States with dwindling intrastate USF revenue aren't waiting for the FCC to decide how to revamp federal contribution. The Nebraska Public Service Commission this week became the second state regulator to adopt connections-based contribution to replace a revenue-based model. A representative for small rural companies applauded and said it’s time for the FCC to act. The Utah PSC previously adopted a connections mechanism that will take effect Jan. 1 (see 1710240042). The New Mexico Public Regulation Commission may soon hold stakeholder discussions about moving to connections.
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.
The National Hispanic Media Coalition and other public interest groups urged the FCC to do more to address the communications meltdown in Puerto Rico and the U.S. Virgin Islands (see 1710040046). Chairman Ajit Pai, meanwhile, said he appointed a staff task force on hurricane recovery. Addressed to Pai, the letter also was signed by the Center for Media Justice, the Color of Change, Free Press and Public Knowledge.
A Thursday Senate Homeland Security Committee hearing on “weaknesses" in the Lifeline USF program's management identified in a May GAO report is likely to be less balanced in the program's favor than a previous committee hearing, communications sector lobbyists from across the political spectrum said in interviews. The Senate Commerce hearing last week included a strong defense of the program from Free Press Deputy Director Jessica González and calls from Democrats for Congress to be patient before the national verifier program instituted in the FCC's 2016 Lifeline overhaul order fully rolls out in 2019 (see 1709060063).
Senate Commerce Committee Chairman John Thune, R-S.D., and other committee members told us Wednesday they Are receptive to calls to delay discussions about a replacement or major overhaul of the Lifeline USF program until the national verifier program instituted in the FCC's 2016 Lifeline overhaul order fully rolls out in 2019. Most witnesses at Commerce's Wednesday Lifeline hearing said Congress should give the FCC a chance to fully implement the 2016 order's provisions. Thune and other committee Republicans also signaled interest in working with Senate Homeland Security Committee ranking member Claire McCaskill, D-Mo., on a Lifeline bill if offered.
Supporters and critics of the Lifeline USF program will closely follow a Wednesday Senate Commerce Committee hearing on issues identified in a critical May GAO report on the program for signs of whether the Senate has a sufficient appetite to pursue legislation to revamp parts of the program, lawyers and lobbyists said in interviews. The hearing and a Sept. 14 Senate Homeland Security Committee one will examine the GAO report, which said the Lifeline program’s management remains deficient despite FCC and Universal Service Administrative Co. efforts to improve controls over finances and enrollment by low-income consumers (see 1706290037).
FCC rules streamlining reporting duties of high-cost USF recipients take effect Sept. 22, said an order summary in the Federal Register Wednesday. The July 7 order eliminated some annual reporting requirements eligible telecom carriers face for network outages, unfulfilled service requests, complaints, pricing information, service quality certification and duplicative Form 481 filings (contingent on Universal Service Administrative Co. implementation of an online portal). Another summary in the FR sought comments by Oct. 23 under the Paperwork Reduction Act on a proposed FCC information collection in annual and quarterly reporting worksheets (Form 499-A, Form 499-Q) for telecom contributors to the universal service fund and telecom relay service fund. The information is also used to calculate FCC regulatory fees for interstate telecom service providers, it said.
NTCA again urged the FCC "to address the shortfall" in high-cost USF support "undermining" the "effectiveness of recent reforms" as "RLECs are being asked to do more with less." Lack of funding for a model-based mechanism means 71,000 rural locations will receive lower-speed broadband, "and 50,000 may see no broadband investment," said the group's filing Tuesday in docket 10-90 on a meeting with an aide to Chairman Ajit Pai. It said a shortfall of $173 million-$283 million over the next year "for cost-based USF recovery will severely harm rural American consumers and businesses in the form of higher prices, lower speeds, and reduced investment." Some 183 NTCA carriers indicated they plan to cut broadband investments over the next year by nearly $950,000, on average, the group said. NTCA said it understood Universal Service Administrative Co., as of now, will cease next year to collect for the overall high-cost USF annual budget of $4.5 billion, instead collecting only what is needs to meet "current demand," which for RLECs, "would include a budget control mechanism that artificially 'suppresses' USF support demand." The group urged the FCC to direct USAC to collect at least the $4.5 billion in support, pending completion of a budget review the agency promised a federal court. The FCC should use reserves to help fill the shortfall, NTCA said, citing USF cash balances that overall "may approach $8 billion as of year-end," including up to $2.2 billion for high-cost support, about $445 million of which is unallocated.
SAN DIEGO -- FCC Commissioner Mike O’Rielly’s visit to NARUC's meeting re-energized federal-state joint boards on Universal Service and Jurisdictional Separations, state commissioners said. But the boards established by the 1996 Telecom Act may be losing relevance, they said. O’Rielly has been federal chair of the boards since February. He participated Tuesday in separate closed-door meetings in San Diego, with each lasting about an hour, NARUC attendees said.
SAN DIEGO -- As states seek broadband-for-USF and funding tweaks, an FCC member was said to visit the city where state regulators are meeting, NARUC attendees told us. Commissioner Mike O’Rielly was expected to have been in San Diego on Tuesday for closed-door meetings of the federal-state joint boards on Universal Service and Jurisdictional Separations. His office didn't comment. Also at the meeting, states and electric utilities joined local governments protesting balance on FCC Chairman Ajit Pai’s Broadband Deployment Advisory Committee (BDAC).
NARUC would seek more state and local government members on the FCC's Broadband Deployment Advisory Committee, under a proposed resolution released in draft form Wednesday. State commissioners plan to vote on that and another resolution seeking increased USF high-cost funding, at their July 16-19 Summer Policy Summit in San Diego. With the BDAC, FCC Chairman Ajit Pai is sending the impression he isn't interested in working with states, said District of Columbia Public Service Commission Chairman Betty Ann Kane in an interview.