Thousands of census blocks are incorrectly identified as “unserved” by the National Broadband Map (NBM), said cable companies and wireless Internet service providers (WISPs) in comments in FCC docket 10-90 (http://xrl.us/bn99cn). But USTelecom, the Independent Telecommunications and Telephone Alliance (ITTA) and individual ILECs said the map incorrectly overstates the areas listed as served. The map is used to determine where Connect America Fund Phase I money can be distributed. Price-cap carriers get access to the money to help fund broadband buildout in areas the map lists as unserved.
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.
State telecommunications associations in New York and Maine oppose Time Warner Cable’s Nov. 13 FCC petition seeking limited ETC classification and Lifeline participation, they told the FCC in filings posted this week. Time Warner Cable (TWC) wants to be categorized as an eligible telecom carrier for limited purposes of receiving Lifeline funds but hopes to avoid any redefinition of its service areas and doesn’t want other USF support. “Forbearance [of certain FCC rules associated with ETCs] would enable TWC to introduce a competitive alternative that better responds to the particular needs of low-income consumers,” it said in its petition (http://xrl.us/bn8w5e). The Wireline Bureau opened the petition for comment in a Nov. 30 notice (http://xrl.us/bn8wzg), with comments due Monday and reply comments due Jan. 14.
The FCC had no jurisdiction to change intercarrier compensation rates to zero in its 2011 USF/intercarrier compensation order, and it violated the 10th Amendment by treating states as administrative agents of the federal government. That’s the main argument of the state members of the Federal-State Joint Board on Universal Service, who submitted a 9,000-word amicus brief this week recounting what they called the FCC’s violation of dual-sovereignty; its “convoluted” and over-expansive interpretation of Section 251(b)(5) of the Telecom Act; and its reliance on “11th hour ex parte communications” without adequate notice, in violation of the Administrative Procedure Act. The 10th U.S. Circuit Court of Appeals had asked for 810 words.
The November 2011 FCC USF order cost a rural Texas telco more than $500,000 in support, the company said. Hill Country Telephone Cooperative asked the Texas Public Utilities Commission for money from the state’s USF this fall to make up for the loss. “I've been in telecom for 34 years, and I find these days the most challenging of my career,” Hill Country General Manager Delbert Wilson told us. “This whole [FCC] transformation order has filled our industry with chaos and uncertainty."
BALTIMORE -- State regulators are confronting an increasingly tortured relationship with the FCC, creating a task force to address it Monday at the NARUC meeting. It consists of seven commissioners and is already official and active. Meanwhile, two NARUC resolutions directly address the fractured FCC relationship, as was expected (CD Nov 2 p12), and NARUC adopted both resolutions as policy Tuesday after they advanced through the telecom subcommittee and committee. One urges FCC referral to the Federal-State Joint Board on Universal Service as well as to the Federal-State Joint Board on Jurisdictional Separations on major decisions, and another addresses a pending Supreme Court case on the Chevron doctrine, looking at the risk of federal overreach of authority.
Three state commissioners from largely rural states questioned whether the U.S. can ever provide universal access to broadband service. It’s like the notion of energy independence, Idaho Public Utilities Commissioner Paul Kjellander said Thursday during a National Regulatory Research Institute panel on state USF funds (http://xrl.us/bnv2ow). “But we're never going to get it,” he said. “It’s too expensive. ... Some divides just can’t be bridged.”
The FCC’s regulation of rural broadband is akin to the taxation of the British government two and a half centuries ago, said Harold Furchtgott-Roth, former FCC commissioner and head of the Hudson Institute’s Center for Economics of the Internet. “Today the situation is eerily similar,” he said at a Hudson Institute panel on rural telecommunications Monday. His comparison kicked off a series of scathing critiques among panelists of how FCC policy contributed to the U.S.’s rural broadband divide. “Flat out, it’s a terrible set of rules that they came up with,” Furchtgott-Roth said of the FCC’s USF/intercarrier compensation order of November 2011.
State regulators asked the FCC Friday to suspend an updated method of determining high-cost support from the USF (http://xrl.us/bnsr4j). The motion comes after months of debate and allegations from national and state entities that the year-old reform will hurt companies due to its unpredictability. “Clearly [the FCC model] is going to have the most impact on high-cost, rural-type carriers,” NARUC Telecom Committee Chair John Burke told us. It will impact states differently depending on how many such companies they have, he said. The FCC’s methodology of quantile regression analysis was introduced in its November USF/intercarrier compensation order, adjusted in April and determines more than 700 companies’ high-cost support as of this July. Other NARUC telecom committee members are “concerned,” Burke said.
Rep. Jeff Landry, R-La., introduced a bill to neuter the FCC’s USF reform order. The Restore Effective Statistics to the Calculation of USF Expenditures (RESCUE) Act would ensure that the order on the commission’s Connect America Fund and high-cost USF support would no longer have force or effect and require the FCC to prepare a report on alternatives. The bill introduced Friday said the order will “invariably” lead to the closure of many small businesses, was made in direct conflict with the USF mandate, relies on unpredictable regression models and “unfairly manipulates” federal support for carriers. The bill’s a “significant step to correct the FCC’s deeply flawed method for limiting USF support for rural telecommunications providers,” NTCA CEO Shirley Bloomfield said in a news release. “This bill highlights three of the most significant shortcomings of the commission’s new statistical caps on universal service support: their disregard for statutory mandates requiring that federal universal service support be predictable; their alarming inaccuracy; and their retroactive nature that penalizes prior commitments made in good faith by job creators all over this country.”
Broadband ISPs excoriated the FCC for adopting unrealistic standards for its Section 706 report on the state of broadband deployment, in comments filed Thursday and Friday in docket 12-228. In response to a notice of inquiry asking what factors the commission should consider for its ninth report (http://xrl.us/bnqtzn), the telcos and cable companies aired some longstanding grievances about the commission’s findings the last three years that broadband was not being deployed on a “reasonable and timely fashion” (CD Aug 22 p1). States spoke of the need for the commission to tweak its USF rules to enable faster deployment of broadband, and interest groups expressed a need for a faster definition of broadband to enable more data-hungry applications.