The Oklahoma Corporation Commission voted 3-0 Thursday to approve final emergency rules to implement state legislation aimed at modernizing the Oklahoma Universal Service Fund. The law, signed May 9 by Gov. Mary Fallin (R), made administrative tweaks and updated the OUSF to account for technology changes, including a provision requiring interconnected VoIP providers to contribute. Per Oklahoma rules, the commission order still needs approval by the governor. At the OCC’s meeting, Chairman Bob Anthony called for strong auditing of the fund, saying the rules should specify that government officials can call for a special audit, paid for by the OUSF, when appropriate. “I have made the statement numerous times that we have overpaid out of this program millions of dollars,” he said. The new law is a step forward for the OUSF, emailed Deborah Sovereign, chief financial officer of Kellogg & Sovereign, a consulting firm that advises schools and libraries on the E-rate program. “Once fully implemented, we expect the fund demand to decrease."
The FCC will implement a rate-of-return USF budget-control mechanism in September, said a Wireline Bureau public notice in docket 10-90 listed in Thursday's Daily Digest. The mechanism, established under a March rural broadband overhaul order, is intended to keep rate-of-return USF spending at $2 billion, at least until a planned cost-model option takes effect. "Going forward the target amount will be calculated for each mechanism each year prior to the annual filing of access tariffs, but that was not possible in this initial year of implementation" because "these calculations were just recently announced," the PN said. NTCA Senior Vice President Mike Romano, who recently voiced concern about a previously planned July 1 implementation date (see 1606170058), said his group appreciates the commission's willingness to set a "more reasonable" timetable. He said the new September date is consistent with a rule calling for two months' notice to carriers. Romano noted the rural high-cost fund isn't indexed for inflation, unlike some other USF programs.
FairPoint Communications will no longer pay into USF for the wholesale broadband telecom service it plans to take private, said an official for another rural-oriented carrier that has similar plans. "This is really about USF," said Trey Judy, Hargray Communications director-regulatory affairs. "I think other companies are going to follow suit. ... It’s just correcting an inequity that’s been there for a while," he told us, citing cable competitors as not paying into the fund for their broadband offerings. "This puts [rural telcos] on a level playing field." Separately, Republican FCC commissioners recently voiced concern the agency could begin to assess industry broadband revenue in general to pay for USF.
Reconsideration petitions on the FCC much-debated Lifeline order rained into the commission Friday. The agency received petitions from CTIA, NASUCA, NTCA, USTelecom and others in docket 11-42. “There are aspects of the Order where the Commission ignored requirements of the Administrative Procedure Act (APA), unnecessarily increased administrative burdens, as well as areas where the Commission should have been clearer,” USTelecom said. The FCC didn’t provide enough notice for changes to the carrier recertification process or port freeze requirements in the order, it said. The wireline association said the FCC should reconsider the effective date of the streamlined federal eligibility criteria and obligation to offer Lifeline broadband internet access service (BIAS) requirements. USTelecom said the date should be delayed until Dec. 31, 2017, or 12 months after Office of Management and Budget approval of the order, whichever is later: “A December 1st obligation to offer Lifeline broadband does not allow adequate time to modify systems to identify those locations where Lifeline broadband must be made available.” Among other requested changes, USTelecom urged reconsideration of the FCC decision that voice should continue to be supported in census blocks with a single Lifeline provider. And it should reconsider the exception to its minimum standard requirements for fixed providers that haven’t deployed broadband networks in specific geographic areas, it said. Also, the commission should reverse its decision that high-cost carriers with state eligible telecom carrier designations are subject to BIAS Lifeline obligations, it said. In a joint petition, NTCA and WTA also urged the FCC to reconsider the exception to the fixed broadband minimum speed standard, saying “it represents a failure to properly leverage the High cost universal service program and will inadvertently punish certain low-income rural consumers.” The FCC should reconsider phasing out support for voice-only service, and exempt rural Lifeline providers using satellite backhaul from the 150 GB minimum usage allowance standard, they said. CTIA asked the FCC to reconsider its decision to set long-term minimum capacity standards for mobile broadband at 70 percent of the average mobile data usage per household. “The record raises serious questions about whether the 70 percent average of mobile data usage per-household standard adequately accounts for the affordability of Lifeline broadband service for the lowest-income consumers who otherwise would stand to benefit the most from the Commission’s recent modifications to the Lifeline program,” CTIA said. NASUCA urged reconsideration of the decision to remove Lifeline support for stand-alone voice services and said the agency failed to adopt regulations so that customers who can’t afford bundled services can maintain basic voice service, failed to require payment arrangements for backup power for Lifeline customers, and failed to require USF contribution from broadband services. NARUC has challenged the Lifeline order in the U.S. Court of Appeals for the D.C. Circuit (see 1606030053).
The FCC put a hold on Lifeline USF reimbursement payments to Total Call Mobile, said a Wireline Bureau order Wednesday in docket 11-42 directing Universal Service Administrative Co. to carry out the action. "This temporary hold is a limited one," the bureau said. "It shall be effective beginning with TCM’s request for reimbursement in all states filed for the data month of May 2016, and shall remain in effect pending the Bureau’s receipt and evaluation of TCM’s final, complete response to the Bureau’s letter of June 1, 2016 and subject to the Bureau notifying USAC of any change in the terms of the temporary hold." The bureau noted the commission issued a notice of apparent liability for forfeiture and order resulting from an investigation by the Enforcement Bureau. The notice proposed fining Total Call Mobile $51 million for allegedly enrolling tens of thousands of duplicate and ineligible consumers into the low-income telecom support program (see 1604080032). Total Call Mobile General Counsel Mike Morrissey told us his company was "a bit surprised" by the FCC action "because we thought we had been responding" adequately. He said TCM had told the FCC it couldn't provide all the information the agency sought by June 13, but it provided over 120,000 documents, and planned to provide the rest by June 27. "Frankly, we hadn't heard there was a problem with that," he said, but the company is now trying to complete its submissions to the commission by Friday. "I think we’re working this out and believe we will be able to do so to their satisfaction and show that whatever happened back in 2013 and 2014, that we’re now in full compliance" with their reimbursement rules, he said, suggesting it could take weeks, not months.
Utah could exhaust its USF by early next year unless the Public Service Commission overhauls its contribution methodology, a state official said Tuesday at a technical conference live-streamed from PSC headquarters in Salt Lake City. The agency is eyeing methods to ensure telecom providers that pay into the state USF collect and remit required revenue, and ways to ensure funding, including possibly adding a line or connection surcharge (see 1606080064). Rural LECs suggested requiring interconnected VoIP companies to contribute.
House lawmakers sparred over the End Taxpayer Funded Cell Phones Act (HR-5525) on the chamber floor Tuesday, likely poised for failure Tuesday night in a vote under suspension of the rules. Passage under suspension requires a two-thirds vote, and a Democratic leadership aide told us Monday nearly all Democrats are likely to vote against the bill (see 1606200049). As expected, Democrats slammed the measure, as did wireless trade groups.
The 6th U.S. Circuit Court of Appeals likely will reject an FCC order that pre-empted state restrictions on municipal broadband expansion efforts, despite the commission's recent net neutrality and broadband victory in the D.C. Circuit, said Tellus Venture Associates President Steve Blum, a community broadband consultant, in a Tuesday blog post. Meanwhile, echoing a debate between Tennessee and the FCC, Free State Foundation President Randolph May suggested the 6th Circuit should overturn or curb the FCC's Telecom Act Section 706 broadband authority. Public Knowledge Senior Vice President Harold Feld disagreed, saying that outcome is unlikely. At oral argument in March, one of the 6th Circuit judges seemed to be skeptical of the FCC's muni-broadband order, and afterward, TechFreedom President Berin Szoka predicted the agency would lose (see 1603170031).
The FCC approved a National Exchange Carrier Association proposal to change the formula used to calculate USF high-cost loop support for "average schedule" rate-of-return telcos (see 1605160023). The new formula, which covers support from July 1 to Dec. 31, incorporates a reduction in the authorized rate of return from 11.25 percent to 11 percent, said a Wireline Bureau order in docket 05-337 listed in Monday's Daily Digest. That's the first 0.25 percentage point cut required by the FCC in its March rate-of-return USF broadband overhaul order driving the authorized rate of return down to 9.75 percent over six years (see 1603300065).
NTCA welcomed FCC clarifications of its rate-of-return USF overhaul for rural carriers (see 1603300065), and said more such efforts will be needed. Reacting to a Wireline Bureau order issued Wednesday in docket 10-90, NTCA Senior Vice President Mike Romano told us Friday: "There are always going to be implementation questions, and this is an important document in starting to answer those questions. But as with anything of this kind, sometimes the answers to the questions generate more questions." Romano said one example is that the FCC order explained how new budget controls were going to work, which is "helpful and needed explanation." But he said "it was a bit surprising" to find the commission expects the budget controls to begin to apply July 1. Although actual payments won't be affected until August, he said, it's difficult for rural carriers to plan budgets on such short notice, particularly when actual numbers, which can include financial "haircuts," aren't yet known. He said NTCA looks forward to further discussions. “It’s important to keep these kinds of things coming. We don’t want them to pull back in any way,” he said.