The FCC proposed a USF contribution factor of 20.1 percent for Q4, up from Q3's 17.9 percent, of U.S. interstate and international telecom end-user revenue, said an Office of Managing Director public notice Wednesday in docket 96-45. The proposal will take effect if the commission takes no further action within 14 days. It's the first time the factor will exceed 20 percent (see 1808310047). USF demand has trended up and the industry long-distance revenue base has trended down, producing a rising contribution factor over time, though variables cause some quarterly fluctuations. Commissioner Mike O'Rielly, who chairs a federal-state joint board, opposes any USF assessment of growing broadband revenue, which he says state joint board members favor (see 1802060028). “As accessible telecommunication revenues continue to decline the universal service fee necessarily increases," emailed State Joint Board Chair Chris Nelson of South Dakota. "In 2014 the FCC referred the question of Universal Service Fund contribution methodology to the Universal Service Joint Board for a solution to this unsustainable increase in the fee percentage. At that time the percentage was 16%, now it tops 20%. This is no surprise. The State Members of the Joint Board have a proposal to solve this and other issues with the contribution methodology. Failure to act will only see the fee continue to rise.” An FCC spokesperson and O'Rielly's office didn't comment.
Stakeholders backed possible FCC creation of a "connected care everywhere" pilot program, diverging on some details such as the proposed focus on facilities-based projects and rural areas. Some telecom entities urged the agency to include resellers; some healthcare parties sought inclusion of projects in urban areas; and other pushed for consideration of their particular industry or patient interests. About 70 substantive comments were posted through Tuesday in docket 18-213 in response to a notice of inquiry adopted Aug. 2 (see Notebook at end of 1808020034).
Sen. Dan Sullivan, R-Alaska, placed a hold on FCC Commissioner Brendan Carr’s reconfirmation for a full five-year term ending in 2023 over the senator’s continued concerns about the agency’s handling of the USF Rural Health Care Program under Chairman Ajit Pai. Confirmation of Carr and FCC nominee Geoffrey Starks has been stalled repeatedly in recent months. Senate Commerce Committee Chairman John Thune, R-S.D., and others point to larger political factors as the major hurdle.
Comments are due Oct. 5, replies Oct. 22 on the National Exchange Carrier Association's proposed modified USF formula for 2019 "average schedule" rate-of-return telco high-cost loop support said an FCC Wireline Bureau public notice in docket 15-337 in Thursday's Daily Digest.
Government should directly fund "infrastructure needs," not last-mile carriers, to promote rural broadband and close the digital divide, said Public Knowledge Thursday. It cited a new Broadband Connects America coalition of 18 groups that also include the Benton Foundation, Institute for Local Self-Reliance, National Hispanic Media Coalition and X Lab. "Rather than repeat the design" of the FCC high-cost USF program, "new funding should take advantage of the ability to divide the supply chain into different components such as towers, fiber, conduit, as well as services such as 911 and packet routing," said the coalition's principles. "Directing funding to shared infrastructure instead of particular carriers would allow federal and state governments to target dollars where needed to ensure efficient deployment of infrastructure that could serve multiple carriers -- rather than limiting funding to one carrier per community." It said the shift in focus "would reduce the cost of providing service to rural areas" for carriers and "is not meant to include funds that are directed towards specific users such as Lifeline, E-rate, or the Rural Health program." Other principles include "a combination of approaches that reflects the complexity" of rural broadband challenges and "restoring net neutrality."
The USF contribution rate will increase from Q3's 17.9 percent to 20.1 percent in Q4, exceeding 20 percent of carriers' U.S. interstate and international telecom end-user revenue for the first time in USF history, industry consultant Billy Jack Gregg emailed Friday. Universal Service Administrative Co. projects USF-applicable telecom revenue for Q4 to be $12.41 billion, down $545 million from Q3 and the lowest USF quarterly revenue base ever, he said. That lower revenue base, plus the previously announced USF quarterly demand of $2.06 billion, is what's driving the high USF contribution factor, he said. Total USF demand for 2018 will be $8.065 billion, up $147 million from 2017 but $1.47 billion less than the peak annual USF demand during 2012, he said. USF demand has hovered between $8 billion and $9 billion annually since then because of a 50 percent decline in low-income fund demand, a 48 percent decline in schools and libraries fund demand, and use since 2015 of unused schools and libraries fund to offset annual demand for that fund, Gregg said. Total USF revenue for 2018 will be $51 billion, also the lowest in USF history, and down $25.2 billion from the 2008 peak, he said.
FCC Republicans Ajit Pai, Mike O’Rielly and Brendan Carr have voted together the vast majority of the time. Carr partially dissented once and has been mostly in step with Pai since he became a member a year ago. O’Rielly, a commissioner throughout Pai's chairmanship, has disagreed more, based on our review. O’Rielly has had partial dissents 12 times and a full dissent once.
The Idaho Public Utilities Commission is “anxious” to hear staff and stakeholder recommendations for a possible legislative fix for state USF to present to the legislature next year, the PUC said in a Thursday order maintaining current state USF surcharges in docket GNR-T-18-06. The state commission is mulling possible IUSF revamp in docket GNR-T-17-05 (see 1804050052). Effective Oct. 1, the PUC held fees at 25 cents for each residential landline, 44 cents for each business line and 0.9 cent per minute for intrastate long-distance calls, said Thursday’s order. IUSF surcharge revenue from local exchange services increased more than $407,000 year over year to about $1 million in 2018, while long-distance surcharge revenue increased about $190,500 to more than $834,000, the PUC said. The year-end cash balance was less than $250,000, it said. Local access lines and intrastate long-distance minutes “generally declined over the last several years,” but prices have increased, the PUC said. Local business lines declined 14 percent, residential lines dropped 6 percent and minutes decreased 12 percent in the 2017 fiscal year, it said. “These factors continue to make it difficult to predict the necessary IUSF fund balance for the next fiscal year, and to determine appropriate rates so qualifying telephone companies can maintain IUSF eligibility.”
Huawei assured the FCC its products pose no cybersecurity risks. The FCC is looking at a proposal to bar USF subsidy support for products from companies seen as posing a national security threat (see 1804170038). Some commenters question “whether a testing and certification regime would be sufficient to guard against potential threats to national security from particular manufacturers,” the company said Thursday in docket 18-89. “Huawei has been one of the most advanced practitioners in the telecom industry when it comes to cybersecurity testing and certification.” Huawei noted the U.K. has worked with Huawei to open the Huawei Cyber Security Evaluation Centre in the U.K., “which is monitored by a public-private Oversight Board to ensure its independency and efficacy.”
New Mexico is the third state to decide carriers should contribute by connection count to state USF rather than by percentage of revenue, following Utah and Nebraska. The Public Regulation Commission voted 4-0 at their livestreamed Wednesday meeting to switch to a $1.17-per-connection monthly surcharge Oct. 1, and 4-0 to open a docket to revise the amount for 2019. Commissioners rejected exceptions suggested by CTIA and others. As Oklahoma also weighs state USF changes, big carriers warned the state commission not to regulate broadband or re-regulate competitive services.