FCC Chairman Ajit Pai has gotten off to an active start in his first two weeks in the job. Several former FCC officials said early on, in contrast to former Chairman Tom Wheeler, Pai could have a tough time figuring out what to do once designated to lead the regulator, especially given the Republican emphasis on less rather than more regulation and the strong possibility Congress, not the FCC, will address ISP privacy and net neutrality rules. But Pai is already moving forward with a busy agenda, teeing up six items for the Feb. 23 commissioners meeting. Much of his early emphasis has been on closing the digital divide. But controversy arose Friday (see 1702030070).
The USF carrier contribution factor could rise in Q2 from 16.7 percent to 16.8 percent of interstate and international U.S. telecom revenue, assuming the industry contribution base stays the same, said industry consultant Billy Jack Gregg in an email update Thursday. The contribution base has been eroding over time as long-distance revenue fell, but there can be quarterly quirks. Gregg said Universal Service Administrative Co. Wednesday projected USF demand for Q2 would increase $14.7 million to $1.99 billion, with demand rising in the high-cost, E-rate and rural healthcare programs but declining in the Lifeline low-income program. "Out of period adjustments" were the main reason for the increased USF demand, he said. USAC revenue projections are due at the beginning of March, at which time it will be possible to nail down the Q2 contribution factor, he added.
FCC Chairman Ajit Pai should adopt the Mobility Fund Phase II, several senators recommended in a letter Thursday. “As you move forward with MFII, we ask that your efforts help to incent wireless carriers to preserve, upgrade, and expand mobile broadband in rural America, rather than degrade and reduce competition in areas that need it most,” said the letter, led by Sens. Roger Wicker, R-Miss., and Joe Manchin, D-W.Va. “Competing in a capital-intensive environment, wireless carriers need long-term certainty of ongoing support to invest, deploy, maintain, and update their networks that provide vital mobile broadband services in rural areas. As the best example, certainty should come in the form of sufficient and predictable USF support in both the implementation of MFII and the transition away from legacy support mechanisms over the next several years.” More than 20 other senators signed the letter, including Sens. Roy Blunt, R-Mo., Maria Cantwell, D-Wash., Al Franken, D-Minn., Shelley Moore Capito, R-W.Va., and Ron Johnson, R-Wis. Competitive Carriers Association President Steve Berry lauded the letter. “The Senators are exactly right -- the FCC has the ability to provide this much-needed certainty now -- by ensuring sufficient and predictable USF support through implementation of a reasonable MFII program and the transition away from legacy support mechanisms over the next several years,” Berry said.
Supreme Court pick Neil Gorsuch appears highly skeptical about broad deference justices have given expert agencies, and he has cited the FCC as a prime example. Gorsuch, the 10th U.S. Circuit Court of Appeals judge whom President Donald Trump tapped to fill the seat of the late Justice Antonin Scalia, is seen by FCC watchers as a likely vote to rein in the deference the high court has given agencies under its 1984 Chevron precedent, including in the 2005 Brand X broadband ruling.
NARUC and 12 states said an FCC Lifeline order improperly bypassed state authority to designate USF-eligible telecom carriers (ETCs) under the federal Communications Act. NARUC said the commission's Lifeline broadband provider designation process order "displays a purposeful disregard of the Congressional scheme and lack of reasoned decision making" and deserved no judicial deference under the Chevron precedent. "Congress specified that State commissions, in the first instance, designate all ETCs," said the state regulators' association brief (in Pacer) Monday to the U.S. Court of Appeals for the D.C. Circuit in NARUC v. FCC, No. 16-1170. The order "claims to 'preempt' that §214(e)(2) State procedure based on the facially illogical claim that this Congressional mandate 'thwart[s] federal universal service goals.' Instead, the Order permits only the FCC to designate a new category of the federal Lifeline carriers -- Lifeline broadband internet access service providers," a process that also "undermines State universal service programs, service quality to the end-user, and increases the chances for ETC fraud and abuse," NARUC said. It asked the court to vacate the designation process and other aspects of the order, including FCC decisions giving federal ETCs the initial say over low-income consumer access to state Lifeline subsidies and using forbearance authority to eliminate state service mandates. Twelve states led by Wisconsin's attorney general filed another brief (in Pacer) saying the order "attempted to amend federal law by regulatory fiat to increase its own authority, while taking away the States' statutory rights." Joining were officials from Arkansas, Connecticut, Idaho, Indiana, Michigan, Mississippi, Montana, Nebraska, South Dakota, Utah and Vermont. An intervenor brief from the National Association of State Utility Consumer Advocates is due Monday. The FCC brief is due March 16.
State commissioners stressed the importance of federalism and state oversight in three telecom resolutions set for consideration this month at NARUC's winter meeting. NARUC released the proposed resolutions Tuesday. The Feb. 12-15 meeting in Washington will be the group's first since President Donald Trump took office and Ajit Pai became FCC chairman. The meeting will include a keynote by House Commerce Committee Chairman Greg Walden, R-Ore., and a congressional staff panel, said a recent agenda.
FCC Chairman Ajit Pai said a new broadband deployment advisory committee (BDAC) would seek ways to spur the rollout of high-speed internet access networks and close the digital divide. He said the BDAC would be charged with identifying regulatory barriers to broadband infrastructure investment, and recommending actions to remove or reduce them. The panel also would draft a model code for localities to follow to encourage deployment, he said, announcing its formation in a statement at the commissioners' Tuesday meeting, followed by a news release and a public notice (documents here).
State government officials and others stressed benefits for rural schools as Arizona seeks to take advantage of up to $100 million in federal E-rate Category One funding for broadband. The state must act quickly to meet a likely April deadline to submit funding applications to the Universal Service Administrative Co., the officials said at an all-day Arizona Corporation Commission (ACC) workshop live-streamed Monday. The workshop is part of a rulemaking to create an estimated $8 million-$10 million state match of rural broadband funds with funding from the state USF (see 1701110062). With nearly a quarter of Arizona schools not meeting the national standard of 100 kbps per student -- affecting about 250,000 students -- the E-rate funding is a way to “get rural Arizona into the game,” said Commissioner Andy Tobin (R).
About 30 rural telcos told the FCC this past week they intend to stop offering broadband internet transmission service as separate components of their broadband internet access services. Minnesota Valley Telephone and Winthrop Telephone made filings (here and here) Friday of their broadband intentions, joining other rural telcos from Minnesota, Wisconsin and Iowa that made such filings in dockets 01-92, 14-28 and 10-90 earlier in the week. Under a Wireline Bureau clarification last June of the FCC's net neutrality and broadband reclassification order, the rate-of-return carriers said, "the revenues associated with the broadband internet access transmission would no longer be subject to the federal universal service fund assessment." FairPoint Communications made a similar move last year (see 1606280037).
Efforts to boost broadband in an infrastructure bill have appeal but face differences and uncertainties over the initiative's structure and size, speakers at a USTelecom event Thursday indicated. A telco executive urged using existing funding mechanisms and new tax incentives; a Senate Democratic staffer cited a plan to provide $20 billion for broadband through executive branch programs (see 1701240067); a House Republican staffer said his members are seeking to encourage broadband but are still working on a plan; and a Trump transition team member opposed repeating the 2009 broadband stimulus approach. The member said FCC restructuring should include an economics bureau; and an AT&T official cited its gigabit-speed efforts in six North Carolina cities.