Rural telcos said "illogical and inequitable" application of a USF budget control mechanism (BCM) is hindering rural telco broadband expansion. NTCA and other industry representatives targeted a Universal Service Administrative Co. calculation of reduced high-cost loop support (HCLS) under the BCM. For rate-of-return telcos subject to a "parent trap" rule, they said USAC was multiplying a per-line reduction amount by a carrier's total lines, including acquired lines not eligible for HCLS. "Acquired lines that are not eligible for HCLS have no impact on the demand for HCLS and overall rate-of-return carrier high-cost support, and thus have no bearing on the BCM being effectuated," said accounting firm Moss Adams' filings (here and here) posted Tuesday in docket 10-90 on meetings with aides to all three FCC commissioners and Wireline Bureau staffers. The rural telcos urged the FCC to "restore fairness" by ensuring the BCM per-line component isn't applied to HCLS-ineligible "parent-trapped lines." The officials also "discussed the unintended consequences that the Maximum Average Per Location Construction Project Loop Plant Investment Limitation (Limitation) of the Capital Investment Allowance for rate-of-return carriers may have on broadband investment and deployment," said the filing, which said the rule was eliminating all associated investment, not limiting excess investment. "We also discussed other general concerns that are causing confusion among rate-of-return carriers on the calculation of the Limitation and the additional accounting and regulatory burdens resulting from these calculations."
The FCC proposed a Q2 industry USF contribution factor of 17.4 percent of interstate and international telecom service revenue from end users, said a public notice from the Office of Managing Director in docket 96-45 in Tuesday's Daily Digest. Telecom consultant Billy Jack Gregg projected March 2 the contribution factor would rise from Q1's 16.7 percent due to a drop in industry revenue (see 1703020079).
The FCC E-rate funding cap was raised to $3.99 billion for the 2017 funding year beginning July 1 to account for inflation, said a Wireline Bureau public notice Monday in docket 02-6. It was a 1.3 percent increase from the current $3.94 cap, the PN said. It noted the commission in 2010 began to index the E-rate USF budget for inflation to ensure the USF subsidy program keeps pace with school and library broadband/telecom needs.
NTCA urged prompt FCC action to address concerns about a USF "rate floor" that's having "continuing adverse effects" on consumers of rural telcos. "The rate floor policy yields no benefits with respect to managing universal service fund budgets, but at this point -- after several years of serial rate increases -- is only harmful and disruptive to rural consumers, especially given that the lack of affordable standalone broadband services makes it more difficult for those same rural consumers to cease purchasing voice service even as it becomes increasingly expensive," the rural telco group said in a filing posted Monday in docket 10-90 on a "follow-on" conversation with an aide to Commissioner Mike O'Rielly. NTCA said "an immediate pause to any further rate floor increase would only help rural consumers and afford the Commission reasonable time to consider on a more informed basis any next steps with respect to the policy."
FCC Commissioner Mignon Clyburn urged USF reform, in a speech Monday to the WTA in Hilton Head, South Carolina. Last year, the FCC adopted reforms aimed at stabilizing the high-cost program, Clyburn said, according to written remarks. “Like with any significant reform, there are choppy waters ahead that need careful navigation.” Clyburn stressed the importance of partnerships, which “have the capability to help your bottom line, and provide a benefit for your communities.” The FCC needs to tweak some of its rules for rate-of-return carriers, she said. “I hear you when you talk about affordability, and the need to have flexibility to price your services as you see fit in the market,” she said. “I am concerned, about the affordability of rates in both rural and urban areas. It is a shame that deregulation has often meant higher rates in both urban and rural areas. But I believe rural areas should not be penalized, simply because of poor legislative or regulatory judgment. That is why I would support hitting the ‘pause’ button on rate floor increases, while we figure out a path forward that does not unduly impact rural consumers or the universal service fund.” Clyburn noted, as a Democrat, she's now in the minority at the FCC. She said she got used to that when she was a South Carolina regulator. “The difference in my role and status are readily apparent,” she said. “I was in the minority as a commissioner here in South Carolina for many years. ... I always start at the 50-yard line when it comes to formulating policy with anyone who may see the world differently than I do. … I will never entertain compromising my principles.” Among those principles, “removing consumer protections and harming competition are always going to be non-starters for me,” she said. “I will continue to sit at the table, even when we are discussing issues that have practical impacts that may make me uncomfortable.”
Nine small New York ILECs may recover revenue losses resulting from the phase-out of terminating access charges mandated by the FCC’s 2011 Connect America Fund order, the New York Public Service Commission ruled in an order released Friday. The commission decided the companies should receive the full amounts requested, adding up to a $47,490 total, the commission said. Eight of the companies requested additional state USF money to recover the revenue, while the ninth requested accelerated amortization of a deferred credit balance, the commission said.
The Kentucky Public Service Commission ended Lifeline support for about 149,000 cellphone users, refocusing funds on about 17,000 eligible elderly and rural customers with landlines, the state commission said in a Friday news release. Meanwhile, the Utah legislature passed a bill Thursday that includes making wireless companies eligible for state Lifeline support. Under the Kentucky PSC order, the state on May 1 will no longer give $3.50 monthly for low-income customers’ wireless services, it said. With the FCC phasing out Lifeline subsidies for landline voice services in December 2021, Kentucky will gradually increase its Lifeline subsidy for those services to $7.50 per month, it said. With far fewer customers to be supported by Kentucky Lifeline, the state USF surcharge on customer phone bills will drop to 3 cents from 14 cents on July 1, the PSC said. The commission launched a review of the state USF in February last year after seeing the fund was on the verge of running out, a problem also seen in other states (see 1607010010). The agency decided an increasing number of wireless customers qualifying for Lifeline shrank the USF balance, it said. Last March, the PSC tried increasing the contribution surcharge to 14 cents from 8 cents, but then three more wireless providers with about 85,000 Lifeline customers applied for state Lifeline funds, it said. Supporting them would have required the PSC to increase the surcharge again to 21 cents, but the agency decided that was an unreasonable burden for the public, it said: “What is clear is that the program cannot continue in its current form.” Low-income customers can still get a $9.25 monthly federal subsidy for wireless service and competition should keep wireless rates low even without the state Lifeline subsidy, it said. In Utah, another state with a shrinking USF fund, the legislature passed SB-130, which includes a provision adding wireless Lifeline support. The Senate voted 26-0 Thursday to concur with a House amendment after the House voted 74-0 in support the same day. It says telecom companies providing access lines, connections or wholesale broadband internet access service qualify for state USF distributions. It requires each provider to contribute to the USF and requires the PSC to develop a method for calculating the amount of each contribution. The bill could add revenue to the state USF, said a fiscal note Monday (see 1703060050).
Lifeline providers asked the FCC to deny TracFone and Sprint requests for clarification of mobile broadband minimum standards for the low-income USF subsidy program. A group of mobile "eligible telecom carriers" said Lifeline rules don't require ETCs to provide smartphones to subscribers, but they agreed consumers receiving offers of mobile broadband internet access service (BIAS) should have devices that can handle such service. "A 3G-capable feature phone with web browsing functionality used in connection with a plan offering the minimum required data allotment enables consumers to access BIAS in a manner that meets the FCC’s mobile BIAS minimum service standards," said the reply, posted Friday in docket 11-42, by Assist Wireless, American Broadband and Telecommunications, Blue Jay Wireless, Easy Telephone Services and Amerimex Communications. The rules don't "limit the definition of mobile BIAS to licensed, cellular data connections," they wrote: "The Commission should continue to advance the central goals of innovation and consumer choice in the Lifeline Modernization Order by permitting Lifeline providers to offer consumers meaningful alternatives to traditional cellular data, including mobile BIAS plans that rely on alternative technologies such as unlicensed spectrum." TracFone replied that Sprint, consumer groups and a state regulatory commission shared its concerns "about abuses of the minimum service standards and the abuse" of a 12-month "port-freeze" rule (see 1703030025). Telrite replied the FCC shouldn't play "innovation gatekeeper" in Lifeline but let consumers decide which offerings work best for them.
Sandwich Isles Communications (SIC) alleged FCC "procedural irregularities" and questioned agency motives since it subjected the carrier to $77 million in USF repayment duties and proposed fines for violations and apparent violations of the high-cost program in Hawaii Dec. 5 (see 1612060032). The commission recently sought comment on a Hawaii Department of Hawaiian Home Lands request for guidance on whether an exclusive DHHL license held by the company violates a Communications Act mandate for the FCC to remove telecom market entry barriers. "The putative licensing issue raised in the February 6 Public Notice was not mentioned in either of the substantive orders issued" Dec. 5, SIC replied in docket 10-90 Thursday: "One of the two public notices specified in the Notice of Apparent Liability ('NAL') was not issued until a few days AFTER the February 6 Public Notice. And, in the unseemly haste to issue the DHHL 'request', the Public Notice truncates the DHHL submission to make it appear that the issue is extremely narrow and the outcome self-evident." SIC complained the comment period was too short and its request for an extension was ignored. "There is reason for SIC to be concerned that the Commission may be, at best, uninterested in the merits of any aspect of this matter, that it regards the outcome of the proceedings as a foregone conclusion, and that its sole purpose is to force SIC to discontinue its service to the HHL so as to allow the ILECs to cherry pick the urbanized areas of the HHL without interference from an [eligible telecom carrier] such as SIC," the company wrote. Supplementing comments of its parent Waimana Enterprises (see 1702280063), SIC said its license doesn't preclude competition in the HHL and criticized how the FCC framed the issue. The agency declined comment Friday.
The Trump administration evidently has “a comprehensive approach to infrastructure” at the “very top of mind,” said NTCA CEO Shirley Bloomfield in a blog post about a Thursday meeting at the White House as part of the Rebuild Rural Coalition “to meet with the special assistant to the president for Infrastructure as well as the special assistant to the president for Agriculture.” Representatives of Capitol Hill leadership, the Farm Credit Council, National Rural Electric Cooperative Association, other groups and the Agriculture Department were also present, she said. “I talked as quickly as I could to share some key points in terms of sharing insights on leveraging existing broadband programs that help with the business case for investment,” Bloomfield said. “Putting supplemental resources into high-cost USF will bring more bang for the buck immediately, rules are clear, targeting is good and accountability is high. In addition, permitting and siting -- federal lands, state highways, and railroads all have an impact.” The administration is in the process of putting together an infrastructure proposal now for Capitol Hill. Bloomfield testified on broadband infrastructure before the Senate Commerce Committee earlier this month (see 1703010075).