The FCC released the Further NPRM and order Monday aimed at moving Lifeline USF (see 1506180029) toward supporting broadband, improving oversight and combating abuses. The 143-page text spells out the FCC's proposals and the actions it's taking "to rebuild the current framework of the Lifeline program and continue our efforts to modernize the Lifeline program so that all consumers can utilize advanced networks." The FCC is taking steps "to promote accountability and transparency for both low-income consumers and the public at-large, and modernize the program," the text said. "Our efforts in this Second Further NPRM and Report and Order are consistent with the Commission’s ongoing commitment to monitor, re-examine, reform, and modernize all components of the Fund to increase accountability and efficiency, while supporting broadband deployment and adoption across the Nation."
The U.S. Court of Appeals for the D.C. Circuit ruled against AT&T Tuesday, reversing a lower court dismissal of a False Claims Act lawsuit alleging the carrier fraudulently overcharged schools and libraries that passed their costs along to the FCC E-Rate subsidy program (USA ex rel. Todd Heath v. AT&T, No. 14-7094). The three-judge panel remanded the case to the U.S. District Court in Washington, D.C., for further proceedings on the merits of the case.
In adopting a Lifeline USF order Thursday, the FCC backed off a staff proposal to increase the general record-retention requirements of Lifeline USF providers from three to 10 years, agency officials said the next day. But the commission in a 3-2 vote (see 1506180029) adopted new rules requiring providers to retain customer eligibility documentation. In a VoIP numbering order also adopted Thursday, the FCC didn't adopt Level 3 proposals to firm up CLEC access charge rights when VoIP providers gain direct access to phone numbers, agency officials said. The FCC staff and Level 3 proposals drew objections from the regional Bells in the days before the vote.
Hill Republicans lashed out at the FCC’s Thursday expansion of the Lifeline program. One prominent Senate critic introduced legislation, the second piece on Lifeline that he has dropped in two weeks. The Ending Mobile and Broadband Welfare Act would prevent the FCC from expanding Lifeline to cover broadband service and end Lifeline's wireless support.
A bitterly divided FCC voted 3-2 Thursday to approve a package of proposals and actions to move the Lifeline USF program toward broadband coverage and move to improve oversight and counter abuses. The FCC's Democratic majority said the NPRM and orders would reboot Lifeline for the 21st century by helping low-income consumers gain broadband access and by undertaking further administrative restructuring to ensure program efficiency and integrity. But the Republican minority said Democratic refusal to impose or even propose a Lifeline budgetary cap was fiscally irresponsible and invited further waste, fraud and abuse.
FCC items moving Lifeline USF toward broadband coverage and authorizing VoIP numbering direct access appear likely to be approved Thursday, despite some continuing controversies and even resistance, agency and telecom industry officials told us. The VoIP numbering item is a "slam dunk 5-0 [vote]," said an agency official, but questions remain about whether Lifeline will draw dissent. Signaling different points of emphasis, Commissioner Mignon Clyburn said Wednesday it was time to "reboot" the Lifeline program for this century, while Commissioner Ajit Pai said the FCC needed to focus on establishing a Lifeline budget and reining in abuses if it's going to authorize broadband support.
Judge Patricia Millett of the U.S. Court of Appeals for the D.C. Circuit said she and colleagues are reluctant to agree to en banc review of panel rulings, and judges generally are chosen randomly to hear cases. Answering questions at an FCBA seminar Monday night, Millett, who was nominated by President Barack Obama and joined the court in December 2013, offered a rare look into the inner workings at the D.C. Circuit, which regularly reviews challenges to FCC orders. Also appearing, two senior attorneys of the FCC Office of General Counsel reviewed major telecom and media cases from the past 12 months, with one attorney hailing the agency's victory in defending its 2011 USF and intercarrier compensation order as "stunning" and suggesting it offered some lessons.
Frontier Communications agreed to accept $283.4 million in annual USF support to provide broadband access to more than 650,000 unserved rural locations over the next few years, the company said Tuesday in a news release. Frontier accepted the entire amount it was offered under the FCC Connect America Fund Phase II program, becoming the first price-cap telco to announce its decision. The FCC gave price-cap carriers until Aug. 27 to decide whether to accept CAF Phase II funding, state by state (see 1504290066). Frontier accepted funding for all its 28 states.
The FCC proposed a Q3 industry USF contribution factor of 17.1 percent, said the Office of Managing Director in a public notice in docket 96-45 that also appeared in Monday's Daily Digest. That means telecom carriers would generally have to contribute 17.1 percent of their interstate and international telecom revenue to the USF mechanism, which is slightly down from Q2's 17.4 percent but up from Q3 2014's 15.7 percent. The USF contribution factor has been trending up over time as USF demand increases and the industry interstate/international telecom revenue base erodes. Industry contributions pay for USF's four programs, which are projected to need $2.17 billion in Q3. High-cost rural support remains the most expensive program, needing $1.14 billion (after certain adjustments), followed by schools and libraries (E-rate discounts) at $618.9 million, low income (Lifeline) at $344.6 million, and rural healthcare at $68 million. The industry's interstate/international end-user telecom revenue base was calculated at $15.05 billion, which is down from Q2's $15.15 billion and Q3 2014's $16.02 billion. After adjustments to account for "circularity" (taking out the amount needed to fund USF) and uncollectible contributions, the industry revenue number is divided by the $2.17 billion in projected USF demand to produce the 17.1 percent industry contribution factor. If the FCC takes no further action, the proposed contribution factor will be deemed approved June 26. Carriers are allowed to recover line-item fees on consumer phone bills but those fees can't exceed 17.1 percent of the interstate/international telecom charges.
As the FCC takes up Lifeline reform, it mustn't ignore the important role played by wireless carriers in the USF program, CTIA President Meredith Baker said in a letter to the agency members posted Friday in docket 11-42. “Thirty years after its creation, Lifeline has evolved to reflect the increasing role of wireless as the primary means of communications for millions of low-income and diverse, underserved communities,” Baker wrote. “In the decade since wireless entered the Lifeline program, the telephone subscribership gap between low-income and all households was cut nearly in half, representing over 3 million low-income consumers.” CTIA is also committed to helping clean up the Lifeline program, further making it “more efficient, accountable, and effective,” she said. “Ensuring the fiscal integrity of the Lifeline program is a high priority because wireless carriers and their consumers make up over 44 percent of the contribution base of the Commission’s Universal Service programs.”