The FCC Enforcement Bureau and Blue Jay Wireless settled an investigation into whether the company improperly enrolled Hawaii customers into enhanced tribal support options under the USF Lifeline low-income program. Under an order approving a consent decree, Blue Jay will reimburse USF about $2 million and undertake compliance measures, said an agency release Friday. "This settlement makes clear that no Lifeline provider should turn a blind eye to potential fraud on the program," said Enforcement Bureau Chief Travis LeBlanc. The bureau found the company incorrectly requested and received the extra tribal funding (up to $25 extra per subscriber monthly) for consumers not residing in the Hawaiian Home Lands, the release said. Despite being informed in 2014 by Hawaii state regulators that the number of tribal subscribers it was claiming appeared to exceed the number of households in the Hawaiian Home Lands, Blue Jay continued to seek tribal support while it gathered more information, it added. The consent decree said Blue Jay admitted that from May to August 2014, it certified that it obtained tribal certifications from some subscribers who were later determined by Blue Jay to be nonresidents of the Hawaiian Home Lands. Commissioner Ajit Pai said the settlement confirms Lifeline still contains waste, fraud and abuse: "I can confirm that Blue Jay Wireless is one target of my ongoing investigation and that I flagged further suspicious conduct for the Enforcement Bureau’s investigation earlier this year. I will continue to work with my colleagues, the Enforcement Bureau, the Inspector General, and the Universal Service Administrative Company to end the abuse of taxpayer money by unscrupulous wireless resellers." The commission last year sought public comment on whether to require additional evidence of tribal residency beyond self-certification and on how providers should provide proof in order to prevent waste, fraud and abuse, said the FCC release. Blue Jay said the settlement memorializes its process for verifying subscriber self-certifications, which included building its own geo-mapping tool. "USAC concluded that this process was 'conservative to the Fund' because FCC rules require only applicant self-certification," Blue Jay said in a statement. "The settlement also allows Blue Jay to make good on a prior commitment to 'make the Fund whole.'" CEO David Wareikis said that the carrier "made the commitment to make the Fund whole because it did not want to be seen as benefiting in any way from erroneous self-certifications made by subscribers." The agreement "contains no finding or admission of wrongdoing by Blue Jay, and affirms Blue Jay's good standing" as an eligible telecom carrier, he said. "The consent decree shows that Blue Jay took voluntary proactive efforts to protect against possible fraud and would never turn a blind eye to potential fraud in the program.”

Price-cap telcos said the FCC violated the law by refusing to give them relief from legacy USF voice duties in areas where they don't receive new broadband-oriented Connect America Fund support. AT&T and CenturyLink, joined by intervenor USTelecom, Tuesday filed their opening brief to the U.S. Court of Appeals for the D.C. Circuit, which is reviewing their challenges to 2014 and 2015 FCC orders (AT&T, CenturyLink v. FCC, No. 15-1038 and consolidated cases) (see 1601110036 and 1602050029). "The Communications Act requires the FCC to adhere to a basic principle: a carrier required to provide services in high-cost areas must receive support in the form of sufficient payments from a universal service fund. The FCC orders under review violate this principle," the telco brief said. "By the FCC’s own calculation, Petitioners and other carriers face more than $1 billion in annual unfunded mandates under the FCC’s orders." The telcos said Section 214(e)(1)(A) requires USF eligible telecom carriers (ETCs) to provide services that “are supported” by universal service funding. But the FCC rule "leaves in place statewide price cap carrier ETC designations that require those carriers to provide service in high-cost areas where the required services are not ‘supported’ by high-cost funds," their brief said. "Those obligations violate the straightforward text of § 214(e)(1)(A). Likewise, requiring that service be provided in high-cost areas without supporting it with disbursements from the Fund violates the statutory command in 47 U.S.C.§ 254(b)(5) and (e) that funding be ‘sufficient’ to advance universal service. The Act also requires States to designate ‘service area[s]’ for price cap carrier ETCs that are linked to the FCC’s 'universal service obligations and support mechanisms.' 47 U.S.C. § 214(e)(5) (emphasis added). Legacy statewide service areas violate this requirement because they are a product of the replaced ‘support mechanisms’ and bear no relationship to the targeted funding mechanism that now determines high-cost support." They also said the FCC violated "the principle of competitive neutrality" and the Administrative Procedure Act. The FCC/DOJ brief is due Sept. 2 (see 1606010042).

Price-cap telcos said the FCC violated the law by refusing to give them relief from legacy USF voice duties in areas where they don't receive new broadband-oriented Connect America Fund support. AT&T and CenturyLink, joined by intervenor USTelecom, Tuesday filed their opening brief to the U.S. Court of Appeals for the D.C. Circuit, which is reviewing their challenges to 2014 and 2015 FCC orders (AT&T, CenturyLink v. FCC, No. 15-1038 and consolidated cases) (see 1601110036 and 1602050029). "The Communications Act requires the FCC to adhere to a basic principle: a carrier required to provide services in high-cost areas must receive support in the form of sufficient payments from a universal service fund. The FCC orders under review violate this principle," the telco brief said. "By the FCC’s own calculation, Petitioners and other carriers face more than $1 billion in annual unfunded mandates under the FCC’s orders." The telcos said Section 214(e)(1)(A) requires USF eligible telecom carriers (ETCs) to provide services that “are supported” by universal service funding. But the FCC rule "leaves in place statewide price cap carrier ETC designations that require those carriers to provide service in high-cost areas where the required services are not ‘supported’ by high-cost funds," their brief said. "Those obligations violate the straightforward text of § 214(e)(1)(A). Likewise, requiring that service be provided in high-cost areas without supporting it with disbursements from the Fund violates the statutory command in 47 U.S.C.§ 254(b)(5) and (e) that funding be ‘sufficient’ to advance universal service. The Act also requires States to designate ‘service area[s]’ for price cap carrier ETCs that are linked to the FCC’s 'universal service obligations and support mechanisms.' 47 U.S.C. § 214(e)(5) (emphasis added). Legacy statewide service areas violate this requirement because they are a product of the replaced ‘support mechanisms’ and bear no relationship to the targeted funding mechanism that now determines high-cost support." They also said the FCC violated "the principle of competitive neutrality" and the Administrative Procedure Act. The FCC/DOJ brief is due Sept. 2 (see 1606010042).

The Copyright Office has concerns about the FCC set-top box rulemaking, said Commissioner Jessica Rosenworcel and House Commerce Committee Vice Chairwoman Marsha Blackburn, R-Tenn., Tuesday during a House Communications Subcommittee FCC oversight hearing. Both have met with the CO and said they believe FCC Chairman Tom Wheeler's proposal can't go forward as is. Momentum is with an alternative pay-TV proposal (see 1607120079), which Wheeler welcomed in prepared testimony (see 1607110063).

The Copyright Office has concerns about the FCC set-top box rulemaking, said Commissioner Jessica Rosenworcel and House Commerce Committee Vice Chairwoman Marsha Blackburn, R-Tenn., Tuesday during a House Communications Subcommittee FCC oversight hearing. Both have met with the CO and said they believe FCC Chairman Tom Wheeler's proposal can't go forward as is. Momentum is with an alternative pay-TV proposal (see 1607120079), which Wheeler welcomed in prepared testimony (see 1607110063).

The FCC didn't base recent regulatory efforts on economic reasoning and should be reined in by Congress, said a report Monday that called the commission "an agency in search of a mission" in the digital age. “We must get back to the practice of basing regulations on thorough analysis rather than populist rhetoric,” said a statement from Mike Montgomery, executive director of CALinnovates, which funded the report. CALinnovates describes itself as a coalition of tech leaders, startups and entrepreneurs that seeks to be a bridge from the tech community to California and federal policymakers; its partners include AT&T. Previous FCCs made "wise" decisions informed by economic principles that deregulated long-distance phone services, enabled enhanced internet data services and spurred wireless growth, said the report by Gerard Faulhaber, a professor emeritus at the University of Pennsylvania Wharton School and law school, and Hal Singer, a senior fellow at George Washington University School of Public Policy. "The failure of the FCC to ground its regulations in economic reasoning in the last few years, however, has led to inefficient policies and proposals that threaten to eviscerate prior benefits," said their report. "The FCC has made no effort to subject its pending privacy or set-top-box proposals to cost-benefits analysis." They said the net neutrality order highlighted "the quagmire facing policymakers" as a federal appeals court deferred to the agency's policy expertise. "Given the FCC’s willingness to eschew econometric evidence and economic theory as it considers new regulations, the most direct way to re-inject economics into FCC policymaking is via a Congressional mandate for the agency to perform cost-benefit analysis, subject to OIRA [White House Office of Information and Regulatory Affairs] or judicial review," the report said. "There is no reason why the Department of Labor, the Environmental Protection Agency, the Consumer Financial Protection Bureau, and a host of other agencies should be required to perform cost-benefit analysis, while the FCC is free to embrace populism as its guiding principle." The FCC didn't comment. The commission's recent business data service proposal did include a detailed market study by consultant Marc Rysman, a Boston University econometrician, which also was subjected to peer reviews that were recently released.

The FCC didn't base recent regulatory efforts on economic reasoning and should be reined in by Congress, said a report Monday that called the commission "an agency in search of a mission" in the digital age. “We must get back to the practice of basing regulations on thorough analysis rather than populist rhetoric,” said a statement from Mike Montgomery, executive director of CALinnovates, which funded the report. CALinnovates describes itself as a coalition of tech leaders, startups and entrepreneurs that seeks to be a bridge from the tech community to California and federal policymakers; its partners include AT&T. Previous FCCs made "wise" decisions informed by economic principles that deregulated long-distance phone services, enabled enhanced internet data services and spurred wireless growth, said the report by Gerard Faulhaber, a professor emeritus at the University of Pennsylvania Wharton School and law school, and Hal Singer, a senior fellow at George Washington University School of Public Policy. "The failure of the FCC to ground its regulations in economic reasoning in the last few years, however, has led to inefficient policies and proposals that threaten to eviscerate prior benefits," said their report. "The FCC has made no effort to subject its pending privacy or set-top-box proposals to cost-benefits analysis." They said the net neutrality order highlighted "the quagmire facing policymakers" as a federal appeals court deferred to the agency's policy expertise. "Given the FCC’s willingness to eschew econometric evidence and economic theory as it considers new regulations, the most direct way to re-inject economics into FCC policymaking is via a Congressional mandate for the agency to perform cost-benefit analysis, subject to OIRA [White House Office of Information and Regulatory Affairs] or judicial review," the report said. "There is no reason why the Department of Labor, the Environmental Protection Agency, the Consumer Financial Protection Bureau, and a host of other agencies should be required to perform cost-benefit analysis, while the FCC is free to embrace populism as its guiding principle." The FCC didn't comment. The commission's recent business data service proposal did include a detailed market study by consultant Marc Rysman, a Boston University econometrician, which also was subjected to peer reviews that were recently released.

Civil rights groups and others asked the FCC to do more to protect consumers as telecom carriers migrate from traditional phone services to IP-based, broadband technologies. The advocates said "high quality, affordable and reliable voice and high-speed broadband services" should be provided to all Americans and consumer protection maintained during the technology transitions. Separately, incumbent telcos pressed for streamlined regulatory treatment in tariffing and discontinuing legacy voice services. They were among the parties lobbying the commission last week as it plans, at its Thursday meeting, to consider a tech transitions item taking various actions (see 1606240069).

Civil rights groups and others asked the FCC to do more to protect consumers as telecom carriers migrate from traditional phone services to IP-based, broadband technologies. The advocates said "high quality, affordable and reliable voice and high-speed broadband services" should be provided to all Americans and consumer protection maintained during the technology transitions. Separately, incumbent telcos pressed for streamlined regulatory treatment in tariffing and discontinuing legacy voice services. They were among the parties lobbying the commission last week as it plans, at its Thursday meeting, to consider a tech transitions item taking various actions (see 1606240069).

Revenue from contributions to state USFs has declined in multiple jurisdictions, we found last week from state USF financial documents and from interviewing state and industry officials. Those officials cited a variety of reasons for the falling revenue. Some cited outdated contribution methodology, while others said the drop is part of deliberate efforts to control the size of funds. Some states reported efforts to revamp USF contribution methodology, and one said its hands were tied by state legislation.