-CAM) support exceeded the 10-year budget set by the FCC by more than $160 million annually. The bureau said 216 rate-of-return companies submitted letters electing 274 separate offers of A-CAM support in 43 states. NTCA wasn’t surprised by the high demand, and the rural association plans to meet immediately with the agency to offer suggestions, said Senior Vice President Mike Romano in an interview Thursday.
Alaska Communications welcomed the FCC's Monday order setting its service duties for using $19.7 million in annual Connect America Fund Phase II "frozen" USF subsidy support to deploy broadband in the state (see 1610310056). The company "is pleased to reach this important milestone with the FCC, setting the stage for the single largest deployment of affordable broadband under any one program in Alaska,” said Leonard Steinberg, senior vice president-legal, regulatory and government affairs, in a release Tuesday. The funding will assist broadband expansion to rural communities along Alaska's highways but doesn't address middle-mile needs for deploying affordable broadband in bush communities not accessible by road, it said.
New York state officials cited wide support for the state's request for expedited waiver of Connect America Fund requirements that Phase II broadband subsidy support in New York be awarded through competitive bidding. But some in the industry said in replies posted in FCC docket 10-90 that legal issues remain. Empire State Development Corp. is seeking a waiver that would allow it to tap federal CAF II support, declined by Verizon in New York, to help fund the state's own reverse auction of broadband subsidies for the same areas targeted by the FCC auction (see 1610260057). “The minimal opposition to the Petition was based on inaccurate factual and legal assertions of the waiver request and the many public interest benefits it would bring,” New York said. ViaSat said the record confirms legal barriers to granting the request. The waiver sought by New York is inconsistent with federal universal service policy and the statute governing federal USF distribution, the company said. The American Cable Association said the petition has “many potential benefits” for spreading broadband, but opposed it as “legally infirm” and suggested New York reconsider. USTelecom cautioned the FCC not to lose a national focus. It said the agency "must ensure that it balances any equitable allocation of CAF funds among the states, with the need to ensure the overall integrity of the CAF fund.”
The FCC adopted "tailored service obligations" for Alaska Communications Systems to accompany the $20 million in annual Connect America Phase II price-cap "frozen" USF subsidy support that ACS elected to receive instead of model-based support. "The company will receive Phase II frozen support for a 10-year term and be required to offer voice and broadband service at the same speed, latency, usage and pricing metrics as established for Phase II model-based carriers to at least 31,571 locations, primarily in census blocks identified as high-cost that are unserved by unsubsidized competitors, with limited exceptions," said the order issued Monday in docket 10-90. Commissioner Mignon Clyburn partially dissented.
The Senate Commerce Committee released its report Thursday on the Rural Health Care Connectivity Act (S-1916), which prompted its placement on the Senate floor legislative calendar under general orders. The bipartisan measure was introduced by Commerce Committee Chairman John Thune, R-S.D., in August 2015 and cleared from the Commerce Committee last November. The legislation would “include skilled nursing facilities (SNFs) among the types of health care providers that may obtain support from the Universal Service Fund’s (USF) Rural Health Care Program,” the 16-page report said. The House Commerce Committee cleared a companion version in May.
Sens. Roger Wicker, R-Miss., and Joe Manchin, D-W.Va., lauded the FCC’s announcement Thursday that changes to the USF Mobility Fund will be considered at the commission’s Nov. 17 meeting (see 1610270054). “This is the right move for Americans living in rural areas,” said Wicker, chairman of the Communications Subcommittee. “People should have access to high-speed mobile wireless service no matter where they live.” Manchin said the proposal is “an important step towards delivering that access to some of the hardest areas in rural communities to serve.” He and Wicker sent the FCC a letter on the topic earlier this year (see 1607110051).