Civil rights groups and others asked the FCC to do more to protect consumers as telecom carriers migrate from traditional phone services to IP-based, broadband technologies. The advocates said "high quality, affordable and reliable voice and high-speed broadband services" should be provided to all Americans and consumer protection maintained during the technology transitions. Separately, incumbent telcos pressed for streamlined regulatory treatment in tariffing and discontinuing legacy voice services. They were among the parties lobbying the commission last week as it plans, at its Thursday meeting, to consider a tech transitions item taking various actions (see 1606240069).
A federal court said it will hear Charter Communications’ complaint challenging state authority over interconnected VoIP services. In a Tuesday ruling (in Pacer), the U.S. District Court in Minnesota denied a motion by the Minnesota Public Utilities Commission to dismiss the challenge. Charter’s complaint alleged the PUC overstepped its authority by imposing state regulations for traditional phone services on VoIP services. The case began in March 2013, when Charter transferred 100,000 Minnesota customers to an affiliate that provided VoIP phone service that wasn't certified by the PUC. The agency said interconnected VoIP is a telecom service subject to state regulation, but Charter and intervenor the VON Coalition said it’s an information service and subject only to FCC regulation (see 1605200015). Judge Susan Nelson said the case involves “questions of fact” that are inappropriate for resolution on a motion to dismiss. The PUC’s “attempt to have these issues resolved as a matter of law by comparison to judicial decisions and FCC orders addressing other services ignores the FCC’s case-by-case approach regarding particular services,” she said. Nelson said FCC decisions cited by the PUC -- including the net neutrality order and its USF order requiring interconnected VoIP to contribute to universal service -- didn’t settle the question of whether interconnected VoIP is a telecom or information service, nor did the Supreme Court’s 2005 Brand X ruling. The judge said her ruling Tuesday “simply determines that -- in this highly fact-dependent and complex field -- Defendants have not shown as a matter of law that, taking the allegations of the Complaint as true, Charter Phone is necessarily an ‘offering’ of telecommunications. Any such determination must await further proceedings.” The PUC will “vigorously defend its positions” as the case moves forward, a commission spokesman said. VON Coalition Executive Director Glenn Richards called the order “the necessary first step in what we hope will ultimately lead to a decision that the Minnesota PUC has no jurisdiction over interconnected VoIP." VON advocates for VoIP providers including AT&T, Vonage, Google and Microsoft/Skype. State officials have said that the recent U.S. Court of Appeals for the D.C. Circuit decision affirming the FCC net neutrality order may help the PUC fend off the Charter lawsuit (see 1606170049). Charter declined to comment Thursday.
FCC Commissioner Ajit Pai asked for state help in "combating waste, fraud, and abuse" in the Lifeline USF low-income telecom support program "since wireless resellers began participating." Pai wrote to members of public utility commissions in California, Oregon and Texas and a Vermont department to alert them to "some of the abuses we have seen with" the FCC National Lifeline Accountability Database (NLAD). In the letters posted Wednesday, he said he was contacting the four because their states ran their own Lifeline accountability databases and he hoped to learn from their experiences. "NLAD safeguards are critical to preventing duplicate enrollments" in Lifeline, which aren't allowed under the FCC "one-per-household rule," but wireless resellers can override the safeguards, Pai said. "Unfortunately, the NLAD is ripe for abuse," he said, saying the agency proposed a $51 million fine of Total Call Mobile "for its dubious practices" (see 1604080032). The agency's TCM investigation "revealed disturbing trends" in the industry, he said, as wireless resellers completed 5.89 million enrollments October 2014-April 2016 by overriding the safeguards, costing Americans $650 million. Pai said recently $476 million in Lifeline support was questionable and perhaps wasteful (see 1606080062). He asked the state officials to answer questions by Aug. 2 about the Lifeline compliance checks they have in place, potential overrides of safeguards and any remedies they had for potential abuses. The four were: Lisa Hardie, chairwoman of the Oregon PUC; Donna Nelson, chairwoman of the Texas PUC; Michael Picker, president of the California PUC; and Christopher Recchia, commissioner of the Vermont Public Service Department. The FCC recently expanded Lifeline support to broadband service and initiated a shift of Lifeline customer eligibility verification from carriers to a third party (see 1603310056). NARUC and some states have challenged the FCC federal broadband eligible telecom carrier designation mechanism (see 1606030053 and 1607010057).
Wisconsin and other states asked a court to vacate part of the FCC Lifeline order that extends USF low-income subsidies to broadband service, sets an annual budget of $2.25 billion and streamlines the program's administration (see 1603310056). "The States seek review of the Order’s creation of a new, federal Eligible Telecommunications Carriers (ETC) designation process and its asserted preemption of the State commissions’ primary authority to designate ETCs with respect to broadband services," said a state petition (in Pacer) to the U.S. Court of Appeals for the D.C. Circuit Thursday (State of Wisconsin, et al., v. FCC, No. 16-1219). "The States seek review on the grounds that this part of the Order exceeds the Commission’s jurisdiction or authority, violates the Communications Act of 1934 and the notice-and-comment requirements of the Administrative Procedure Act, and is arbitrary, capricious, an abuse of discretion, or otherwise contrary to law. The States request that this Court hold unlawful, vacate, enjoin, and set aside this part of the Order." Joining Wisconsin were Arkansas, Idaho, Indiana, Michigan, Montana, Nebraska, South Dakota and Utah, plus the state regulatory commissions of Connecticut, Mississippi and Vermont. NARUC recently also challenged the FCC's new federal broadband ETC mechanism (see 1606030053). The FCC didn't comment Friday.
The FCC hasn't adopted two USF orders to support rural broadband in Alaska despite commissioner statements to an Alaska senator that they would act in Q2. Commissioner Jessica Rosenworcel has voted in favor of both items, an official in her office said Friday. In addition, Chairman Tom Wheeler may have voted in favor of the two draft Connect America Fund orders targeting Alaska that he circulated in early June (see 1606100075) if past practice is any guide. His spokespeople didn't confirm that Friday.
Revenue from contributions to state USFs has declined in multiple jurisdictions, we found last week from state USF financial documents and from interviewing state and industry officials. Those officials cited a variety of reasons for the falling revenue. Some cited outdated contribution methodology, while others said the drop is part of deliberate efforts to control the size of funds. Some states reported efforts to revamp USF contribution methodology, and one said its hands were tied by state legislation.
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).