A universal service bill moving through the Utah State Legislature could add revenue to the state USF, said a fiscal note issued Monday on SB-130. The Utah bill says telecom companies providing access lines, connections or wholesale broadband internet access service qualify for state USF distributions. It requires each provider to contribute to the USF and requires the Utah Public Service Commission to develop a method for calculating the amount of each contribution. And it makes wireless companies eligible for state Lifeline support. Enactment could “increase revenues to the Universal Public Telecommunications Service Support Fund, assuming the Public Service Commission adjusts surcharge rates to match fund disbursements,” said the fiscal note. “One aspect of the legislation, expansion of the state Lifeline Program to wireless customers, could require increased surcharge revenue to the fund of at least $1.1 million.” The bill means broadband and internet providers will face additional regulation and contribution requirements, while customers could pay increased surcharges, it said. Expanding the state Lifeline program could give $42 annually to at least 26,200 individuals, it said. The Utah Senate passed SB-130 on Feb. 27 and the bill awaits a House vote. The Utah PSC, which is considering contribution changes amid projections its fund could run out early this year, tentatively decided last July to increase its revenue-based surcharge as an interim step while the state legislature considers broader changes (see 1607150017).
NTCA urged FCC Commissioner Mignon Clyburn to help remedy "the insufficiency" of high-cost USF budgets, which is "resulting in fewer locations being reached with better broadband," and rural broadband rates "that are materially higher" than urban rates. The rural telco group also sought urgent action on two targeted issues, "the need for a technical correction to or clarification of the Capital Investment Allowance adopted in last year’s reforms" and "the continuing adverse effects upon consumers arising out of application of the 'rate floor' policy," said an NTCA filing posted Monday in docket 10-90 on a meeting its CEO Shirley Bloomfield and Senior Vice President Michael Romano had with Clyburn and an aide.
The USF contribution factor for Q2 will jump from 16.7 percent to 17.4 percent of carrier interstate and international telecom end-user revenue, emailed industry consultant Billy Jack Gregg Thursday. He said Universal Service Administrative Co. projections for Q2 industry revenue were $13.6 billion, about $356 million less than the previous quarter, which, combined with projected USF demand of $1.99 billion, will cause the contribution factor to go up. The Q2 revenue decline "continues the downward trend in the USF contribution base, which places upward pressure on the USF assessment factor. USF revenues for the four quarters ending the second quarter of 2017 are $3.35 billion lower than revenues for the four quarters ending the second quarter 2016, a 5.6% decline," he wrote.
The Arizona Corporation Commission should narrow funding for broadband to rural areas and commercially provisioned, finished services, CenturyLink said in Tuesday comments on the ACC’s proposed broadband fund for rural schools (see 1702080022). But the ISP praised the commission’s other Feb. 15 revisions to draft amendments to the state’s USF rules, including capping the proposed fund at $8 million, limiting collection to 12 months and limiting the program to the 2017 and 2018 E-rate funding cycle. In other comments, AT&T urged the commission to clarify that it’s not asserting regulatory jurisdiction over broadband, prohibit overbuilding and limit funds to E-rate special construction projects. The Arizona commission plans an all-day workshop on the matter Thursday at 1 p.m. EST, the agency said in a Wednesday news release.
The Missouri Public Service Commission sought comment on the future of the state USF, in a notice released Tuesday in docket TW-2017-0078. The commission asked if it should revise its $6.50-per-subscriber support amount and what should be the USF assessment level. The PSC asked if the fund, which today supports only voice landline Lifeline service, should support a broadband-only service and if it should provide a high-cost service. It asked if it should use different assumptions to project state USF revenue and expenses. Killing the state USF is on the table, too, said the agency: “Should the Missouri USF be eliminated? If yes, how and when should it be done? What should be done with any unused funds?” In an accompanying memo, staff said changes in consumer behavior and federal developments necessitate a revamp of the state USF. "The number of participants in programs supported by the Missouri USF has declined, primarily due to a shift in consumer preferences to wireless service,” staff said. “Federal Lifeline program reforms are shifting federal support to only support a broadband service.” The Missouri USF fund balance is $2.45 million and has slowly declined since October 2014, staff said. The state requires companies to contribute 0.0010 times their net jurisdictional revenue, it said. Despite repeated reductions in contribution amounts to the state USF, the Missouri fund could be financially viable through 2023 even if the assessment was eliminated, staff said. Comments are due May 1. Revenue from contributions to state USFs has declined in multiple jurisdictions, our report last year found (see 1607010010).
Any grand infrastructure plan should go beyond public-private partnerships and tax credits and find ways to incorporate broadband, senators and witnesses said Wednesday during a Commerce Committee hearing. It followed another call Tuesday from President Donald Trump that Congress act on infrastructure. Senators repeatedly questioned what a broadband component should look like.
Rural telco groups again recommended the FCC hike their USF funding support, as replies were posted Monday and Tuesday in docket 10-90. NTCA repeated its call for providing additional funding for carriers that opted into the alternative connect America cost model (A-CAM) mechanism and for those receiving nonmodel support. "Budget shortfalls throughout the entirety of the RLEC High Cost program undermine the goals of the [March 2016] Rate-of-Return Reform order and threaten to leave far too many rural Americans with access only to substandard and/or unaffordable" broadband service, the group replied, citing a "unanimous record" in initial comments supporting additional funding (see 1702140043). The Eastern Rural Telecom Association's reply said it "strongly supports full funding" of both the A-CAM and nonmodel funding mechanisms. The reply of a group of Nebraska rural telcos said it supports funding A-CAM recipients at $200 per location, which it calculated would require $104 million a year, not the $110 million initial commenters cited, because some carriers elected not to receive the support. It disputed previous calls for "fully funding" the A-CAM mechanism. "The highest cost-companies have costs far in excess of $200 per location," said the Nebraska group. It nevertheless backed the $200 amount as a "realistic policy outcome" that "recognizes the Commission's budget limitations." It said calls for additional nonmodel support "are being addressed in a separate proceeding and thus are not germane" to the rulemaking.
NCTA urged Congress, in any infrastructure proposal, to identify “problem areas before spending money to fix them,” “deliver broadband to those who don’t have it,” offer “equal opportunities for all qualified broadband providers,” and accept “alternative technologies in remote areas,” in a blog post prior to a Wednesday Senate Commerce Committee hearing on infrastructure spending. Policymakers should guarantee “transparency and accountability to ensure government funds achieve intended results,” said NCTA, which isn’t testifying. The one witness at the hearing with a clear telecom focus is NTCA CEO Shirley Bloomfield. She and USTelecom President Jonathan Spalter offered what they called a “simple road map” for the broadband spending they recommend. “Rather than reinventing the wheel, let’s put to better use initiatives and programs that have worked in the past to enable the availability and sustainability of rural broadband,” they said in a blog post for The Hill. “Serious consideration should be given, for example, to leveraging the federal Universal Service Fund (USF) programs as part of any new broadband infrastructure initiative.” They urged Congress to streamline and kill regulatory barriers in the process. ITTA, NTCA, USTelecom and WTA joined earlier this week to send a letter with recommendations (see 1702270038). Public Knowledge Vice President-Government Affairs Chris Lewis sent a letter to committee leaders urging Congress to weigh "how to ensure affordable, reliable access for all Americans, to expand economic opportunity for all." Lewis pointed to what he called market failures: "While high prices have driven robust rates of return on capital investment for broadband providers, they have not led those providers to invest those profits into deployment to rural, unserved, and underserved communities." President Donald Trump pressed for an infrastructure proposal of up to $1 trillion but didn't offer precise details. He was expected to have addressed a joint session of Congress Tuesday night, and infrastructure is one topic slated for the speech. “I hope that the president will lay out what it is he wants to do,” Senate Commerce Committee Chairman John Thune, R-S.D., told reporters Tuesday. “We don’t know exactly what approach he wants to take. From my standpoint, I’m interested obviously in how you would do any infrastructure plan that includes these private-public partnerships, or P3s as they call them, that work in more populated areas but how you would fund infrastructure in rural areas.”
The U.S. should auction most broadband subsidies "to catch up with the rest of the world," said American Enterprise Institute scholar Mark Jamison, who was on Donald Trump's presidential transition team for the FCC. Peru and Chile pioneered telecom subsidy auctions and much of FCC Connect America Fund support is now auctioned for high-cost areas, but such auctions should be expanded to other USF programs, he said in a Friday blog post. "The old E-Rate, Rural Health Care, Lifeline and some CAF programs would be dropped. E-Rate, Rural Health Care and some CAF programs would be rolled into a CAF Phase II-like reverse auction. Lifeline support would move to income subsidies." Other federal government broadband programs should be terminated, with funding channeled "through the new world-class FCC system," he wrote. "As Commissioner Michael O’Rielly recently observed, federal broadband spending must have integrity and efficiency. The best bet for accomplishing this is a revamped FCC system." Asked how many countries auctioned broadband subsidies, Jamison told us he didn't know, but said "it is considered best practice internationally."
A Vermont 911 case is raising legal and public policy questions about whether states can mandate backup-power requirements for wireless or interconnected VoIP carriers. Last week at the Public Service Board, some commented that federal statute bars states from making battery-backup mandates to either industry, and -- for wireline providers including VoIP -- that FCC existing backup power requirements make separate state rules unnecessary. A recent former California commissioner said in an interview it’s critical from a public policy standpoint for states and local governments to make their own decisions on communications network resiliency, including battery backup. A NARUC attorney disputed industry claims of federal pre-emption.