The FCC must address the overall spending of the USF, not use “savings” from universal service reform to expand other USF programs, FCC Commissioner Mike O'Rielly said Friday in remarks to the commission’s Consumer Advisory Committee (CAC). O'Rielly said he wanted to lay down this marker as the agency takes up Lifeline reform. He also suggested that at least one of the CAC members should come from a group representing taxpayers.
Gaps in FCC’s data analysis and reporting limit the commission’s ability to evaluate the USF high-cost program, demonstrate its effectiveness, and help ensure that the data collected will inform current and future reforms, a GAO report (http://1.usa.gov/Umzzpr) said Tuesday. “FCC has not traditionally demonstrated how high-cost funds were spent and the results of that funding because FCC had not collected data to do so,” the report said. Competitive carriers and consumers told the GAO the FCC should increase all carriers’ accountability for their use of high-cost funds by providing information on the results of the funding, the report said. FCC has made improvements to its data collection and presentation that could help it address some of these gaps, the report said, but the agency “has not indicated what information it will make publicly available on a regular basis in the future.” By improving the transparency and accountability of USF’s high-cost spending, “FCC and interested parties could better understand the effects of the reforms; determine those most successful in efficiently enhancing broadband availability, service quality, and capacity; and identify areas for improvement,” the report said. The FCC had no comment, but concurred with the findings, according to the report.
NARUC planned Friday to comment on the FCC net neutrality NPRM, adding to the more than 1 million comments already filed on the NPRM. (See separate report in this issue.) NARUC General Counsel Brad Ramsay told us Friday he was still writing the group’s comments but said he anticipated they would “undoubtedly quote” a net neutrality resolution NARUC’s board passed Wednesday at its meeting in Dallas (CD July 17 p17).
For all the last-minute negotiations, partisan bickering and congressional pressure involved in Friday’s FCC E-rate modernization order (CD July 14 p1) -- not to mention the sweep of bringing Wi-Fi connections to millions of schoolchildren nationally -- several major issues facing the program were left on the table, advocates involved in the debate told us. “This was a tough sell, but the next set of deliberations will be even harder,” said Bob Wise, president of the Alliance for Excellent Education and former West Virginia Democratic governor, who supported FCC Chairman Tom Wheeler’s proposal. “There will be an incredible amount of debate."
House Communications Subcommittee Chairman Greg Walden, R-Ore., lauded the FCC saying it’s creating a USF strike force to target fraud and abuse (CD July 15 p10). “Identifying and eliminating waste, fraud, and abuse to protect taxpayer dollars has been a top priority for House Republicans,” Walden said in a news release Monday (http://1.usa.gov/1qcXdDF). “As the USF has continued to grow, it has become an increasing cost on consumers’ monthly phone bill. The FCC has a responsibility to ensure any dollars being spent are being spent wisely and efficiently.”
The FCC is creating a Universal Service Fund Strike Force in the Enforcement Bureau, charged with combating waste, fraud and abuse in agency funding programs, said Chairman Tom Wheeler in a news release (http://fcc.us/1qACHZl) Monday. The strike force will be led by Loyaan Egal, who joins the FCC after being a senior assistant U.S. attorney in the Fraud and Public Corruption Section of the U.S. Attorney’s Office for the District of Columbia. The strike force will expand commission efforts, including those of the FCC Office of Inspector General, “to protect the integrity of the Universal Service Fund and ensure that the American people’s money is wisely spent,” Wheeler said. The Strike Force will investigate violations of the Communications Act, commission rules and other laws involving USF programs and contributions, said the FCC.
DALLAS -- Parties within state utility commissions and elsewhere opposed to the 10th U.S. Circuit Court of Appeals’ decision upholding the FCC 2011 USF/intercarrier compensation order (CD May 27 p1 ) should continue exploring options for appealing that decision even though available options have a low probability of succeeding, industry panelists said at the NARUC meeting. Those options include requesting an en banc review by the entire 10th Circuit or an appeal to the Supreme Court, said NARUC Counsel Brad Ramsay.
Comments on proposed USF overhauls are due Aug. 8, replies Sept. 8, in FCC dockets including 14-58, said the agency in a Federal Register notice Wednesday (http://1.usa.gov/1oJT46i). The NPRM seeks to adapt its universal service reforms to ensure those living in high-cost areas have access to services that are reasonably comparable to services offered in urban areas (CD April 24 p2).
Congressional Republicans began raising concerns about the FCC’s Friday E-rate vote, focusing primarily on the financing of any E-rate overhaul. “Since Chairman [Tom] Wheeler first announced his $5 billion Wi-Fi stimulus proposal, I have been concerned that he cannot realistically expect to pay for it without forcing Americans to pay more for communications services or diverting E-Rate funds that support necessary connectivity in our nation’s schools, particularly in rural areas,” said Senate Commerce Committee ranking member John Thune, R-S.D., in a statement Wednesday night. He also suggested that if Wheeler lacks bipartisan backing on the commission, Wheeler should postpone the vote. “Moving forward in a partisan manner, relying on untested budget assumptions, and shifting E-Rate’s priority from connectivity to Wi-Fi will only erode the Chairman’s and FCC’s stature, and potentially jeopardize support for E-Rate,” Thune said. House Commerce Committee Chairman Fred Upton, R-Mich., and Communications Subcommittee Chairman Greg Walden, R-Ore., sent a joint letter (http://1.usa.gov/U5xsq1) to Wheeler Thursday questioning the math that Wheeler has said will be used to pay for the E-rate expansion. Upton and Walden support the described approach but worry about “discrepancies” and the plan’s sustainability as well as “press reports that you have promised to increase the E-rate budget in the ‘near term,'” they said. There are also procedural “red flags” on bipartisan deliberation, they added. Sen. Kelly Ayotte, R-N.H., sent Wheeler a letter Wednesday raising her concerns about broader USF equity among the states. Real E-rate overhaul “means simplifying the process by reducing the paperwork needed to apply for funding” and “distributing aid to schools on a more equitable per-student basis (rather than the complex discount formula that the program now uses),” Ayotte said. “Moreover, this means giving schools the flexibility to spend E-Rate funds on technologies that directly benefit students, instead of a complicated system of technology priorities dictated by Washington.” Do not increase the size of the E-rate budget without these changes, she cautioned.
USTelecom opposed an American Cable Association FCC application for review of a Wireline Bureau April decision on the Connect America Fund cost model order that calculated costs of serving census blocks in price-cap telco areas. “USTelecom stands by its cost of capital calculation which resulted in a zone of reasonableness above 8.48% and below 9.52%, resulting in a point estimate of 9.00%” and other figures, said that association in an opposition filing to ACA’s request posted Monday in docket 10-90 (http://bit.ly/U1g5GM). “ACA presents no new information to contradict it. Yet ACA rejects the Bureau’s considered conclusion which adopted a cost of capital 50 basis points below the recommendation of the ABC Coalition.” The association said an FCC model used data from the coalition, a USF reform group of telcos that has included USTelecom members (http://bit.ly/1pXdWuo). ACA’s June 20 application for review said the bureau’s model, “for the key input of the cost of money ... adopted a cost significantly in excess of forward-looking market rates” and would mean price-cap LECs get more support than required (http://bit.ly/1vWPFSK). ACA plans to respond to USTelecom’s opposition, in reply comments, said ACA Senior Vice President-Government Affairs Ross Lieberman. He declined further comment.