USF contributions are projected to spike in Q4, from 17.1 percent to 18.8 percent -- a new high -- of carriers' U.S. interstate and international telecom end-user revenue, said industry consultant Billy Jack Gregg in a Friday email. He said the contribution factor hike is due to Universal Service Administrative Co.'s projected drop in the USF revenue base to $13.02 billion -- down $85 million from Q3 and the lowest ever -- combined with a previous projection that USF quarterly demand will be $2.04 billion. The USF revenue base for all of 2017 is projected to be $53.7 billion, down 30 percent since its 2008 peak, and annual USF demand is projected to be $7.9 billion, $848 million lower than in 2016, Gregg wrote. The contribution factor has been trending higher over time.
Supporters and critics of the Lifeline USF program will closely follow a Wednesday Senate Commerce Committee hearing on issues identified in a critical May GAO report on the program for signs of whether the Senate has a sufficient appetite to pursue legislation to revamp parts of the program, lawyers and lobbyists said in interviews. The hearing and a Sept. 14 Senate Homeland Security Committee one will examine the GAO report, which said the Lifeline program’s management remains deficient despite FCC and Universal Service Administrative Co. efforts to improve controls over finances and enrollment by low-income consumers (see 1706290037).
The Senate Homeland Security Committee will hold a Sept. 14 hearing on issues identified in a May GAO report on continued “weaknesses" in the Lifeline USF program's management, as expected (see 1708300051), a committee spokeswoman confirmed Thursday. That will follow a planned Sept. 6 Senate Commerce Committee hearing on the Lifeline issues. GAO said the Lifeline program’s management remains deficient despite FCC and Universal Service Administrative Co. efforts to improve controls over finances and enrollment by low-income consumers. The report also identified broader problems in USF contribution system oversight, among other issues (see 1706290037). Senate Homeland Security leaders urged the GAO last month to refer its report to the FCC Enforcement Bureau and Office of Inspector General “for further investigation and possible enforcement action” (see 1708150023). FCC Chairman Ajit Pai has reportedly been invited to testify at the Senate Homeland Security hearing. The hearing will begin at 10 a.m. in 342 Dirksen, the committee said.
Comments and petitions on Cincinnati Bell buying Hawaiian Telcom are due Sept. 28, replies and oppositions to petitions Oct. 13, said the International, Wireless and Wireline bureaus in a public notice in Wednesday's Daily Digest in docket 17-207. "Together with HTI, Cincinnati Bell plans to expand the combined company’s fiber network to both urban and non-urban areas in Hawaii" and they "affirm that HTI will 'continue its progress in deploying broadband in census blocks where HTI receives Connect America Fund Phase II USF support,'" said the PN. Cincinnati Bell last month unveiled plans to buy Hawaiian Telcom and OnX Enterprise Solutions for about $851 million (see 1707100051).
The Senate Commerce Committee set a Sept. 6 hearing on issues identified in a May GAO report on continued “weaknesses" in the Lifeline USF program's management, and the Senate Homeland Security Committee is planning a hearing on those issues Sept. 14, several communications sector lobbyists told us. GAO said the Lifeline program’s management remains deficient despite FCC and Universal Service Administrative Co. efforts to improve controls over finances and enrollment by low-income consumers. The report also identified broader problems in USF contribution system oversight and the commission's use of a private bank account rather than the Treasury Department to store $9 billion in USF net assets (see 1706290037). GAO Forensic Audits and Investigative Service Director-Audit Services Seto Bagdoyan, Citizens Against Government Waste Director-Technology and Telecommunications Policy Deborah Collier, American Enterprise Institute visiting scholar Jeffrey Eisenach and South Dakota Public Utilities Commissioner Chris Nelson are to testify at the Senate Commerce hearing, the committee said. The hearing will begin at 10 a.m. in 253 Russell. Senate Homeland Security hadn't announced its hearing at our deadline, but it's expected to include testimony from FCC Chairman Ajit Pai, two lobbyists said. Senate Homeland Security and the FCC didn't comment. Neither hearing is surprising given both Senate committees' existing interest in the GAO's Lifeline report, the lobbyists said. Senate Commerce intended to hold its Lifeline hearing before Congress' August recess but postponed it amid uncertainty about when the Senate would recess (see 1708020029). Senate Homeland Security leaders urged the GAO earlier this month to refer its report to the FCC Enforcement Bureau and Office of Inspector General “for further investigation and possible enforcement action” (see 1708150023).
Nick Degani, aide to FCC Chairman Ajit Pai, said Pai is dead set on digital inclusion and bridging the digital divide. Pai has seen the problem firsthand, Degani told the University of Mississippi Tech Summit Wednesday, according to written remarks. “I don’t mean jet-setting to major technology hubs like Silicon Valley or Boston,” he said. “I’m talking about road trips to visit the people and places we seldom associate with the digital revolution, such as Dillon, Nebraska, and Minneola, Minnesota.” Pai believes overregulation is part of the problem, Degani said. The move to 5G is a big deal for the wireless industry, he said. “Clearing the regulatory underbrush could remove a lot of delays and higher costs as 5G rolls out.” Fifth-generation will be a game changer, he promised: “5G promises exponential growth in the Internet of Things, major advances in augmented and virtual reality, cooperative collision avoidance for cars, remote robotic surgery. And those are just the things we can already foresee.” To "promote digital inclusion, the biggest mechanism in the FCC’s proverbial toolkit would be our universal service programs," he said, saying USF invested $180 million last year in Mississippi. Experts agree it will take more government and industry coordination to further narrow the digital gap between rich and poor (see 1708220036).
FCC-proposed procedures for auctioning up to $198 million annually in fixed broadband USF subsidy support were published in Friday's Federal Register. Comments are due Sept. 18, replies Oct. 18, said the Connect America Fund Phase II reverse auction public notice issued in early August (see 1708070032).
FCC rules streamlining reporting duties of high-cost USF recipients take effect Sept. 22, said an order summary in the Federal Register Wednesday. The July 7 order eliminated some annual reporting requirements eligible telecom carriers face for network outages, unfulfilled service requests, complaints, pricing information, service quality certification and duplicative Form 481 filings (contingent on Universal Service Administrative Co. implementation of an online portal). Another summary in the FR sought comments by Oct. 23 under the Paperwork Reduction Act on a proposed FCC information collection in annual and quarterly reporting worksheets (Form 499-A, Form 499-Q) for telecom contributors to the universal service fund and telecom relay service fund. The information is also used to calculate FCC regulatory fees for interstate telecom service providers, it said.
The Idaho Public Utilities Commission wants to revamp the state USF after more than doubling monthly surcharges for residential and business lines in a Tuesday order, the Idaho PUC said in a news release. Effective Sept. 1, the PUC increased the fee for each residential landline to 25 cents from 12 cents and business lines to 44 cents from 20 cents. It also increased the per-minute fee for intrastate long-distance calls to 0.9 cent from 0.5 cent. Idaho USF revenue declined to $1.29 million this year from $2 million in 2015, but the fund distributed about $1.7 million every year since 2013, the PUC said. The fund wouldn’t have met its obligations this year without the increase in fees, it said. Fearing the increase will exacerbate landline abandonment and make the USF unsustainable, the PUC opened a generic docket to overhaul the fund, it said. “We … find it prudent and necessary to take a hard look at the sustainability and viability of the IUSF,” the PUC said in the order, citing a 10 percent decline in local residential lines and a 37 percent decline in local business lines and Message Telecommunications Service/Wide Area Telecommunications Service (MTS/WATS) billed minutes. “The continued popularity and growth of wireless, cellular and VoIP services in Idaho are actively contributing to this decline and these trends do not appear to be changing,” it said. Idaho PUC President Paul Kjellander said Wednesday: "Our immediate concern is addressing a program that is funded through a declining business model.” The PUC is "asking the industry and any other interested parties to come together and look at a solution related to the immediate problem.” Proposals in other states to assess VoIP or wireless services “would require legislative action” in Idaho, he said.
The FCC should focus on consumer choices in defining advanced telecom capability under Section 706 of the Telecom Act, blogged Mark Jamison, American Enterprise Institute visiting scholar and former Trump transition team member. He noted that the FCC's recent notice of inquiry on whether ATC is being adequately deployed (see 1708110034) asked how to define the broadband-like capability. "Don't customers define broadband every day? Why not simply watch what they do?" he wrote Wednesday. Most of those commenting on the NOI "will be pundits, special interests, and companies with skin in the game," he wrote. "Their self-interests will influence their input. Maybe the FCC is asking the wrong people." He said the FCC should gather data on what customers are buying and correlate it with factors such as geography, demographics and local business economics to identify problems and changing patterns; it could then do a cost-benefit analysis to craft solutions through a reverse auction of USF subsidies. Commissioner Mignon Clyburn voiced concern Aug. 8 about the NOI's desire for comment "on whether the Commission should establish a speed benchmark based on the speed tier consumers are subscribing to" (see 1708080070).