It’s unconstitutional for Washington state to tax federal Lifeline reimbursements, the Washington Supreme Court unanimously decided Thursday. Siding with T-Mobile subsidiary Assurance Wireless, the state’s high court reversed a lower court’s opinion because it found that the Universal Service Administrative Co. (USAC) is the FCC’s instrumentality and thus immune from state taxes.

It’s unconstitutional for Washington state to tax federal Lifeline reimbursements, the Washington Supreme Court unanimously decided Thursday. Siding with T-Mobile subsidiary Assurance Wireless, the state’s high court reversed a lower court’s opinion because it found that the Universal Service Administrative Co. (USAC) is the FCC’s instrumentality and thus immune from state taxes.

Senate Commerce Committee ranking member Ted Cruz, R-Texas, called Wednesday for Congress to substantially rein in the FCC's autonomy in setting USF spending and creating new programs amid a bicameral working group’s examination of a possible universal service revamp (see 2305110066). “Caught in a dilemma of wanting to further expand USF programs but having already maxed out the level of taxation American consumers can reasonably tolerate, the conversation at the FCC and in Congress has focused on expanding the pool of companies and products subject to” the USF contribution factor, which is effectively a “tax on the working class,” Cruz said in a paper. “This approach is anything but fair to American taxpayers: it would hide the problem of excessive USF taxation rather than fix it and ultimately make tax burdens worse by emboldening further unaccountable spending growth.” Instead, he said Congress should “take charge of defining universal service and deciding where USF funds may go.” Cruz proposes making most USF programs subject to congressional appropriations but believes “it may make sense to keep the High-Cost program within the current” funding framework “given ongoing multiyear commitments to providers.” Congress should eliminate “duplicative” USF spending, including combining the Lifeline program with the currently independent affordable connectivity program, given perceptions that the “federal government has too many broadband programs, and a poor record of coordinating them,” Cruz said. He also proposes curbing the FCC’s expansion of E-rate eligibility, citing concerns about permitting schools and libraries to use program support for off-premises Wi-Fi hot spots and wireless internet services (see 2311090028).

Many small and mid-sized internet service providers (ISP) have doubts that they will participate widely if at all in the broadband equity, access and deployment (BEAD) program. At ACA Connects' annual summit Wednesday in Washington, President Grant Spellmeyer said members are concerned "about where BEAD is headed" on project requirements and conditions. "Places like Pennsylvania have got some troubling provisions that are slowing members down," he said. "I think you're going to see wildly disparate results across the 50 states." One ISP that operates in multiple states told us it's leaning away from participating in the states with particularly onerous conditions.

Arizona Corporation Commission staff warned Tuesday that the Arizona Universal Service Fund (AUSF) could exhaust its money unless the commission increases contribution rates. Commissioners could vote March 12 on a staff-proposed order to raise fees. AUSF administrator Solix told commission staff “that although there were enough funds collected to fund the AUSF for January, February and March 2024, Solix has calculated that it's anticipated, by the end of April, the AUSF fund balance would be depleted and that the fund will not be able to pay the Commission-approved and contractual obligations to [Frontier Communications] and Solix, respectively, beginning in May 2024,” said a Tuesday (docket RT-00000H-97-0137). For basic local exchange and wireless service providers that interconnect with the public switched network, staff recommended increasing the monthly surcharge to 3.4 cents per access line, up from 2 cents, and to 34 cents per interconnecting trunk line, up from 20 cents. For intrastate toll service providers, Arizona commission staff recommended increasing the monthly surcharge to 45% of revenue, up from 34.1%. The new rates would start April 1 and would result in a $200,000 fund balance by year-end, a “reasonable level” that would “potentially eliminate the need to revise the AUSF surcharge rates again for 2024,” staff said. Arizona commissioners declined raising AUSF contribution rates in December (see 2312050032). Frontier is the only company receiving AUSF high-cost support.

Spreading high-speed internet will remain a key focus for the California Public Utilities Commission in the years ahead, CPUC President Alice Reynolds told Communications Daily during a wide-ranging Q&A. Reynolds addresses broadband funding, affordability issues, state USF and the FCC’s net neutrality rulemaking in written answers to our questions, lightly edited for length and clarity.

E-rate participants and advocates welcomed the FCC's proposed cybersecurity pilot program for schools and libraries in reply comments posted Tuesday in docket 23-234 (see 2311130062). A coalition of education associations and school districts from 42 states and Puerto Rico urged the FCC to move forward, saying public schools are "now the industry most targeted by ransomware attacks" because they are "data-rich environments that often lack advanced resources and technology." The FCC should update the definition of firewalls under category two services to include "industry standard firewalls that are necessary to counter the most common, yet devastating, cyberattacks," the coalition said. The group also backed the schools and libraries cybersecurity pilot program, asking the FCC to "adequately fund the pilot and to shorten its duration so that entities can immediately strengthen their cybersecurity defenses by next school year." Establish an 18-month timeline for the pilot program, said E-rate compliance consulting firm Kellogg & Sovereign. Consider an "open data model" so the public, researchers, program participants and other stakeholders can "independently analyze and use data to support informed decision-making." The American Library Association noted that smaller libraries lack staff time and expertise to apply for the program and urged the FCC to require the Universal Service Administrative Co. to conduct outreach. ALA backed a one-year timeline for the pilot, saying the proposed three-year timeline "just adds unnecessary delay in the urgent need to make cybersecurity tools eligible for E-rate support."

Sen. Joe Manchin told us Tuesday he supports Congress allocating funding for the FCC's affordable connectivity program (ACP). "The money's there," but congressional leaders must "get the bill on the floor," the West Virginia Democrat said after a speech at the NARUC meeting in Washington. Later, a NARUC panel said states should learn from Rural Digital Opportunity Fund (RDOF) problems when setting rules for internet service providers to participate in the broadband, equity, access and deployment (BEAD) program.

America’s Public Television Stations CEO Patrick Butler is “hopeful” that Senate legislation maintaining funding for PBS will advance over a House FY24 federal funding legislation bill that would zero out that money, he told the APTS Public Media Summit in a farewell address Monday after 13 years leading the association (see 2307210065). Butler plans to retire this year once a replacement is hired (see 2311010050). “I’m hopeful. I can’t say I’m confident, but I am hopeful,” he said after the speech.

House Commerce Committee ranking member Frank Pallone, D-N.J., said Wednesday he and other supporters of the FCC’s affordable connectivity program are seeking stopgap funding for an FY 2024 omnibus appropriations package in a bid to keep the endangered initiative running. Meanwhile, ex-FCC Chairman Ajit Pai and eight other former commission heads said congressional leaders should “act swiftly” and appropriate up to $15 billion for next-generation 911 tech upgrades. President Joe Biden last year sought $6 billion in stopgap ACP money and $3.08 billion to fully fund the FCC’s Secure and Trusted Communications Networks Reimbursement Program as part of a supplemental appropriations request but didn’t mention NG-911 (see 2310250075).