The FCC “should address the uncertainty caused by the current budget control mechanism” for the High-Cost USF program through actions like “guaranteeing at least some minimum level of support to ease the unpredictability and allow reasonable capital planning” while also “being mindful of mitigating incentives to operate inefficiently,” said FCC Chairman Ajit Pai in letters to 37 House lawmakers released Friday. Reps. Kevin Cramer, R-N.D., and Collin Peterson, D-Minn., led a letter from the lawmakers last month that urged the FCC to do a review of the program budget and proposed an interim change aimed at mitigating current budget constraints before a review (see 1710030074). The lawmakers raised similar concerns in May (see 1705020056). Pai bemoaned the FCC's 2016 rate-of-return order for not having “its intended effect,” noting his own opposition to the rule. “I repeatedly hear from small carriers that offering stand-alone broadband would put them underwater, that the rates they have to charge exceed the rates for bundled services because of the different regulatory treatment,” he said. “This is unfortunate but unsurprising.” More “fundamental reforms are needed” to address the “punch list of lingering issues” from the 2016 order, Pai said. Until that revamp happens, “I am committed to exploring how this situation can be changed and to determine the appropriate budget levels,” Pai said.
Expect lively debate about Lifeline at the NARUC annual meeting Nov. 11-15 in Baltimore, said Telecom Committee members and staff in interviews. In separate NARUC telecom draft resolutions, Nebraska Public Service Commissioner Crystal Rhoades and District of Columbia PSC Chairman Betty Ann Kane disagreed whether Lifeline should support reseller services (see 1710310051). The conflict is likely to be the “hot item” at the NARUC meeting and already is spurring discussion and lobbying, said NARUC Telecommunications Staff Subcommittee Chair Lynn Notarianni, from the Colorado Public Utilities Commission. A less contentious draft resolution aims to show a united front by states in favor of requiring direct dialing of 911 in hotels and other enterprises, said Colorado PUC Commissioner Wendy Moser.
Sprint asked the U.S. Supreme Court to review a lower court ruling that federal law doesn't pre-empt state authority to regulate non-nomadic, intrastate long-distance VoIP calls (see 1706230047). Sprint said under FCC precedent the VoIP traffic "is an 'information service' exempt from traditional common carrier regulation," whether state or federal. The 8th U.S. Circuit Court of Appeals in June -- agreeing with a 1990 9th Circuit California v. FCC ruling -- contradicted "clear FCC policy," said a Sprint cert petition this week in Sprint Communications v. Richard W. Lozier, Jr., et al. "The court below thereby both broadened and deepened the conflict, breathing new life into what had been an outlying and outdated Ninth Circuit decision." The 8th Circuit affirmed a U.S. district court ruling siding with an Iowa Utilities Board decision requiring Sprint to pay intrastate access fees to Windstream for VoIP service. Sprint said the 8th Circuit said Windstream's state tariffs apply to the VoIP calls, even if they are an information service because an enhanced service provider exemption doesn't apply. "That holding conflicts with decades of FCC decisions establishing federal policy to the contrary," said Sprint, citing actions going back to a 1980 Computer II finding by the FCC that enhanced services weren't subject to common-carrier regulation. NARUC General Counsel Brad Ramsay said the Sprint petition was wrong on the facts and the law. "The FCC in order after order for 13 years has been adamant that it has not classified VoIP as either an information service or a telecommunications service," he said. "So of course this entire petition is based on the 'fact' that facilities based VoIP service is an information service -- the one legal issue the FCC insists it has not decided." He said "states, both with and without FCC concurrence, regulate some aspects of VoIP services -- imposing USF and emergency calling fees and requirements that Congress specified (and the DC Circuit confirmed in the Verizon case) can only apply to the extent a carrier is providing a 'telecommunications service.'" The FCC didn't comment Thursday. “Windstream is not surprised by Sprint’s cert filing with the US Supreme Court since Sprint appears to be intent on endless litigation in this matter,” said Deputy General Counsel Carol Keith via statement.
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.
Sens. Jerry Moran, R-Kan., Pat Roberts, R-Kan., and Amy Klobuchar, D-Minn., led a letter released Wednesday urging the FCC to address high-cost USF program budget problems. Rep. Kevin Cramer, R-N.D., led House lawmakers in pressing the same issue twice this year (see 1710030074 and 1705020056). “Providers have continued to experience a significant reduction in support” from high-cost USF despite Congress' concerns, 39 senators wrote the commissioners. “While we recognize that a thoughtful long-term solution to the budget shortfall will take time and effort to identify and assess, many of the providers that serve rural consumers and businesses in our states have already begun to feel the pain of an arbitrary budget cap.” The FCC should act "as quickly as possible to ensure” high-cost USF “provides sufficient and predictable support to help deliver affordable, high-quality broadband to rural consumers,” they said: “At a minimum, we ask that you ensure that there is no reduction in funds allocated to or collected for the High-Cost program until you have reached a comprehensive solution.” The letter “highlights the continued dedication of Congress in making sure the USF mechanisms work as intended to prioritize consumers and close the digital divide for rural communities,” said NTCA CEO Shirley Bloomfield. The FCC didn't comment. The Schools, Health & Libraries Broadband (SHLB) Coalition and 35 healthcare providers and telehealth networks sent a letter Wednesday to House Commerce Committee leaders asking them to back a funding increase in the FCC's Rural Health Care Telecommunications Program, which they said was "facing an unprecedented crisis" after applications exceeding a budget cap for both FY 2016 and 2017. "This shortage has resulted in health providers canceling or downgrading broadband connections and reducing services to the public. Several telehealth networks put their plans to expand into rural markets on hold due to the uncertainty around future funding," said an SHLB release. “This is a life and death issue for Rural America,” said John Windhausen, SHLB executive director.
Puerto Rico ISP Open Mobile says hurricane-disrupted service could be fully restored to its 250,000 customers across the island by year's end, as long as electricity is similarly restored. "Nothing could prepare us for what happened," said OM Advertising Manager Ricardo Hernandez. He called Hurricane Irma, which preceded Maria, "like a dress rehearsal" that had OM working on restoring towers.
Citizens Against Government Waste lobbied FCC Republicans on "Restoring Internet Freedom" in recent meetings. CAGW officials urged Commissioners Mike O'Rielly and Brendan Carr and aides to undo Title II net neutrality regulation under the Communications Act, indicated filings (here, here) posted Tuesday in docket 17-108. They also discussed Lifeline USF, use of TV white spaces, vehicle-to-vehicle communications in the 5.9 GHz band and 5G issues, testimony and letters. CAGW made a similar presentation to Chairman Ajit Pai and an aide on Oct. 18. Verizon urged O'Rielly aides in a Thursday meeting to ensure a "national, light touch" broadband framework that isn't undermined by conflicting state and local regulation, a pitch it made recently to Pai advisers (see 1710190057). Also recently, ADT suggested the FCC use Title I ancillary authority to write net neutrality rules protecting alarm-monitoring companies. Akamai asked the FCC to "expressly clarify" that content delivery network services "differ from paid prioritization" by localizing traffic through data storage near users "in a way that is both neutral and reduces overall congestion," said a filing on a meeting with Wireline Bureau Chief Kris Monteith and others.
Rural telcos said FCC constraints are "ravaging" their ability to meet broadband needs. "Budget control mechanism 'haircuts' -- now in the 12-to-15 percent range and apparently increasing to 19-to-20 percent or so in 2018 -- are the primary current factor disrupting the predictability and sufficiency" of "critical high-cost support revenue streams," said a WTA filing Friday in docket 10-90 on meetings it and members had with Wireline Bureau officials. "Growing shortfalls are making it extremely hard to undertake broadband extensions and upgrades and obtain the loans needed to finance them; forcing cutbacks in staffing, maintenance and service operations; and making it difficult to repay existing broadband construction loans." They urged "the current high-cost support budget for Rate-of-Return carriers be increased, and that relief be provided from the burgeoning budget control mechanism 'haircuts' ravaging RoR Path RLECs." The FCC should address "issues teed up for reconsideration or further action in connection with high-cost [USF] reforms, including a recommended, readily available path toward helping to mitigate the pervasive insufficiency of USF support and greater prospective confirmation as to the eligibility of certain expenses for cost recovery," said an NTCA filing on a meeting with an aide to Commissioner Mike O'Rielly.
FCC commissioners approved temporary rules providing immediate relief to schools and libraries contending with “devastation” caused by Harvey, Irma and Maria. It makes "available targeted support to schools and libraries that are forced to rebuild facilities and replace equipment damaged by the Hurricanes, and provide increased flexibility for eligible services to be restored through service substitutions,” said a Monday order in docket 02-6. “We also make additional E-rate support available for schools that are incurring additional costs for eligible services, e.g., for increased bandwidth demand, because they are serving students that have been displaced by the storms, even though they may not be contending with substantial physical damage.” The storms together caused an estimated $150 billion-$200 billion in damage to areas of Texas, Florida and Georgia “and to virtually all of Puerto Rico and the United States Virgin Islands,” the agency said. Commissioner Mike O’Rielly said the FCC should work with Congress to determine whether the USF programs could be reimbursed through funding targeted to hurricane relief. “Because of our budget limitations, providing additional funding from universal service generally comes at the expense of other recipients,” O’Rielly said.
Large telcos and others urged the FCC to complete an intercarrier compensation move to bill-and-keep arrangements under which carriers don't charge each other for exchanging traffic, and speed the transition to IP-based networks. Rural telcos urged a more cautious approach and further FCC action only after addressing USF subsidy "shortfalls." Comments were posted Thursday and Friday in docket 01-92 on a public notice seeking to refresh the record as a lengthy phaseout of many terminating charges continues under a 2011 overhaul.