The FCC gave a few tribal-oriented telcos additional USF support for operating costs it said were well above average. The two Democratic commissioners partially dissented and the agency's chief partially concurred, citing changes he made to win OK. The commission Thursday released as expected (see 1804040056) a modified, long-pending order to relax 2016 operating-expense (opex) restrictions on rate-of-return telco high-cost support for carriers primarily serving tribal land. Broadband deployment and competition conditions were added to target the relief to an estimated five providers.
Stakeholders agree Alaska shouldn’t terminate state USF and that the current fee is too high, GCI observed in Tuesday reply comments at the Regulatory Commission of Alaska in docket R-18-001. But the company and others continued to disagree over the right path forward, as they did in initial comments (see 1802270034). State Rep. David Guttenberg (D) said an industry proposal by the Alaska Telephone Association “does not adequately address how the AUSF should be reformed in order to support the infrastructure Alaska needs to bridge its digital divide and grow and diversify our economy in the 21st century.” It “would enshrine current carrier support without doing anything to enhance carrier accountability.” Industry’s suggestion to wait until 2029 to decide if AUSF should be retained, amended or repealed is “simply unacceptable,” he said. “That's over ten years of support that could be used to help Alaskans get better access to faster broadband. That's over ten years that the rest of the world will be building the infrastructure of the future.”
An FCC order providing some USF relief for tribal operational expenses looks imminent, agency officials said Wednesday. Commissioner Mignon Clyburn and Chairman Ajit Pai traded fire in February over Clyburn's decision to change her vote to a partial dissent. She said the order should also act to expand tribal broadband (see 1802020058). The FCC recently issued an NPRM proposing a tribal broadband factor to target additional USF support to Native American lands (see 1803230025).
Modified FCC rules on rural telco consumer broadband-only loop (CBOL) service costs take effect May 3, after publication in Tuesday's Federal Register. A USF and intercarrier compensation order reconsidering access recovery charge treatment and a surrogate cost methodology for rate-of-return CBOLs was released Feb. 16 (see 1802200032).
The FCC should waive a $400 million rural health care USF program cap and fully fund qualified applications, said the Schools, Health & Libraries Broadband Coalition Tuesday, noting it filed an emergency petition in docket 17-310. Recent RHC program cuts of more than 15 percent to individual health-care providers and 25 percent to consortia (see 1803160040) "will severely degrade the quality of healthcare in rural America," SHLB said. “Health care providers from Alaska to New England will face significant financial hardship from this unexpected funding decrease, potentially resulting in downgraded telehealth services, staff layoffs, or even bankruptcy,” said Executive Director John Windhausen. “There is no way that applicants could have predicted the size of the funding cutbacks this year, which have no precedent in the 20-year history of the program.” An FCC spokesman had no immediate comment but noted a December NPRM launched a rulemaking on possible RHC program changes.
The Competitive Carriers Association has major concerns about an NPRM set for a vote at the April 17 commissioners’ meeting proposing to prevent use of money in any USF program to buy equipment or services from companies that “pose a national security threat” to U.S. communications networks or the communications supply chain, President Steve Berry told us Tuesday. “The FCC has injected uncertainty at a time when carriers need certainty most,” as they are getting set for the Connect America Fund Phase II and Mobility Find II auctions and “building out 600 and 700 MHz spectrum,” Berry said. “This will most certainly impact the United States’ efforts to win the global race to 5G.” The Rural Wireless Association and NTCA also expressed concerns (see 1804020054). CCA was preparing for its spring meeting last week when FCC Chairman Ajit Pai circulated the draft NPRM. “CCA and its members care about national security and support prosecution of those who violate known national security policy,” Berry said. “Nevertheless, the FCC’s proposal to prohibit the use of USF to purchase any equipment or services produced or provided by any company posing a national security threat is incredibly broad and could impact every aspect of the communications supply chain with or without ever taking USF or purchased Chinese or Russian equipment and/or services.” Berry conceded the NPRM raises complicated issues. “CCA members care deeply about the security of their customers and the country and are focused on working towards comprehensive solutions,” he said. “I would hope any action taken by the FCC will move our nation to a broad solution and not a half measure that unduly paralyzes consumers in rural America.” Many smaller carriers have cut deals with Chinese equipment makers Huawei and ZTE, which worked hard to penetrate the U.S. market (see 1803260037).
The FCC hopes this month to begin transferring USF assets from a commercial bank to the U.S. Treasury, said Deena Shetler, acting deputy managing director, at an FCBA event Tuesday. She said the shift won't fundamentally change the subsidy program, which will still be subject to FCC rules and Universal Service Administrative Co. management. USF recipients will be essentially unaffected, other than receiving payments from the Treasury instead of Bank of America, she said. Industry contributors to the fund will have to shift to a government payment portal, but are expected to have better online account access, said Fred Theobald, USAC director-financial operations. Some continue to have concerns.
California probably will get "a lot less" than the $476 million in USF support it could receive (over 10 years) under the FCC's Connect America Fund Phase II subsidy auction for fixed broadband and voice services starting July 24, blogged Tellus Venture Associates President Steve Blum Monday. He said participants will bid against a "reserve price" setting the maximum the FCC would pay for 10/1 Mbps service in mostly rural unserved areas: "The FCC has a total of $2 billion to hand out, against a nationwide reserve price total of $6 billion. Presumably, the reverse auction will bring that $6 billion total down, but it’s unlikely, to say the least, to go as low as $2 billion. So some, maybe most, eligible communities will be out of luck." Blum emailed us that "there's nothing unique" about the state's prospects: "Areas that have denser populations and less scattering of eligible census blocks will be more attractive to bidders. The states where ILECs have declined CAF-2 subsidies in the last round will have an advantage."
Lifeline wireless resellers defended their request for FCC reinstatement of port freezes of 12 months and 60 days for broadband and voice services, respectively, and subsidization of Premium Wi-Fi service under the low-income USF program. Telrite, i-Wireless and AmeriMex Communications noted Q Link Wireless and TracFone Wireless backed their reconsideration petition's port-freeze request (TracFone's support was limited to the voice part), saying they recognized "the scourge of flipping" service from one carrier to another, both for Lifeline providers and program costs. They disputed Smith Bagley's lone opposition to their petition's requests, in their reply posted Friday in docket 17-287. A Smith Bagley counsel didn't comment Monday.
USF "disbursements from operations" totaled about $8.8 billion in 2017, said Universal Service Administrative Co.'s annual report posted Monday in FCC docket 96-45 (such disbursements are "cash outlays less admin transfer to USAC"). USAC said the disbursements were $4.67 billion for high-cost (most rural) operations, $2.62 billion for E-rate (schools and libraries), $1.27 billion for Lifeline (low-income) and $261 million for rural health care. USAC said its operating expenses were $196.7 million in 2017, compared with $179.5 million in 2016. Radha Sekar, who joined USAC as CEO in January, looks forward "to transforming the organization into a high-performing team while having a watchful eye on fraud waste and abuse."