Fiber proponents urged the FCC to devise a Connect America Fund subsidy auction to encourage deployment of cutting-edge high-speed networks and services, as initial comments on a Further NPRM were posted Thursday and Friday in docket 10-90. Satellite and some wireless interests suggested the rules should encourage broad deployment and industry participation, and traditional telcos seemed fairly sympathetic to that. Regulators in three northeastern states where Verizon declined initial CAF Phase II support asked the commission to ensure or help their states receive their fair share of support through the auction.
NTCA asked the FCC to set a clear implementation schedule for its USF overhaul order transitioning rate-of-return carriers from voice to broadband-oriented support in two mechanisms, including a new option based on a broadband cost model (see 1603300065). The schedule should "enable all reforms (model and non-model) to take effect at approximately the same time to the extent possible, and to provide carriers with sufficient estimates, calculations, and other data in advance of any implementation deadlines to help inform" their upcoming USF support elections, said the rural telco group in a filing Wednesday on a meeting with an aide to Commissioner Ajit Pai in docket 10-90; it also met separately with Wireline Bureau officials: "NTCA noted the importance of providing data or analyses that would allow carriers to estimate, if not completely ascertain, the impacts of reforms still being implemented -- specifically: (1) the new operating expense limits; (2) the competitive overlap rule; (3) any new buildout obligations; (4) the budget control as it might apply in 2017, and (5) the new capital investment allowance governing recovery of prospective investments." NTCA continues to believe questions of USF support sufficiency, rural-urban service/rate comparability and intrastate cost recovery need to be addressed in its petition to reconsider/clarify the March 31 FCC order, but it said the most urgent priority is for budget management in the event some carriers elect and then decline model support It's "essential" the model elections be carried out in a way that does "not leave non-model carriers with insufficient support by penalizing those carriers that did not elect the model for the choices of those that expressed initial interest in the model but then 'backed out of' a final election," it said.
The FCC denied Allband Communications Cooperative a further waiver of a rule establishing a presumptive $250 monthly line cap on total high-cost USF support for eligible telecom carriers. The commission gave Allband previous waivers to the rule, which was adopted in a 2011 order overhauling USF mechanisms. "Allband has consistently misapplied our cost allocation rules rendering its cost accounting unreliable," said an FCC order Wednesday adopted unanimously in docket 10-90. "We are therefore unable to determine, at this time, what, if any, support in excess of the $250 cap is justified and in the public interest. Accordingly, we deny Allband’s Further Waiver Request and require that Allband revise its cost accounting practices to be consistent with our rules. Once that has occurred, Allband may submit a new request for a waiver of the $250 cap if its revised cost study incorporating correctly determined costs would result in a need for support in excess of $250 per line. In addition, we deny Allband’s Application for Review of the Wireline Competition Bureau’s July 25, 2012 waiver grant. Allband requested that the Commission extend its July 2012 waiver of the $250 cap until 2026, rather than 2015, and waive the Commission’s benchmarking rule. Allband also made several legal challenges to both rules. We deny Allband’s legal challenges, consistent with the decision of the U.S. Court of Appeals for the Tenth Circuit." Commissioners Mignon Clyburn and Mike O'Rielly issued separate statements attached to Wednesday's order. An Allband representative didn't comment.
Lobbying spending among some wireless heavyweights is up. CTIA lobbying rose in Q2, to $1.96 million, vs. $1.76 million in last year’s Q2. T-Mobile spent more than $2.1 million in Q2, vs. $1.6 million a year ago. T-Mobile typically has spent aggressively on lobbying, and this is the first quarter in many years that it’s broken the $2 million mark in quarterly lobbying spending. An exception is Q2 2008, when T-Mobile recorded $3.29 million.
Major telcos said they can't provide E-rate discounts and may exit the program unless fixes are made to the E-rate Productivity Center (EPC), an online portal of the Universal Service Administrative Co. "While USAC released several waves of Funding Decision Commitment Letters (FCDL) to date, approving approximately $77.8 million in E-rate funds, these commitments are of little value to applicants unless service providers can access information regarding their customer’s E-rate funding status -- information essential to deliver service and provide the discounts USAC has authorized," said a letter Wednesday from AT&T, CenturyLink, Frontier Communications, Sprint, Verizon and Windstream to USAC CEO Christopher Henderson in FCC docket 13-184. The letter followed up on an attached April 20 letter previously not released.
Crocker Telecommunications asked the FCC to revisit Connect America Fund auction plans. Crocker, headquartered in Greenfield, Massachusetts, said the CAF Phase II auction funds should be sufficient to bring fiber-based advanced services to unserved areas. "We strongly urge the Commission to adopt rules for the CAF PH II auction that will allow for the deployment of the most robust and future proof physical infrastructure possible, recognizing that the infrastructure enabled by the USF support funds should be capable of delivering both broadband and voice services, and be capable of scaling in speed and performance for decades to come," it said in a petition posted Tuesday in docket 10-90. It asked the commission to clarify or reconsider decisions and proposals on scoring and weighting of bids, validating locations, letters of credit and accelerated payments in a May order and Further NPRM (see 1605250046 and 1605260034). Comments are due Thursday.
The uncertain timing of a federal USF contribution overhaul stirred debate over whether states should proceed with changes to their own funds. In replies Friday at the Nebraska Public Service Commission, some telecom companies urged the PSC to wait to revamp its surcharge methodology until the FCC Federal State Joint Board on Universal Service and the FCC act on federal contribution reform. It’s unclear when the Joint Board will issue a recommendation; the FCC USF contribution reform proceeding has been open for more than a decade.
With its universal service fund quickly depleting, the Utah Public Service Commission tentatively decided to increase its USF surcharge to 1.65 percent from 1 percent of billed intrastate retail rates, said a notice in Friday's Utah State Bulletin. The rule change may become effective Aug. 22, though the PSC could change its decision after comments are filed Aug. 15. If no change is made, the rate would increase Oct. 1, the Bulletin said. The new rate is “intended to function as an interim solution to address the current funding deficiency in the least disruptive way possible, and to allow time for the Utah Legislature to consider other changes to the fund,” it said. The Utah Division of Public Utilities last month urged a revamp of the state USF contribution method, saying without a change, the fund balance could dip $3 million this year and run out completely by early 2017 (see 1606210035). The DPU had recommended moving to a charge of 32 cents per line. But a Legislature committee “expressed interested in more fundamental changes to the Utah Universal Service Fund,” the State Bulletin said. Revenue from contributions to state USFs has declined in multiple jurisdictions, our survey has found (see 1607010010).
The FCC Enforcement Bureau and Blue Jay Wireless settled an investigation into whether the company improperly enrolled Hawaii customers into enhanced tribal support options under the USF Lifeline low-income program. Under an order approving a consent decree, Blue Jay will reimburse USF about $2 million and undertake compliance measures, said an agency release Friday. "This settlement makes clear that no Lifeline provider should turn a blind eye to potential fraud on the program," said Enforcement Bureau Chief Travis LeBlanc. The bureau found the company incorrectly requested and received the extra tribal funding (up to $25 extra per subscriber monthly) for consumers not residing in the Hawaiian Home Lands, the release said. Despite being informed in 2014 by Hawaii state regulators that the number of tribal subscribers it was claiming appeared to exceed the number of households in the Hawaiian Home Lands, Blue Jay continued to seek tribal support while it gathered more information, it added. The consent decree said Blue Jay admitted that from May to August 2014, it certified that it obtained tribal certifications from some subscribers who were later determined by Blue Jay to be nonresidents of the Hawaiian Home Lands. Commissioner Ajit Pai said the settlement confirms Lifeline still contains waste, fraud and abuse: "I can confirm that Blue Jay Wireless is one target of my ongoing investigation and that I flagged further suspicious conduct for the Enforcement Bureau’s investigation earlier this year. I will continue to work with my colleagues, the Enforcement Bureau, the Inspector General, and the Universal Service Administrative Company to end the abuse of taxpayer money by unscrupulous wireless resellers." The commission last year sought public comment on whether to require additional evidence of tribal residency beyond self-certification and on how providers should provide proof in order to prevent waste, fraud and abuse, said the FCC release. Blue Jay said the settlement memorializes its process for verifying subscriber self-certifications, which included building its own geo-mapping tool. "USAC concluded that this process was 'conservative to the Fund' because FCC rules require only applicant self-certification," Blue Jay said in a statement. "The settlement also allows Blue Jay to make good on a prior commitment to 'make the Fund whole.'" CEO David Wareikis said that the carrier "made the commitment to make the Fund whole because it did not want to be seen as benefiting in any way from erroneous self-certifications made by subscribers." The agreement "contains no finding or admission of wrongdoing by Blue Jay, and affirms Blue Jay's good standing" as an eligible telecom carrier, he said. "The consent decree shows that Blue Jay took voluntary proactive efforts to protect against possible fraud and would never turn a blind eye to potential fraud in the program.”
Implementing the FCC Reauthorization Act (S-2644) “would have a gross cost of $705 million over the 2017-2021 period,” offset by collected fees, the Congressional Budget Office said in a report Thursday. “Assuming that future appropriation acts allow the FCC to continue to collect such fees, CBO estimates that net discretionary spending under S. 2644 would be reduced by $23 million over the 2017-2021 period.” The extended Antideficiency Act exemption for USF in the measure “would allow the program to obligate and spend funds faster than it would without the exemption,” CBO said. The Senate Commerce Committee cleared the bipartisan legislation in April and Commerce Committee Chairman John Thune, R-S.D., told us in mid-May the hotline filing for unanimous consent consideration of the measure awaited CBO scoring (see 1605130057). But a hotline is likely to face Democratic holds due to an unrelated policy fight over the reconfirmation of FCC Commissioner Jessica Rosenworcel (see 1607010047 and 1607120075). CBO also scored the Senate version of the Securing Access to Networks in Disasters Act (S-2997), cleared by Commerce last month. It would increase FCC costs by less than $500,000, said CBO.