House Appropriations Financial Services Subcommittee Chairman Mike Quigley, D-Ill., told us he’s eyeing attaching a rider to the subcommittee’s FY 2021 appropriations bill aimed at allocating proceeds from the FCC’s coming auction of spectrum on the 3.7-4.2 GHz C band. Quigley raised concerns about the FCC’s current C-band auction plan during a Wednesday House Appropriations Financial Services hearing on the commission’s FY 2021 budget request. The C-band plan drew criticism from Senate Appropriations Financial Services Subcommittee Chairman John Kennedy, R-La., during that subpanel’s Tuesday FCC budget hearing (see 2003100022).
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.
There's a need for a new federal broadband plan, with different metrics and tasked outside the FCC, panelists said Tuesday during the Incompas Policy Summit. They commented on the 10-year-old FCC National Broadband Plan.
The FCC got some industry support for new supply chain rules designed to protect U.S. networks. But groups representing rural carriers raised concerns, and Huawei said the proposals aren't legal. Commissioners approved rules 5-0 in November barring equipment from Chinese vendors Huawei and ZTE in networks funded by the USF, and sought comment on whether to expand the prohibition (see 1911220033). Commenters urged coordination, especially with the Department of Homeland Security, and regulatory humility. Comments were posted Monday and Tuesday in docket 18-89.
ISPs expect wide participation in the first phase of the $20 billion Rural Digital Opportunity Fund auctions FCC Chairman Ajit Pai signaled he wants in 2020, they said in interviews this month. RDOF replaces the Connect America Fund phase II USF program that supports deployment in high-cost, sparsely populated areas (see 1907110031). "We'll start to see the pace of things quicken in 2020," said Mike Saperstein, USTelecom vice president-policy and advocacy.
The FCC should take five new steps to manage fraud risks in its USF programs supporting broadband deployment in high-cost rural areas, said a GAO report released Monday. It recommended the FCC: (1) ensure it follows leading practices from a GAO fraud risk framework; (2) plan regular fraud-risk assessments tailored to the high-cost program and assess those risks; (3) design and implement an anti-fraud strategy for the high-cost program with specific control activities based upon the results of the fraud-risk assessment and a corresponding fraud risk profile; (4) assess the model-based support mechanism to determine how well it produces reliable cost estimates; and (5) consider whether to mandate the use of the model-based support mechanism depending on the results of the assessment. "Given the continuing importance of deploying telecommunications services in difficult-to-serve areas, effective oversight for rate-of-return carriers is an important component for helping ensure that the high-cost program's finite funds are used properly to meet the intent of the program," GAO said. House Commerce Committee Chairman Frank Pallone, D-N.J., said he “requested this report because it was clear FCC was failing to adequately protect the high-cost program against flagrant waste, fraud and abuse of federal funds by some rate-of-return carriers.” The GAO “agrees” with that view and FCC Chairman Ajit Pai “must heed GAO’s recommendations and implement an antifraud strategy for the program,” Pallone said. In comments attached to the public report, FCC Managing Director Mark Stephens and Wireline Bureau Chief Kris Monteith said the agency remains "committed to our statutory obligation to close the digital divide, while preventing waste, fraud, and abuse of universal service funding." They noted the FCC gave small, rural carriers the opportunity to elect model-based high-cost support "in exchange for robust broadband deployment" to help advance its objective to protect USF from waste, fraud and abuse. The FCC said it will implement the GAO's recommendations through the Office of the Managing Director.
The FCC released a draft proposal Tuesday to ban equipment from Chinese vendors Huawei and ZTE from networks funded by the USF. Industry officials largely welcomed the order. Huawei signaled it will fight. Commissioners are scheduled to vote Nov. 19, after Chairman Ajit Pai circulated the item Monday (see 1910280054). The FCC also posted proposed new 911 location accuracy rules.
FCC Chairman Ajit Pai circulated an order Monday for the Nov. 19 commissioners’ meeting that would bar providers from using USF support to buy from suppliers deemed a threat to national security. Pai mentioned Chinese companies Huawei and ZTE (see 1910280021). FCC officials said the order singles out those two. Pai proposes to seek comment on rules requiring eligible telecom carriers remove from their networks existing equipment from the suppliers and on how to provide financial assistance to carriers to help them transition to a trusted supplier.
Rural broadband providers want the FCC to update or clarify eligibility requirements for applicants in its upcoming Rural Digital Opportunity Fund (RDOF) auctions to award up to $20 billion in USF dollars to companies that can deliver high-speed broadband to unserved and underserved parts of rural America (see 1908010060). In comments posted through Monday on docket 19-126, industry groups differed on whether and how to expand the pool of applicants that could receive the federal funding to deliver high-speed internet service to remote communities.
Staff is entering the second phase of a lengthy process to update the FCC's main filing system. After spending about a year on internal communications and other early work, agency employees are now poised to speak with external stakeholders. The update may include ways to help prevent the agency's filing system from being overwhelmed with fraudulent or spam comments that could slow it down, and it could register users, officials told the agency's Consumer Advisory Committee. Unlike past filing system revamps, this one may have bigger changes, staff told CAC.
Pennsylvania Public Utility Commissioner Andrew Place shares stakeholder worries from initial comments to the FCC NPRM on capping the USF at $11.42 billion. The “hard cap” could reduce "needed support for the continuous deployment of broadband access networks and services," he replied in docket 06-122, on his behalf and not the PUC's. It could "create an artificial and unnecessary competition for funding resources between the constituent programs," he said. Place noted the FCC's plan came without "finalizing its long-standing proceeding on the reform of the federal USF contribution base and methodology in conjunction with the corresponding referral to the Federal-State Joint Board on Universal Service." Other replies posted earlier this week raised similar points (see 1908270053).