The House FY 2017 FCC funding bill retained its policy riders curbing the agency’s net neutrality order, mandating a pause to the set-top proceeding and mandating FCC process overhaul Thursday as it advanced to the floor. Appropriations Committee Republicans shot down Democrats' attempts to modify the Financial Services bill during the long full committee markup, approving the bill 30-17.
There's sufficient E-rate USF funding available to fully meet school and library demand for discounted service in the 2016 funding year beginning July 1, said the FCC Wireline Bureau in a public notice Wednesday in docket 02-6. The Universal Service Administrative Co. estimated in a letter this week that demand for the coming funding year would be $3.61 billion: $2.33 billion for "Category One" services providing broadband connectivity to schools and libraries, and $1.28 billion for "Category Two" internal broadband connections. The FCC has budgeted $3.94 billion for the E-rate program, and there's another $1.9 billion in unused funds from previous years, allowing the program to fully fund all of the requests for discounted service in both categories, the PN said.
At least $476 million in annual Lifeline USF spending remains questionable and perhaps wasteful, FCC Commissioner Ajit Pai said Wednesday. Pai said it appears that "unscrupulous" wireless resellers continue to take advantage of "override" processes to get around a commission rule aimed at preventing duplicative Lifeline telecom support to low-income consumers. "We need to get to the bottom of it and we need to root out the waste, fraud and abuse that has persisted in the program for a long time,” he told reporters at a briefing Wednesday on his latest letter seeking answers from the Universal Service Administrative Co., which runs USF for the commission.
The FCC proposed an E-rate eligible services list (ESL) for schools and libraries looking at participating in the USF discount program for the funding year starting July 1, 2017. Comments are due July 5, replies July 20, said a Wireline Bureau public notice Friday in docket 13-184. The program supports two types of eligible services: Category One covers services needed to provide broadband connectivity to schools and libraries, and Category Two covers internal connections. "The proposed ESL revises the description of eligible dark fiber service under Category One to read 'Leased Dark Fiber (including dark fiber indefeasible rights of use (IRUs) for a set term).' This revision is intended to further explain the distinction between leased dark fiber and self-provisioned fiber under E-rate program rules," said the PN. Among other possible updates, the PN proposes to include a new explanation on the treatment of connections between multiple buildings of a single school, classifying those located on a single campus as Category Two internal connections and those connecting buildings on separate campuses as Category One connections.
NARUC challenged the FCC Lifeline decision to bypass state regulators in setting up a national process for designating providers eligible for new broadband low-income USF support (see 1603310056). "Congress specifies that the FCC simply has no role in the [eligible telecom carrier] designation process unless the State cannot act as a result of State Law," said the state regulatory association in a petition for review Friday with the U.S. Court of Appeals for the D.C. Circuit (NARUC v. FCC, No. 16-1170). It said if upheld on review, the FCC's "flawed view of the power of an Agency vs. the power of Congress to specify the scope of ... agency powers will break new ground transferring yet another substantial swath of authority from Congress to agencies." The NARUC challenge isn't a surprise (see 1604010042).
The industry USF contribution factor for Q3 will stay at 17.9 percent of carrier interstate and international telecom end-user revenue, industry consultant Billy Jack Gregg said in an email update Wednesday. He said the Universal Service Administrative Co. projected industry long-distance telecom revenue for Q3 at $14.56 billion, about $181 million less than in the current quarter. The revenue drop is part of a downward trend that is putting upward pressure on the contribution factor over time, he said, but USF demand for Q3 also is projected to edge down to $2.18 billion, providing an offset.
USF eligible telecom carriers and other stakeholders must file FCC Form 481 by July 1 for "carrier annual reporting data" after the Office of Management and Budget approved the form and its instructions Friday, said a Wireline Bureau notice in docket 14-58 listed in Wednesday's Daily Digest.
A federal court pushed back the briefing schedule for AT&T challenges to two FCC orders from December 2014 and December 2015 on price-cap telco USF duties (see 1601110036). An order (in Pacer) issued Wednesday by the U.S. Court of Appeals for the D.C. Circuit granted an unopposed AT&T motion to extend a previous timetable (see 1605170061) due to deadline conflicts faced by the company's counsel. An initial joint brief from petitioners and supporting intervenors is now due July 12; a brief from respondents FCC and DOJ is due Sept. 2; and a joint reply brief from petitioners and supporting intervenors is due Sept. 19. Petitioner AT&T is joined in the challenges by CenturyLink as a petitioner/intervenor and USTelecom as an intervenor. The consolidated case is AT&T v. FCC, No. 15-1038.
FCC Commissioner Ajit Pai said he appreciated the "responsiveness" of Universal Service Administrative Co. CEO Chris Henderson, who wrote three times in May to answer an April 18 letter from Pai seeking USAC help in fighting waste, fraud and abuse in the Lifeline USF program (see 1604180074). Pai said Henderson's responses confirmed that Total Call Mobile "was not alone" in "apparently overriding third-party identity verification (TPIV) safeguards"; apparent duplicate and ineligible enrollments drew an FCC-proposed $51 million fine against the company (see 1604080032). "Three of the companies identified by Total Call Mobile's agents indiscriminately overrode the TPIV safeguards between October 2014 and February 2015," Pai said in a Tuesday letter to Henderson that blacked out the companies' names. "The aggregate numbers for just these five months of enrollment are staggering. Roughly one third of the 2.5 million Lifeline subscribers enrolled by wireless resellers, or 821,482 subscribers, were enrolled using TPIV override," Pai said. Even without Total Call Mobile included, 11 other wireless resellers were responsible for 616,937 enrollments, he said: "That's outrageous." Pai commended USAC for changing the TPIV override process in February 2015, but said he remains concerned "that existing safeguards still may let unscrupulous carriers exploit the program." He said USAC staff still doesn't review "any document that verifies a person's identity" before a TPIV override is authorized. "Integrity of the process relies on the integrity of the carriers -- the only ones who know if a subscriber's identify is legitimate," he said. Pai asked Henderson for more information on 13 wireless resellers that USAC said frequently engaged in overriding and that weren't identified in his April 18 letter, and to answer various questions about USAC processes and policies.
Rural telcos asked the FCC to reconsider parts of its rate-of-return USF order aimed at helping small carriers maintain and expand broadband service in high-cost areas (see 1603300065). The FCC should address issues of "sufficiency and reasonable comparability," a "cost recovery "black hole" and broadband cost "model election budget issues," among other things, said NTCA in its petition Wednesday in docket 10-90. A WTA email said its petition seeks reconsideration in four areas: "the Commission should reconsider and strengthen its requirements for qualifications as 'unsubsidized competitors' to ensure that customers in affected 'competitive' areas do not suffer loss or degradation of service; the Commission should clarify and expand its rules regarding the treatment of transactions after the ACAM [cost model] and Rate of Return paths are implemented; the Order’s build-out obligations do not consider virtually certain price increases and delays regarding fiber optic cable and construction contractors; and the Order’s benchmark and budgetary controls render it unlikely that retail broadband rates can comply with reasonably comparability ceilings." A Madison Telephone Co. petition asked the FCC to eliminate a “parent trap” rule, which governs high-cost USF support when rural exchanges are sold or transferred.