The Minnesota Public Utilities Commission will appeal a federal district court opinion that Charter VoIP is an information service that may not be regulated. The commission informed U.S. District Court in St. Paul of its appeal to the St. Louis-based 8th U.S. Circuit Court of Appeals in a Wednesday notice (in Pacer). With the FCC never ruling definitively on how to classify interconnected VoIP, observers see the case as having big implications for whether states also may regulate internet-based voice communications.
The USF contribution is now projected to drop in Q3 from 17.4 percent to 17.1 percent of carriers' U.S. interstate and international (long-distance) telecom end-user revenue, said industry consultant Billy Jack Gregg. Universal Service Administrative Co. projected Q3 industry revenue would be $13.11 billion, about $505 million less than Q2, which, combined with previously revised estimated USF demand (see 1705240058), would raise the contribution factor to 18.2 percent, Gregg emailed Friday. But in a Saturday email update, Gregg said USAC filed another revised demand projection based on rural health care fund (RHC) changes, including a determination that collections for funding year 2016 RHC programs would exceed demand by $63.8 million. USAC revised the Q3 RHC demand downward to $35.3 million. USAC also "found that $34.6 million reserved for FY2016 Healthcare Connect Fund obligations would no longer be needed, and used this $34.6 million to further reduce" Q3 RHC demand, he emailed. "After prior period adjustments and projected interest earnings, the final adjusted demand for the RHC will be negative $1.2 million, an overall reduction of $100.9 million from the RHC demand originally projected. The revision to the RHC reduces overall USF demand" for Q3 $1.896 billion, he wrote. "Because of the drop in RHC demand, the USF contribution factor for the third quarter will go down from its current level, in spite of the continued erosion of the USF contribution base."
Key House Commerce Committee lawmakers continue to examine issues that likely will factor into an expected broadband deployment section in President Donald Trump's long-promised infrastructure package, telecom aides said Friday during a Schools, Health & Libraries Broadband Coalition event. Democrats released three infrastructure proposals this year that include broadband language in a bid to influence debate ahead of the White House's plan. Administration's infrastructure principles released last month focus on targeted investments and efforts to encourage “self-help” (see 1705240050).
FCC Chairman Ajit Pai remains committed to doing “everything we can to fix” the E-rate program process, amid concerns about Universal Service Administrative Co. oversight of the USF school and library discount program, said senior Pai adviser Nick Degani during a Schools, Health & Libraries Broadband Coalition event Thursday. Pai criticized USAC in April for E-rate oversight and said the program has “serious flaws” despite previous remedy efforts (see 1704190026). USAC CEO Chris Henderson resigned in early May (see 1705040055) and House Communications Subcommittee Chairman Marsha Blackburn, R-Tenn., expressed renewed oversight interest in E-rate (see 1705040064 and 1705230042).
FCC Commissioners Michael O'Rielly and Mignon Clyburn backed means-testing USF support for broadband/telecom service in high-cost areas. It's "time to fix a fundamental structural defect" in the program, which is the subsidization of communications access for people "who don't need or deserve governmental assistance," they said in a rare joint blog post Wednesday. They sought comment on various questions and hope to bring the issue before the commission "in the very near future." O'Rielly recently said he and Clyburn were working on a draft item (see 1705180061). Representatives of Chairman Ajit Pai, USTelecom and NTCA declined comment.
Chairman Ajit Pai urged state and local officials to work with the FCC on speeding up siting of new telecom facilities. Pai said he has made no decision on net neutrality rules other than they should be market-based and stable. He also backed revisions to the Sunshine Act. Pai spoke Wednesday at a Free State Foundation conference, interviewed by FSF President Randolph May. (For other FSF coverage, see 1705310027 and 1705310057).
The Competitive Carriers Association warned that amounts proposed for the Mobility Fund II are inadequate. Replies were due last week on oppositions to various reconsideration petitions on the February FCC order launching the MF-II (see 1702230042). U.S. Cellular recently released a study on how much funding would be necessary to build and maintain a 4G LTE network in rural areas, CCA said. “Annual maintenance capital costs ... would be approximately $1.05 billion, while annual operational expenses ... would be approximately $1.08 billion, in total approximately five times the amount budgeted for MF II,” CCA commented in docket 10-90. “Absent contrary evidence, such a fact-driven study should be relied upon by the FCC to determine an appropriate budget.” CCA asked the FCC to rethink a requirement that MF-II fund applicants secure a letter of credit before authorization of support. The requirement could limit the number of companies that apply, CCA said. It's "critically important that this USF support reaches areas in-need, especially unserved and underserved locations, and the FCC must implement a framework that encourages robust participation in the program through clear, cost-efficient goals,” President Steve Berry said in a news release. T-Mobile defended its arguments to reconsider MF-II order speed and latency thresholds. The carrier said it “demonstrated that the speed requirements adopted in the Mobility Fund Order exceed the actual median data speeds consistently provided.” Only the Rural Wireless Association opposed its calls for change, T-Mobile said. RWA said it was right to urge the FCC to utilize a 5 Mbps download threshold to determine an area’s eligibility for MF-II support, instead of 10 Mbps: The lower number "conflicts with the Commission’s statutory mandate to ensure that rural areas have access to services that are reasonably comparable to those available in urban areas.”
State regulators welcomed news the USF contribution factor may not change in Q3, but some voiced continued concern about the long-term trend toward rising assessments on telecom carriers. "Fortunately, the USF assessment factor won't be increasing this quarter due to lower than anticipated demand on the E-rate program," emailed South Dakota Public Utilities Commissioner Chris Nelson Friday.
The Nebraska Public Service Commission executive director resigned after he couldn’t agree with the agency on a resolution to conflict-of-interest questions, the state telecom regulator said. Government watchdogs decried possible conflict of interest after Nebraska’s attorney general found no violations by PSC Executive Director Jeff Pursley, who consults on the side for telecom companies (see 1705170037). “The Commission and Dir. Pursley agreed that he would sever his ties with his part-time employer,” a PSC spokeswoman emailed us. “However, they could not come to an agreement on when that would occur and Director Pursley chose to resign.” The resignation is effective June 12; Pursley’s duties will be absorbed by staff until a new executive director is hired, the commission said in a Thursday news release. “Jeff is a man of many of talents,” said Chairman Tim Schram, praising Pursley’s USF experience.
ITTA and USTelecom asked the FCC to ease business data service regulations for some rural telcos by allowing them to opt into recently adopted relief for price-cap carriers. "Rate-of-return carriers that receive universal service fund ('USF') support based on theoretical cost models (termed 'model-based rate-of-return carriers) must comply with legacy regulation only for their BDS offerings," said a petition for rulemaking Thursday. "Costs of such rate-of-return regulations for these carriers now outweigh the benefits of the regulation." The petition "requests that model-based rate-of-return carriers be permitted to opt into existing price cap regulation for their provision of BDS, subject to certain conditions. ... Continued compliance with rate-[of]-return-based rate regulation, including tariffing, tariff review plans, cost studies, and associated requirements, entails significant costs that are difficult for model-based rate-of-return carriers to recover in the competitive marketplace."