The FCC should try harder to thaw the separations freeze, two state members of the Joint Board on Separations and the state chair of the Joint Board on Universal Service said in interviews ahead of NARUC's summer meeting. They complained that the federal side of the Joint Board isn’t engaging to update separations factors set more than 30 years ago and first temporarily frozen in 2001. NARUC members plan to vote next week in Scottsdale, Arizona, on asking the FCC to extend the freeze’s 2018 expiration by two years, and other draft resolutions related to the Lifeline national verifier, IP captioned telephone service (IP CTS) and a precision agriculture bill pending in Congress (see 1807030052).
Federal Universal Service Fund
The FCC's Universal Service Fund (USF) was created by the Telecommunications Act of 1996 to fund programs designed to provide universal telecommunications access to all U.S. citizens. All telecommunications providers are required to contribute a percentage of their end-user revenues to the Fund, which the FCC allocates for four core programs: 1. Connect America Fund, which subsidizes telecom providers for the increased costs of offering services to customers in rural and remote areas 2. Lifeline, which directly subsidizes low-income households to help pay for the cost of phone and internet service 3. Rural Health Care, which subsidizes health care providers to offer broadband telehealth services that can connect rural patients and providers with specialists located farther away 4. E-Rate, which subsidizes rural and low-income schools and libraries for internet and telecommunications costs The Universal Service Administrative Company (USAC) administers the USF on behalf of the FCC, but requires Congressional approval for its actions. Many states also operate their own universal service funds, which operate independently from the federal program.
CTIA said the FCC is in no position to determine if any telecom companies are a threat to U.S. security, and it should work with the Department of Homeland Security, which has more expertise in the area. Other commenters also urged caution. The Rural Wireless Association said the FCC has already chilled investment in rural networks. Reply comments were posted this week in docket 18-89 on the NPRM approved 5-0 by commissioners in April (see 1804170038).
The FCC approved 3-1 an order to further relax telecom service discontinuance duties and related regulatory processes in an effort to remove barriers and encourage the industry shift from legacy wireline to next-generation, IP-based offerings. Commissioners also voted 4-0 to adopt an order to relieve certain rural telcos of USF contribution obligations on their broadband services to equalize their treatment with other carriers and promote affordability. Commissioner Jessica Rosenworcel largely dissented on the discontinuance order and concurred on the rural telco USF order.
The FCC proposal to bar USF spending on products or services from companies seen as posing a national security risk is meeting with mixed reaction, with disagreements about whether rules should be limited to USF-funded equipment and services or should have broader reach, recent docket 18-89 comments show. Huawei called the rulemaking launched in April (see 1804170038) an "improper and imprudent" blacklist, and some critics questioned the efficacy of the proposed approach. Comments were due Friday, replies July 2.
The federal USF shift to the U.S. Treasury is moving ahead, with changes to the contribution and distribution processes happening Tuesday, Universal Service Administrative Co. emailed Monday. "Effective immediately, as of May 2018, USAC will accept payments to and distribute funds from the U.S. Treasury," said a USAC announcement on a web page where it said further transition updates will be posted. "We are taking this step to safeguard USF funds consistent with guidance from GAO and OMB. And we have made clear for months that the funds were going to be moved to the Treasury,” emailed an FCC spokesman.
Utah Public Service Commission staff is pleased with early results of changing state USF to a connections-based contribution from the earlier revenue-based model, said PSC Telecom Manager Bill Duncan in an interview this week. The change to 36 cents per line took effect Jan. 1; PSC telecom staff released its first status report taking connections into account on April 19. CTIA opposes the change and its lawsuit created legal uncertainty for Utah's pioneering shift away from revenue-based contribution, the method used for federal and other state USFs (see 1804120046). Separately, industry supported an Idaho Public Utilities Commission staff finding that revamping state USF requires the state legislature to act.
Including resolution of some Mobility Fund Phase II petitions and setting a deadline for comments on USF budgeting, numerous FCC notices are to appear in Wednesday's Federal Register. In a final rule to be effective May 25, the agency said it's resolving remaining petitions for reconsideration on Mobility Fund Phase II by revising the language of its collocation rule and reducing the value of the letter of credit a Phase II support recipient has to hold after Universal Service Administration Co. and the agency verify the recipient "achieved significant progress" on buildout and service provision requirements. Effective Wednesday is a three-year information collection requirement for its NET 911 Improvement Act order of 2009, it said. The FCC said the Office of Management and Budget approved the information collection mandates that were part of its reporting requirements for U.S. providers of international services report and order from its 2016 biennial review of telecom regulations. It said comments are due May 25, replies July 24 on a proposed rule on establishing a budget allowing for "robust broadband deployment" in rate of return areas while "minimizing the burden" on ratepayers of USF contribution while bringing "greater certainty and stability to rate-of-return high-cost funding." It sought comments on other reforms to increase broadband deployment.
States should be able to shift to connections-based USF contribution to stabilize funds, said the state chair of the Federal-State Joint Board on Universal Service Thursday after CTIA filed its second lawsuit against states making that change. CTIA sued the Utah Public Service Commission Tuesday for its Jan. 1 shift to connections-based contribution, arguing the 36-cent fee violates federal Lifeline requirements and illegally discriminates against prepaid wireless services. CTIA urged the U.S. District Court in Salt Lake City to decide federal law pre-empts the Utah rule and to stop the state commission from enforcing it.
The Competitive Carriers Association, NTCA and the Rural Wireless Association raised questions about an NPRM set for a vote at the April 17 commissioners’ meeting proposing to bar use of money in any USF program to buy equipment or services from companies that “pose a national security threat” to U.S. communications networks or the communications supply chain. But that hasn’t translated into ex parte meetings at the FCC. RWA raised concerns Monday in a filing in new docket 18-89. China experts said concerns are legitimate.
The digital divide is the FCC's “top policy priority” and the Connect America Fund reverse auction is “a milestone” in modernizing a key USF program, FCC Chairman Ajit Pai told an American Cable Association conference Wednesday. Pai slammed Title II Communications Act regulation of broadband service, which he said was the result of “Silicon Valley giants” claiming small ISPs such as ACA's members “posed a greater threat to a free and open internet” than Google, Facebook and Twitter.