FCC Enforcement Bureau letters notifying Icon Telecom and Oscar Enrique Perez-Zumaeta of their suspension from participating in the Lifeline USF program are to be published Thursday in the Federal Register, said two FR notices including the letters (here and here) posted Wednesday. The letters, which also give notice of the commencement of debarment proceedings against Icon and Perez-Zumaeta, were dated May 26 and June 8, respectively, and released at the time by the FCC (see 1505260027 and 1506080067), but the parties have 30 days to contest the suspensions upon receipt of the letter or publication of the suspension in the Federal Register, whichever comes first. Icon, a Lifeline participant, pleaded guilty "to knowingly making a false statement to the Universal Service Administrative Company through its submission of 58 fabricated customer recertification forms," the bureau said in its letter notifying Icon. In April, Wes Yui Chew, president and owner of Icon, was ordered to serve four years in federal prison and pay a fine of $117,166 after pleading guilty to money laundering for transferring $20.5 million from an Icon bank account to his own, "despite knowing that Icon had thousands fewer customers than it reported to the Commission," said the bureau in a separate letter notifying Chew of his own suspension (which was not part of Wednesday's FR notices). Chew also agreed to forfeit $27 million seized during a Department of Justice investigation. Perez-Zumaeta owned and managed PSPS Sales, which recruited low-income people to apply for Lifeline-supported phone services through Icon. He pleaded guilty to money laundering for depositing a $52,390 check from Icon into a PSPS bank account "despite knowing that more than $10,000.00 of those funds was the result of criminal fraud against the Commission," the bureau said in its letter to Perez-Zumaeta.
The FCC is likely to expand Lifeline USF support to broadband and could establish a budget for the program serving low-income consumers, panelists said Wednesday on a webinar hosted by Ball State's Digital Policy Institute. Finding a compromise that exerts fiscal control while allowing low-income consumers to benefit was seen by some panelists as key to obtaining a unanimous vote among commissioners -- who were divided 3-2 along partisan lines on issuing an NPRM in June (see 1506180029) -- though panelists had mixed assessments of the prospects. Some speakers also said the FCC was likely to relieve telecom carriers of responsibility for determining consumer Lifeline eligibility and voiced hope the process could be streamlined by shifting oversight to state agencies already administering other federal low-income programs such as food stamps and Medicaid.
The FCC is actively encouraging fiber deployment to boost broadband capabilities, spur competition and facilitate innovation, said Gigi Sohn, counselor to Chairman Tom Wheeler, in prepared remarks Tuesday at Fiber to the Home's Fiber on Fire conference in Anaheim. "Fiber networks lead to an influx of business, resources, jobs, and consequently, economic growth," she said. "On top of the economic benefits, broadband enhances health care, education, energy use, environmental protection, public safety, transportation, civic engagement, you name it." Sohn said that fiber-driven advances improve U.S. competitiveness overseas and broadband competition domestically. Citing many consumers' slow data speeds, she noted that the FCC increased the baseline speed for "broadband" from 4/1 Mbps to 25/3 Mbps. The agency is "working to help lift barriers to broadband deployment" by taking steps to foster wireless backhaul, better align the costs of using poles and conduits, and pre-empt state laws restricting community broadband, she said. Local and industry deployment efforts "are even more exciting," she said, and they often spark competitive responses. "If our efforts to lift barriers are not enough and if the efforts of communities across the country don’t reach far enough, rest assured, the FCC is taking more steps to incentivize fiber deployment. We need to make sure that all Americans will reap the benefits of fast broadband speeds." She cited the FCC decision to allocate $10 billion in USF support over six years to extend broadband in high-cost areas currently served by price-cap telcos; if the carriers decline funding in a state, others, including municipal systems and electric cooperatives, will be eligible for the funding, she noted. Sohn said the commission is promoting fiber deployment through the E-rate program subsidizing school and library communications.
The U.S. wireless industry is “more vibrant and vigorously competitive than ever before” and the FCC should recognize that in its next wireless competition report, CTIA said in comments. Other industry commenters offered the same take in docket 15-125. But industry observers told us they see little chance the FCC will change course and agree with them. The first seven wireless competition reports didn't include any conclusions on whether the industry was effectively competitive, though the next six reports concluded it was. All reports since 2010 have not drawn a conclusion.
FCC Commissioner Ajit Pai proposed adapting rate-of-return USF support to broadband while allowing rural carriers to voluntarily opt into model-based support, but not at the expense of a near-term fix he sees as more urgent. Pai issued a statement Monday that proposed focusing on "targeted" rule changes to solve "the standalone broadband problem," in which generally smaller rate-of-return rural LECs can lose USF support if customers drop voice service. Groups representing RLECs welcomed Pai's proposal, which came after FCC Chairman Tom Wheeler Friday appeared to issue a warning to RLECs about the absence of more telco consensus (see 1506260024).
T-Mobile asked the FCC for an extra year to complete network deployment in one census tract where it received USF Mobile Fund Phase I support. In a request for waiver and extension filed Thursday in docket 10-208, T-Mobile asked that a June 25 deadline be pushed back until June 25, 2016, to complete construction for the Census tract in Pike, Pennsylvania. It also sought a waiver and extension so it wouldn't be required to repay the Mobile Fund support it has received for that tract or to make an "additional performance default payment." T-Mobile said it had finished construction in 16 of the 17 tracts where it was the winning bidder in the Mobile Fund reverse auction. Low bids generally win. T-Mobile "also has completed construction of a mobile network in the PA Census Tract, but the special and challenging nature of the local terrain in that area has resulted in drive test results showing less coverage than required by the Commission’s construction milestone (i.e., less than 75 percent of the road miles covered)," it said. "This shortfall has resulted despite T-Mobile’s thorough planning and use of propagation studies to design the network. While T-Mobile has taken steps to improve and optimize the level of coverage in the PA Census Tract, the company has been unable to produce results that meet the Commission’s requirements."
State policymakers must continue to address how to ensure communications services are available and affordable for consumers so industry can adapt and bring everything into the now broadband-focused playing field, USF experts said in interviews Friday. A white paper, released Friday, by Sherry Lichtenberg, National Regulatory Research Institute principal researcher, said state USF support includes high-cost support, funds for broadband access for schools and libraries, funding for Lifeline and dedicated broadband funding. A key finding in the review is the limitation on high-cost support for areas where competition has driven down the cost of service, reducing the need for support, Lichtenberg said.
Chairman Tom Wheeler said the FCC would offer its own rate-of-return USF overhaul plan absent rural LEC industry consensus, expects to move an Internet video program-rights order and a broadband privacy NPRM this fall, and would hold the broadcast incentive auction in Q1. Offering a broadband overview at the Brookings Institution Friday, Wheeler said the FCC would continue to protect and promote competition but wouldn't require "network unbundling." He also said many telco and cable providers continue to invest despite the threats of "a few big dogs" to "starve investment" due to the recent broadband reclassification. Wheeler's speech largely tracked prepared remarks.
Many Americans, especially African-Americans and Hispanics, are still struggling to find jobs, but broadband offers some hope, said Ralph Everett, senior fellow at Georgetown University’s Center for Business and Public Policy, in a white paper. Everett said the USF Lifeline program can help. “The FCC’s Lifeline program, if updated to cover broadband, can help ensure that young students and other lower income Americans can fully participate in the 21st century economy,” he said. But changes are needed. Lifeline “needs to be revised so that consumers are empowered to decide for themselves what communications services best meet their needs, and are provided the financial assistance to take advantage of this right to choose,” he wrote. “In addition, and this is critical to success, the program must be reformed to wring out waste, fraud, and abuse in order to maximize the dollars available to those who qualify for assistance.”
The FCC Wireline Bureau published a list of census blocks deemed "extremely high-cost" for USF support purposes in areas served by price-cap telcos, in a public notice Tuesday. The census blocks are generally not eligible for Connect America Fund Phase II model-based support, the notice said, but price-cap telcos accepting such support in a state can substitute the identified locations in lieu of those in other census blocks to meet their broadband deployment duties in a state, provided that the total number of locations served is larger than or equal to the number of locations in eligible census blocks that must be served under the duties. The list includes 151,505 extremely high-cost census blocks with varying numbers of locations. (There are more than 11 million census blocks in the U.S., said a Census Bureau Web page). Extremely high-cost census blocks that aren't targeted for CAF Phase II broadband deployment will be included in the Phase II reverse auction the FCC expects to hold some time after carriers decide whether to accept support, the notice said. Those decisions are due Aug. 27, but Frontier already has announced it will accept all $283.4 million in annual support it was offered by the FCC (see 1506160039).