The Nebraska Public Service Commission could face a lawsuit if it revamps state USF contribution methodology before the FCC overhauls federal USF contribution formula, CTIA warned in comments Wednesday in PSC docket NUSF-100. The state commission is mulling a move to a connections-based mechanism from the current system based on intrastate revenue. Echoing a call from last month (see 1607190033), CTIA urged the state commission to wait for the FCC: "In addition to avoiding needless legal and practical problems, this approach also will allow the [PSC] to better guard against exacerbating the already high tax, fee, and surcharge burden on Nebraska wireless consumers." Carriers shouldn’t have to make major changes to their billing and accounting systems twice, once for Nebraska contribution overhaul and again after the FCC makes its own changes, CTIA said. “Such a costly and wasteful move could result in litigation.” AT&T is litigating with the Kansas Corporation Commission on these grounds, CTIA said. Federal law says state USF mechanisms mustn't be inconsistent with federal USF's, it said. Wireless contributors allocate intrastate revenue from connections that carry both interstate and intrastate traffic based on the inverse of the factor used for federal USF contributions, based either on a traffic study or the wireless safe harbor, it said. "If Nebraska uses a different approach to assessing interstate-intrastate connections, there is a significant risk that the Nebraska approach could impose NUSF contributions on revenue that is treated as interstate by the FCC.” CenturyLink disagreed. Its comments said "there are no unsurmountable intrastate versus interstate jurisdictional issues raised by moving to a connections-based mechanism for assessing an NUSF surcharge.” Workshops are needed to work out details, but "a connections-based methodology is fundamentally legally sound," the telco said. "An NUSF contribution which is connections-based does not burden the interstate uses any more than a surcharge which is revenues based, since both are determined without regard to jurisdictional separations" and "both recover the same total amount for the fund." Rural independent telcos said the PSC can’t afford to wait for the FCC. The FCC will revamp contribution "at some future point in time, but waiting for the FCC to act at a time when the current NUSF contribution methodology may not be sustainable is not a viable alternative,” rural independents commented. Nebraska is one of several states with decreased revenue to the state USF from contributions (see 1607010010).
FCC staff finalized a rural carrier cost model and announced model-based offers of broadband-oriented Connect America Fund support for rate-of-return carriers that opt into the mechanism. Rate-of-return telcos have until Nov. 1 to decide, on a state-by-state basis, whether they want to receive subsidy support based on the final version of the Alternative Connect America Cost Model or a revised legacy mechanism, said a Wireline Bureau public notice Wednesday in docket 10-90. Both the model-based and revised-legacy mechanisms were approved in an order released March 30 that capped the rate-of-return high-cost fund at $2 billion per year, though model-based support can be supplemented by up to $150 million annually from USF reserves (see 1603300065 and 1603310039). Recipients of model-based support must meet broadband and voice service requirements, including varying levels of broadband deployment (25/3 Mbps, 10/1 Mbps and 4/1 Mbps) that were specified in one of several reports that the PN noted and linked to.
The USF carrier contribution factor could fall in Q4 from 17.9 percent to 16.9 percent of interstate and international telecom revenue, said industry consultant Billy Jack Gregg in an email update Tuesday. He said the Universal Service Administrative Co. (USAC) projected USF demand for Q4 would be $2.08 billion, down $100 million from Q3. Demand in three USF mechanisms -- supporting Lifeline, high-cost and rural-healthcare telecom service -- is expected to increase, but demand for school and library fund (SLF) E-rate discounts is expected to decrease by $215 million in Q4 to $403 million, he said. "This dramatic reduction in demand for the SLF is driven by the FCC’s June 8, 2016, authorization to USAC to use $1.9 billion of unused funds from prior years to offset 2016 SLF demand, and USAC’s projection that only $3.6 billion will be needed to satisfy overall 2016 SLF demand, $300 million less than the overall cap of $3.9 billion." If projected Q4 long-distance telecom revenue holds steady, the contribution factor will drop to 16.9 percent, he said, but if the projected revenue continues its trend lower, the contribution factor likely will be higher than that. USAC's Q4 revenue projection is expected in late August, he said.
Cutting carriers out of the eligibility process helps the California Public Utilities Commission avoid waste, fraud and abuse in the California LifeLine program, CPUC President Michael Picker said in a letter July 27 to FCC Commissioner Ajit Pai. The CPUC responded to Pai’s July 5 letter asking for four states' help fighting such problems in the Lifeline USF low-income telecom support program (see 1607060047). Pai wrote to state telecom regulators in in California, Oregon, Texas and Vermont, each of which runs its own Lifeline accountability databases. Unlike other states, California has empowered an independent, third-party administrator to determine eligibility, Picker said. “One of the fundamental differences between how the CPUC administers the California LifeLine Program and how states in which service providers determine eligibility for the federal Lifeline program [administer theirs] is that that carriers cannot override the safeguards California has put in place.” The California administrator “reviews each piece of underlying document to determine eligibility,” and the state program “neither acquires nor relies on certifications by service providers as a part of the enrollment process,” he said. At the 2016 NARUC summer meeting last week, CPUC Commissioner Catherine Sandoval said California may want to opt out of national verification, as established in the FCC recent Lifeline order, because the state already has a strong third-party verifier (see 1607270020).
FCC Commissioner Ajit Pai sent a further Lifeline USF query to Universal Service Administrative Co. CEO Chris Henderson Monday. Pai said he appreciated Henderson's answers to previous queries (see 1606080062) about the waste, fraud and abuse that has "riddled" Lifeline since wireless resellers entered the low-income subsidy program. He asked the USAC administrator to answer a series of new questions by Aug. 15. "If American taxpayers are to have faith in the Universal Service Fund, they must know that the Lifeline program only supports actual, eligible subscribers, not phantoms," Pai said in a letter posted on the FCC website.
Nebraska Rural Independent Companies urged a Federal-State Joint Board to recommend the FCC make USF contribution system changes similar to what NRIC has advocated in a state proceeding, said a filing in docket 96-45 on a meeting with FCC Commissioner Jessica Rosenworcel, chairwoman of the joint board, and an aide. "NRIC supports implementation of a connections-based contribution mechanism applicable to residential consumers, and continuation of the revenues-based contribution mechanism for business/enterprise and special access at least for a transition period," said an attached summary of the group's state positions. "A connection would be defined as 'a wired line or wireless channel used to provide end users with access to any assessable service.' Assessable service would be defined as 'a service which allows a connection to other networks through inter-network routing as a means to provide the telecommunications.'” In other meetings it summarized, NRIC made the same pitch to Commissioner Chris Nelson of the South Dakota Public Utilities Commission and Commissioner Ronald Brise of the Florida Public Service Commission, two state members of the board.
NASHVILLE -- An FCC official tried to ease tensions with state commissioners over the federal agency’s controversial Lifeline order, speaking at the 2016 NARUC Summer Committee Meetings. But NARUC Telecommunications Committee Chair Chris Nelson said he continues to believe the order violates the law. State officials raised concerns about the order's implementation in Lifeline sessions Wednesday.
The FCC Wireline Bureau finalized broadband coverage data for a cost model in a new USF mechanism that rate-of-return telcos can opt into to receive Connect America Fund support pursuant to a commission March 31 overhaul (see 1603300065). The bureau concluded a streamlined challenge process for the voluntary Alternative Connect America Cost Model (A-CAM), said an order in docket 10-90 listed in Tuesday's Daily Digest. "The Bureau is making the necessary adjustments in A-CAM in order to make final calculations of the offer of model-based support to rate-of-return carriers and will shortly release the Public Notice summarizing offer amounts and associated deployment obligations, which will trigger the 90-day deadline for carriers to indicate their intent to elect model-based support," the order said. "In this proceeding we received 146 comments, containing 273 requests to change reported A-CAM coverage data. Following our review of each filing on its merits, today we grant 80 requests and deny 73 requests. We decline to act on 124 requests that request changes that are administratively infeasible or unnecessary to make. We modify the A-CAM coverage data in the model accordingly, as described more fully" in the rest of the order. The disposition of each request is listed in an appendix.
Plains Internet asked the FCC to designate it as a Lifeline broadband provider (LBP) under the agency's new federal eligible telecom carrier process for the low-income USF support program (see 1604270028). Plains is a facilities-based telecom carrier providing fixed-wireless broadband, VoIP and data services capable of reaching over 293,000 customers, said its petition posted Thursday in docket 11-42. The company seeks LBP approval to serve Lifeline-eligible customers and meets all the statutory and regulatory requirements for such designation, it said. Approval would result in a "higher level of service quality and more competitive pricing and advantageous service options" for low-income consumers, it said, proposing an effective date of Aug. 31.
The FCC Enforcement Bureau admonished Momentum Telecom for not making full and timely contributions to the USF for more than a year. That failure deprived the USF of funds and gave Momentum an advantage over competitors that made timely contributions, said a bureau order Friday in File No.: EB-IHD-15-00018669. The bureau said that starting in September 2013, Momentum failed to make full and timely USF contributions, owing over $100,000 in August 2014, before fully erasing its arrears in October 2015. "An admonishment is appropriate in this case because the relevant statute of limitations has expired for all but a de minimis amount of the USF debt at issue. Nevertheless, Momentum’s habitual late payments to the USF must still be sanctioned," it said. Momentum said the $100,000 debt was due to a single missed invoice and notes it wasn't placed on "red light" status or had its case referred to the U.S. Treasury for debt collection, the order said. The bureau believes the size and duration of the debt warrant some enforcement action, but it didn't issue a fine despite some consideration. Momentum didn't comment Friday.