The FCC invited input on the sufficiency of budgets for E-rate Category Two services, which provide broadband access within schools and libraries at a discount under the USF subsidy program. Comments are due Oct. 23, replies Nov. 7 on how applicants, service providers and others have used their budgets, and the percentage of purchased Category Two services that are being covered by the budgets, said a Wireline Bureau public notice in docket 13-184 and Monday's Daily Digest.
Free Press is increasing its opposition to FCC Chairman Ajit Pai amid perceptions that a Senate floor vote on Pai’s reconfirmation could happen as soon as late this week, two communications sector lobbyists said Monday. Senate Republican leaders have been hoping to invoke cloture on the Pai confirmation vote before the upcoming Columbus Day recess, with up to 30 hours of floor debate ahead of a final vote (see 1709130054 and 1709150060). Free Press is collecting signatures on a petition urging the Senate to “fire” Pai when his confirmation comes up for a vote. “He's failing at his job” and “that means we need the Senate to fire him,” the petition said. “Not a single senator should support” Pai’s agenda. The group cited possible rescission of 2015 net neutrality rules, ongoing concerns about the FCC’s handling of Sinclair, and the debate over the Lifeline USF program. The FCC didn’t comment.
NTCA asked the FCC to begin a "comprehensive' high-cost USF budget review by year-end as contemplated since a 2011 overhaul, and to collect the current budget amount near term. If such collection exceeds current USF demand, the FCC should "use the additional sum to mitigate the shortfalls in support that are being applied only to smaller rural carriers," the RLEC group said. The requests came in a filing Wednesday in docket 10-90 on discussions with aides to Chairman Ajit Pai and Commissioner Jessica Rosenworcel. NTCA asked the FCC "to use any high-cost USF reserves that have not already been expressly allocated pursuant to Commission order to fill the budget shortfall." Once a budgetary review is completed, "the Commission can then make informed, updated judgments about the 'right size' of the high-cost USF budget," it said.
Industry cautioned Alaska and Nebraska regulators about their state USF revamps, in comments posted this week. At the Regulatory Commission of Alaska, AT&T and rural phone companies said a proposed short-term fix should be temporary and the RCA should launch a more comprehensive proceeding. In Nebraska, wireless carriers asked the Public Service Commission not to proceed with a proposed shift to connections-based USF contribution.
FCC Commissioner Mike O'Rielly said he generally favors giving RLECs more USF support through both legacy and model-based mechanisms, including by potentially tapping high-cost reserves. "It does appear that some amount of reserve funding could be available, particularly in the short-term," he said at an WTA conference in Coeur d'Alene, Idaho. "While it may not provide all the relief sought by affected carriers, it could benefit consumers and carriers in areas more difficult to serve." O'Rielly said the FCC's $4.5 billion high-cost budget, about $2 billion of which goes to rate-of-return carriers, is due for review under a 2011 overhaul order. "If the Commission does nothing, I’m told that the budget expires, any reserves that have not been committed are used to reduce the contribution factor, and funding for the program would be based solely on demand in any given quarter," he said. "That is not an acceptable outcome." He noted he backed firm USF budgets or caps, including on Lifeline: "We cannot, at the same time, allow the high-cost program to operate without its own budget control." He said the FCC may need to consider a temporary extension of the current budget and reserve policy. He noted the agency is considering revising its access recovery charge imputation rule, and he hopes it "resolves this and other pending issues soon, including specifying in more detail which expenses are not recoverable" under regulatory mechanisms. He couldn't support expanding the USF contribution base to broadband users, absent congressional direction. He wouldn't be surprised to see a net neutrality decision "later this year" and hoped broadband infrastructure deployment proceedings would "bear fruit" in coming months.
Senate Homeland Security Committee leaders followed up, as promised (see 1709140059), with the FCC and Universal Service Administrative Co. to urge both to initiate forensic audits of the top 30 companies certified as Lifeline USF program eligible telecom carriers. Chairman Ron Johnson, R-Wis., said last week during and after a hearing on problems with Lifeline that he wanted the forensic audits as a way of pinpointing program abuses. “By taking this immediate action, you will identify actual waste, fraud, and abuse to support appropriate enforcement actions and make necessary policy changes to protect taxpayer dollars,” Johnson and ranking member Claire McCaskill, D-Mo., said in a letter to FCC Chairman Ajit Pai and USAC acting CEO Vickie Robinson. “When deciding how to initiate these audits, whether through third-party auditors or other means, we request you take every reasonable step to minimize the cost to taxpayers.” The lawmakers asked Pai and Robinson to follow up by Oct. 13 on how they plan to proceed. The FCC and USAC didn't comment.
FCC Chairman Ajit Pai recommitted to “implementing measures” GAO recommended in a report released in June on continued "weaknesses" in Lifeline USF program management, saying in letters to the leaders of the Senate Homeland Security Committee and the House Oversight Committee he intends agency staff to “follow through in implementing these actions.” Pai also copied the letter, released Friday, to Sen. Rob Portman, R-Ohio. Portman and Senate Homeland Security ranking member Claire McCaskill, D-Mo., jointly sought the GAO report. GAO found Lifeline management remains deficient despite FCC and Universal Service Administrative Co. efforts to improve controls over finances and enrollment by low-income consumers (see 1706290037). McCaskill and Senate Homeland Security Chairman Ron Johnson, R-WIs., said last week they will delay pursuing legislation to revamp Lifeline while FCC fixes take effect (see 1709140059). Pai also noted his July order to USAC to impose safeguards "to mitigate the risk of waste, fraud, and abuse" (see 1707110051). “These safeguards are designed to strengthen program integrity through in-depth examinations of subscriber eligibility, oversubscribed addresses, phantom Lifeline subscribers, deceased Lifeline subscribers, and duplicate subscribers, and through increased oversight over sales agents,” Pai said.
FCC Chairman Ajit Pai said "bridging the digital divide" is his "highest priority" and vital to free expression and America's civic future. "To work, to learn, to educate, to heal, but most relevant here, to speak -- these are incredibly important functions, and so in this mission we simply cannot fail and we cannot falter," he said Friday at a Center for Democracy & Technology conference on online speech (he deviated at times from prepared remarks). Pai said free speech is being both challenged and stimulated by modern communications, but on balance, "the positives outweigh the negatives." He cited polls showing a lack of appreciation among Americans for freedom of speech, along with "regular demands" the FCC pull the licenses of Fox News, MSNBC or CNN because people disagree with opinions expressed on the networks. "Setting aside the fact that the FCC doesn’t license cable channels, these demands are fundamentally at odds with our legal and cultural traditions," he said. Pai also sees positive signs, with expansion of internet access particularly hopeful. But for "too many," the discussion "is academic," he said, because they are on the wrong side of the digital divide, lacking adequate access to high-speed broadband. "The most significant digital divides are along economic and geographic lines," he said. "Basically, if you’re wealthy and live in a city, you should be in good shape. If you’re low-income and/or live in a rural area, you’re much more likely to have a problem." He said the FCC is trying to close those gaps, including by revamping $6.5 billion in USF subsidies to support both mobile and fixed broadband services over the next 10 years, and by removing regulatory barriers to network investment.
Rural interests supported a request for RLEC broadband relief from USF contributions while regulators review the industry mechanism funding the subsidy system. WTA urged the FCC to grant an NTCA/USTelecom petition for temporary forbearance from application of USF contribution requirements to RLEC-provided broadband internet transmission services until the FCC decides on how all broadband services should be treated. The relief "would put an end to the anomaly whereby some rural Internet access service customers bear the cost of substantial federal USF contributions on broadband transmission services while urban and most rural Internet access service customers do not," WTA commented this week in docket 17-206 responding to a public notice (see 1708140059). Granting the petition would be "a simple matter of fundamental fairness and good public policy," said GVNW Consulting, which works with rural carriers. It said forbearance also would "avoid the anti-competitive implications of a regime that picks 'winners and losers' in the broadband marketplace," somewhat mitigate the "high cost of broadband for rural consumers" and be "fully consistent" with other FCC pronouncements, including in its Communications Act "Title II proceeding and more recent USF reform efforts." Without opposing or supporting the petition, the Pennsylvania Public Utility Commission said the request "demonstrates disparate treatment" of broadband services and "underlines the need for the timely reform of the federal USF contribution base reform."
Administration and oversight of the Lifeline USF program drew criticism during Thursday's Senate Homeland Security Committee hearing, as expected (see 1709130053), and committee leaders sought major improvements. Chairman Ron Johnson, R-Wis., and ranking member Claire McCaskill, D-Mo., indicated they will hold off on a legislative response until the national verifier program and other fixes instituted in the FCC 2016 Lifeline overhaul order fully roll out. McCaskill had said she would consider a possible bill, depending on results of the hearing, including a restructuring and budget cap (see 1709060063).