FCC staff cleared Global Connection and Phone Club Lifeline wireline compliance plans that are one condition for them to continue receiving USF low-income support. Global Connection and Phone Club provide resold Lifeline service, but the commission in 2015 amended its rules to eliminate Lifeline reimbursement for wholesale service provided to resellers, leaving only eligible telecom carriers providing service directly to consumers able to seek support, said a Wireline Bureau public notice in docket 09-197 listed in Thursday's Daily Digest. Effective Monday, non-ETC resellers no longer will be eligible for reimbursement and must obtain approval of a compliance plan to obtain ETC designations from state commissions or the FCC, the PN said. The compliance plan approval clears the way for Global Connection and Phone Club to seek state ETC designations, it said.
Representatives of the Rural Wireless Association urged the FCC to approve a second phase of the USF Mobility Fund at $500 million per year. RWA met with aides to Commissioners Mignon Clyburn and Jessica Rosenworcel. “RWA discussed its continued support for the creation of a Mobility Fund Phase II mechanism that will provide specific, predictable, and sufficient support to sustain and advance the availability of mobile services in high-cost areas,” said a filing by the group in docket 05-265. A proposal to reduce the program to a $400 million annual amount “was predicated on estimated disbursement figures that were frozen and ratcheted down to 60 percent of the 2011 baseline,” RWA said, adding that “$400 million was not reflective of carriers’ costs then, and certainly isn’t reflective of carriers’ costs now.” Clyburn told an RWA meeting last year that the FCC should wrap up an order creating a dedicated USF mobility fund (see 1509100059).
Parties that want the FCC to revisit its Lifeline USF overhaul answered critics of their petitions for reconsideration or clarification, which were the subject of recent oppositions and other initial comments (see 1608010028). Every petitioner filed a reply -- CTIA, General Communication Inc. (GCI), Joint Lifeline ETC Petitioners, the National Association of State Utility Consumer Advocates (NASUCA), NTCA/WTA, the Pennsylvania Public Utility Commission, TracFone and USTelecom. CenturyLink and New America's Open Technology Institute (OTI) also replied. Replies were posted in docket 11-42 Monday and Tuesday, with CTIA's filing the first to post (see 1608080042).
Parties not only disagree about how the FCC should weight performance tiers for its planned Connect America Fund Phase II reverse auction of broadband-oriented subsidies, but also about what the record demonstrated. Replies were posted Friday and Monday in docket 10-90, after initial comments last month (see 1607220057).
The FCC could act in late September to revise its special access framework for business data services, said Incompas CEO Chip Pickering Monday. On a Competify call highlighting BDS arguments ahead of reply comments due Tuesday, Pickering and others argued for more FCC regulation of the BDS market, which they said is still dominated by incumbent telcos overcharging competitors and business customers. Meanwhile, CenturyLink and Frontier Communications urged the FCC not to impose regulation they said would harm BDS competition and investment. NCTA said it would file a reply showing there's no market failure "justifying massive regulatory intervention."
CTIA, Incompas, NCTA and USTelecom backed a March 2015 petition for reconsideration asking the FCC to vacate a policy statement on the forfeiture methodology for violations of rules governing payment to certain payment programs. "Because the Policy Statement is written in terms that bind the agency in applicable monetary forfeiture proceedings, the Administrative Procedure Act required notice and comment prior to issuance of the Policy Statement," said a filing Friday by a CTIA counsel on a meeting with Enforcement Bureau staffers. It noted there was no docket because the commission didn't put the petition out for comment. The groups had said in 2015 the policy statement created “draconian” treble damages for amounts owed to USF and other funds (see 1503310052).
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).