The FCC should reconsider its Feb. 3 policy statement creating treble damages in calculating fines for violations of federal payment rules, said Comptel, CTIA, NCTA and USTelecom in a joint petition Friday that also seeks a stay. The policy statement makes a “substantial rule change” affecting the USF, Telecom Relay Service Fund, local number portability, North American Numbering Plan and regulatory fee programs, USTelecom said in a blog post. The commission didn't follow proper notice and comment requirements, USTelecom said. Tripling damages is “’arbitrary and capricious,’” it said.
A little-noticed provision in the FCC net neutrality order (see 1502270045) would let small rural broadband providers opt to continue to be partially regulated under the old Communications Act Title II rules instead of the order’s “light-touch” version that forbears from several provisions of the section, the agency and attorneys representing the providers told us. The providers and groups like NTCA and the National Exchange Carriers Association lobbied for the provision, fearing a change in their classification could jeopardize their eligibility to receive USF support for providing telecom service, said Michael Romano, NTCA senior vice president-policy, and Jeffrey Dupree, NECA vice president-government relations. Continuing to be under the old Title II rules also would not weaken what the providers can count under rate-of-return rules.
House Communications Subcommittee lawmakers grilled FCC Managing Director Jon Wilkins Wednesday at an FCC reauthorization hearing. Wilkins said the agency sought to be nimble and use its resources well in its $388 million budget request for FY 2016, more than $50 million more than what it received the previous year. Much of the money would go toward both modernizing the agency’s information technology and its move away from or restacking of its headquarters at the Portals, Wilkins said, as expected (see 1503030053).
The Senate may take the lead on the video overhaul component of a Communications Act overhaul, House Communications Subcommittee Chairman Greg Walden, R-Ore., said Wednesday at the American Cable Association summit. ACA President Matt Polka stressed the importance of Local Choice, a broadcast a la carte proposal that failed last Congress. Senate Commerce Committee Chairman John Thune, R-S.D., was a backer and “remains interested in moving forward,” Polka said in a conversation with Walden. “[Local Choice] puts consumers in control compared to current retrans laws, which gives them no choice at all.”
“Operational demands” have driven up the FCC’s budget request, which is $388 million for FY 2016, agency Managing Director Jon Wilkins plans to testify Wednesday before the House Communications Subcommittee. “For FY 16, the Commission has been forced to adjust its costs upward to manage and execute activities leading to the termination of our headquarters lease in 2017,” Wilkins says in his written testimony. “Over 70 percent of our requested increase supports ‘unavoidable’ costs such as the restacking and move, inflationary increases, and the OIG [Office of Inspector General] base increase.” The hearing, scheduled for 10:30 a.m. in 2322 Rayburn, is focused on FCC reauthorization. Wilkins will argue that the FCC headquarters transition is “an opportunity to create greater cost savings and efficiencies by significantly reducing the Commission's footprint and instituting new management techniques that encourage greater use of shared space,” saving “over $100 million over the life of our new post-2017 lease.” He will say FCC licensees “will bear the brunt of the move” and that the agency is attempting to “assess fees in a fair and equitable manner,” and will defend the agency as fiscally responsible. This FY 2016 budget will “properly align USF expenditures with cost outlays,” thereby “shifting USF funds to cover our salary and compensation expenditures directly related to USF activities,” he will testify. He plans to discuss the “tough budget decisions” the FCC faced as a result of receiving $36 million less than requested last year. “Flat funding has led to staff reductions,” he will say, also warning of big information technology challenges given the agency’s aging systems. “Limited funds have delayed many improvements and threaten to cost us more each day that we are unable to move ahead.”
Despite FCC Chairman Tom Wheeler’s and Commissioner Mignon Clyburn’s remarks Thursday in approving net neutrality rules, small rural broadband providers are subject to Communications Act Title I, which regulates information services, not to Title II common-carrier regulations as Wheeler and Clyburn claimed, USTelecom Senior Vice President-Law and Policy Jonathan Banks wrote in a blog post Friday. In answering fears the agency would regulate broadband rates after reclassifying broadband under Title II, Clyburn said at the commission meeting that the agency hadn't regulated the rates of 700 rural broadband providers, even though they were subject to “full panoply of Title II regulation.” The “hideous complexities” of the commission’s telecom regulations, Banks said, led the companies to provide Title II wholesale transport services they “’sell’” to themselves, while providing Title I broadband service to customers wanting Internet access, Banks wrote. The Title II wholesale service “is fully and completely regulated by the commission, including rate regulation, down to the penny,” Banks wrote. The “misunderstanding illustrates the lack of clarity and understanding around the debate of Title II being a workable regulatory model for achieving an open and vibrant Internet,” Banks wrote. The rural broadband providers have to contribute to the USF based on their Title II revenue, he said. Clyburn noted that the rural providers make USF contributions, but said, “amazingly, the sky has not fallen and things are OK.” Clyburn’s office did not comment Monday. The Title II regulations Banks referred to don't include the forbearance in the "light touch" net neutrality regulations the commission approved, an agency spokesman said.
The net neutrality order approved Thursday (see 1502260043) prevents states for now from making broadband contribute to states' USF, an agency official told us. Commissioner Mignon Clyburn, in voting for the overall order, opposed the restriction, but NARUC General Counsel Brad Ramsay said he doesn’t expect it to cause the same kind of backlash from states as the commission’s pre-emption at the same meeting of North Carolina and Tennessee municipal broadband laws (see 1502260030).
The Senate Communications Subcommittee will take a swing in the months ahead at a Communications Act overhaul, FCC oversight and making more spectrum available, Chairman Roger Wicker, R-Miss., said Tuesday at Comptel’s Washington summit. He emphasized the FCC’s responsibility “to encourage expansion of rural broadband” and cited a letter he wrote the agency last year to make sure rural consumers receive access to Mobility Fund II support.
Despite FCC discussions about adding broadband to Lifeline, "there should be adequate controls and deterrents in place before considering a revamp of the program,” Commissioner Mike O’Rielly said in a blog post Friday. There's a “legitimate debate whether the Lifeline program should be abolished or significantly scaled back rather than expanding its mission,” he said. O’Rielly proposed a number of principles in examining the program. Lifeline should have a budget, he said, saying it’s the only USF program without one. If broadband is expanded, the reimbursement rate shouldn’t be increased to pay for it, he wrote. The commission should decide what services should be supported, he said. To prevent “double-dipping,” a household should be able to get a subsidy for a voice plan or a combined plan with voice and broadband, but shouldn't be able to get subsidies for both, he wrote. O’Rielly also proposed tightening eligibility requirements, requiring financial contributions from recipients and making carrier involvement voluntary.
FCC Commissioner Ajit Pai disputed Chairman Tom Wheeler’s claims that the net neutrality draft order wouldn't result in rate regulation as “flat-out false.” Pai also assailed Wheeler at a Tuesday news conference and in a fact sheet for not making the document public before the commission’s scheduled Feb. 26 vote. Saying he was “correcting the record” and last week’s “carefully stage-managed rollout” of the draft order (see 1502040055), Pai highlighted what he said are some previously undisclosed aspects of the order that made it “worse than what I imagined.” Among them, Pai said data usage plans would “now be subject to regulation."