Republicans will have more House Commerce Committee muscle as they attempt a Communications Act overhaul this year, with new members from both parties eager to dig into the issues and showing telecom expertise. Net neutrality also will be a major political focal point, with legislation likely on deck at least in the Senate (see 1412310033) and House lawmakers planning an FCC oversight hearing on net neutrality early in 2015.

A legal issue that could arise if the FCC’s coming net neutrality order reclassifies broadband as a telecom service is that a telecom service is defined as "the transmission, between or among points specified by the user, of information of the user’s choosing,” said University of Pennsylvania Law professor Christopher Yoo. Technically, while users may enter the name of the website they want to visit, it’s the Domain Name Server service that chooses the point on the Internet where the user goes, Yoo said at a net neutrality panel Monday at the Association of American Law Schools annual meeting. Other panelists disagreed.

Republicans will have more House Commerce Committee muscle as they attempt a Communications Act overhaul this year, with new members from both parties eager to dig into the issues and showing telecom expertise. Net neutrality also will be a major political focal point, with legislation likely on deck at least in the Senate (see 1412310033) and House lawmakers planning an FCC oversight hearing on net neutrality early in 2015.

The FCC’s Rural Broadband Experiment was a success, with 575 bids from 181 different entities covering homes and small businesses in more than 75,000 census blocks in rural areas in every state in the country, said Jonathan Chambers, chief of the FCC Office of Strategic Planning and Policy Analysis, Wednesday in a blog post. The amount of funding requested was nine times higher than what was available, he noted. “It appears that the auction succeeded in drawing bidders who believe they can provide service very economically,” he said. “For example, when we compared the bids to the amount of support calculated by the FCC's cost model, the total requested in the auction in the aggregate is less than half the model-based support for those census blocks.” The amount offered was relatively small, Chambers said, at $10 million a year for 10 years, "or just over two-tenths of one percent of the FCC's $4.5 billion annual fund for rural universal service support." Some predicted bidding would focus on just the lowest-cost eligible census blocks, Chambers wrote. But bidders “sought support in all types of geographic areas with varying cost characteristics, with the majority of bids in the most expensive to serve areas that will be eligible for Connect America Phase II support,” he said. Next, the FCC is starting the process of reviewing low bids, he said. Provisionally selected bidders must demonstrate technical and financial qualifications and obtain a letter of credit and designation as an eligible telecommunications carrier, before they can start receiving funding, he said. “At the same, time, we are starting to design a rural broadband auction on a larger scale. While hard questions remain, we are glad to have results from this experiment to help guide our answers, and we are appreciative of the interest shown by every bidder in the auction.”

Claims that reclassifying broadband would mean new state and local taxes are “baloney,” Sen. Ron Wyden, D-Ore.,wrote in a blog post Thursday. The Internet Tax Freedom Act “broadly defined the term ‘Internet access,’” making it “illegal to tax the internet,” Wyden wrote. “Under Title II or otherwise, the FCC could define the Internet as a series of tubes and ITFA would still prohibit taxes.” The grandfathering clause in ITFA “will not allow cities to suddenly open the Internet up to telecom taxes,” Wyden wrote. A Progressive Policy Institute study said reclassification would lead to $15 billion more nationally in state and local taxes (see 1412150053). PPI Senior Fellow Hal Singer, who co-wrote the study with Brookings Institution Senior Fellow Robert Litan, said Friday that IFTA does shield broadband from general sales taxes, and he has reduced the annual estimated increase to $11 billion. “Perhaps Wyden is missing the larger point: Since state-based telecom-based FEES are already on the books, reclassifying broadband as telecom makes it EASIER for states to apply those same fees to broadband,” Singer emailed. “Rather than having to pass new legislation, an unelected bureaucrat in some local or state tax office can simply grab a new source of revenues for taxation, citing the FCC’s new definition of broadband.” The study didn't include the grandfathering issue, Singer said. NCTA, which has run ads warning of tax and fee increases under a Title II net neutrality approach, supports ITFA and its permanent extension, an association spokesman said. "ITFA does provide protection from many state and local taxes. However it does not close the door on the full range of taxes and fees -- including Universal Service Fund fees – that could be imposed if broadband were reclassified as a telecommunications service," the spokesman said.

Claims that reclassifying broadband would mean new state and local taxes are “baloney,” Sen. Ron Wyden, D-Ore.,wrote in a blog post Thursday. The Internet Tax Freedom Act “broadly defined the term ‘Internet access,’” making it “illegal to tax the internet,” Wyden wrote. “Under Title II or otherwise, the FCC could define the Internet as a series of tubes and ITFA would still prohibit taxes.” The grandfathering clause in ITFA “will not allow cities to suddenly open the Internet up to telecom taxes,” Wyden wrote. A Progressive Policy Institute study said reclassification would lead to $15 billion more nationally in state and local taxes (see 1412150053). PPI Senior Fellow Hal Singer, who co-wrote the study with Brookings Institution Senior Fellow Robert Litan, said Friday that IFTA does shield broadband from general sales taxes, and he has reduced the annual estimated increase to $11 billion. “Perhaps Wyden is missing the larger point: Since state-based telecom-based FEES are already on the books, reclassifying broadband as telecom makes it EASIER for states to apply those same fees to broadband,” Singer emailed. “Rather than having to pass new legislation, an unelected bureaucrat in some local or state tax office can simply grab a new source of revenues for taxation, citing the FCC’s new definition of broadband.” The study didn't include the grandfathering issue, Singer said. NCTA, which has run ads warning of tax and fee increases under a Title II net neutrality approach, supports ITFA and its permanent extension, an association spokesman said. "ITFA does provide protection from many state and local taxes. However it does not close the door on the full range of taxes and fees -- including Universal Service Fund fees – that could be imposed if broadband were reclassified as a telecommunications service," the spokesman said.

The FCC raised the minimum broadband speeds required of Connect America Fund (CAF) recipients to 10 Mbps download Thursday, but CenturyLink complained the commission didn't provide enough in return to offset the costs, and that fewer expensive-to-serve rural ones will get service than had the commission done more (see 1411260040).

In a move FCC Chairman Tom Wheeler and the commission's Democratic majority said would bring more broadband and Wi-Fi connections to schools and libraries, commissioners on a party-line 3-2 vote Thursday raised E-rate’s annual spending cap by $1.5 billion. They signaled their intent to approve another reform aimed at giving people more access to the Internet, adding broadband to Lifeline (see 1411120026). Republican commissioners, while backing the aim of E-rate, opposed raising the spending cap.

In a move FCC Chairman Tom Wheeler and the commission's Democratic majority said would bring more broadband and Wi-Fi connections to schools and libraries, commissioners on a party-line 3-2 vote Thursday raised E-rate’s annual spending cap by $1.5 billion. They signaled their intent to approve another reform aimed at giving people more access to the Internet, adding broadband to Lifeline (see 1411120026). Republican commissioners, while backing the aim of E-rate, opposed raising the spending cap.

The question of whether and how much to increase the length of Connect America Fund support in return for recipients providing faster broadband remains under discussion at the FCC, with the commission scheduled to take up the issue Thursday (see 1411260040), industry representatives involved in the debate said. One issue that has emerged is a sentiment within the agency that CAF recipients continue to get funding for five years, as they do now, the representatives said.