The Competitive Carriers Association has major concerns about an NPRM set for a vote at the April 17 commissioners’ meeting proposing to prevent use of money in any USF program to buy equipment or services from companies that “pose a national security threat” to U.S. communications networks or the communications supply chain, President Steve Berry told us Tuesday. “The FCC has injected uncertainty at a time when carriers need certainty most,” as they are getting set for the Connect America Fund Phase II and Mobility Find II auctions and “building out 600 and 700 MHz spectrum,” Berry said. “This will most certainly impact the United States’ efforts to win the global race to 5G.” The Rural Wireless Association and NTCA also expressed concerns (see 1804020054). CCA was preparing for its spring meeting last week when FCC Chairman Ajit Pai circulated the draft NPRM. “CCA and its members care about national security and support prosecution of those who violate known national security policy,” Berry said. “Nevertheless, the FCC’s proposal to prohibit the use of USF to purchase any equipment or services produced or provided by any company posing a national security threat is incredibly broad and could impact every aspect of the communications supply chain with or without ever taking USF or purchased Chinese or Russian equipment and/or services.” Berry conceded the NPRM raises complicated issues. “CCA members care deeply about the security of their customers and the country and are focused on working towards comprehensive solutions,” he said. “I would hope any action taken by the FCC will move our nation to a broad solution and not a half measure that unduly paralyzes consumers in rural America.” Many smaller carriers have cut deals with Chinese equipment makers Huawei and ZTE, which worked hard to penetrate the U.S. market (see 1803260037).

The FCC hopes this month to begin transferring USF assets from a commercial bank to the U.S. Treasury, said Deena Shetler, acting deputy managing director, at an FCBA event Tuesday. She said the shift won't fundamentally change the subsidy program, which will still be subject to FCC rules and Universal Service Administrative Co. management. USF recipients will be essentially unaffected, other than receiving payments from the Treasury instead of Bank of America, she said. Industry contributors to the fund will have to shift to a government payment portal, but are expected to have better online account access, said Fred Theobald, USAC director-financial operations. Some continue to have concerns.

California probably will get "a lot less" than the $476 million in USF support it could receive (over 10 years) under the FCC's Connect America Fund Phase II subsidy auction for fixed broadband and voice services starting July 24, blogged Tellus Venture Associates President Steve Blum Monday. He said participants will bid against a "reserve price" setting the maximum the FCC would pay for 10/1 Mbps service in mostly rural unserved areas: "The FCC has a total of $2 billion to hand out, against a nationwide reserve price total of $6 billion. Presumably, the reverse auction will bring that $6 billion total down, but it’s unlikely, to say the least, to go as low as $2 billion. So some, maybe most, eligible communities will be out of luck." Blum emailed us that "there's nothing unique" about the state's prospects: "Areas that have denser populations and less scattering of eligible census blocks will be more attractive to bidders. The states where ILECs have declined CAF-2 subsidies in the last round will have an advantage."

Lifeline wireless resellers defended their request for FCC reinstatement of port freezes of 12 months and 60 days for broadband and voice services, respectively, and subsidization of Premium Wi-Fi service under the low-income USF program. Telrite, i-Wireless and AmeriMex Communications noted Q Link Wireless and TracFone Wireless backed their reconsideration petition's port-freeze request (TracFone's support was limited to the voice part), saying they recognized "the scourge of flipping" service from one carrier to another, both for Lifeline providers and program costs. They disputed Smith Bagley's lone opposition to their petition's requests, in their reply posted Friday in docket 17-287. A Smith Bagley counsel didn't comment Monday.

USF "disbursements from operations" totaled about $8.8 billion in 2017, said Universal Service Administrative Co.'s annual report posted Monday in FCC docket 96-45 (such disbursements are "cash outlays less admin transfer to USAC"). USAC said the disbursements were $4.67 billion for high-cost (most rural) operations, $2.62 billion for E-rate (schools and libraries), $1.27 billion for Lifeline (low-income) and $261 million for rural health care. USAC said its operating expenses were $196.7 million in 2017, compared with $179.5 million in 2016. Radha Sekar, who joined USAC as CEO in January, looks forward "to transforming the organization into a high-performing team while having a watchful eye on fraud waste and abuse."

NTCA is the latest group to express concerns about an NPRM teed up for a vote at the April 17 commissioners’ meeting proposing to bar use of money in any USF program to buy equipment or services from companies that “pose a national security threat” to U.S. communications networks or the communications supply chain (see 1803260037). The draft NPRM cites a 2012 report by the House Intelligence Committee raising concerns about Chinese equipment makers Huawei and ZTE.

Comments are due May 29 at the FCC on disaster information reporting system duties, which now affect wireless, wireline, broadcast, cable, VoIP and ISP entities, said a notice in the Federal Register Wednesday. The commission is to review comments on the DIRS burdens for industry under the Paperwork Reduction Act (PRA) and make any appropriate adjustments, which the Office of Management and Budget must approve. The FR is to publish several FCC items Thursday, including: a notice seeking PRA comments by May 29 (calendar) on Lifeline USF information-collection requirements; a notice seeking PRA comments by May 29 on telecom relay service information-collection requirements; and a rule requiring short-form applications to be filed by Friday in the Connect America Fund Phase II fixed service subsidy auction to start July 24.

The FCC will publish in the Federal Register Thursday its specific parameters and procedures for implementing the Mobility Fund Phase II challenge process. The document lays out the steps the FCC will use “to establish a map of areas presumptively eligible for MF-II support from the newly collected, standardized 4G Long Term Evolution coverage data and proposes specific parameters for the data that challengers and respondents will submit as part of the challenge process, as well as a process for validating challenges,” the notice said. The challenge window opens Thursday and will remain open through Aug. 27. AT&T said Wednesday the FCC laid out challenge rules that are “clear-cut and manageable” and it’s time to get the process started. “Predictably, many of the same carriers who have long criticized the FCC data collection methods have criticized the MF-II maps as well,” said Mary Henze, AT&T assistant vice president-federal regulatory. “The FCC has collected new data to generate an up-to-date LTE coverage map designed specifically to meet its USF goals and created a hands-on way to crowdsource more granular data through a comprehensive challenge process to make the map even better.”

A draft NPRM on rules potentially barring the use of the USF to buy equipment or services from companies that “pose a national security threat” to U.S. communications networks or the communications supply chain wouldn’t necessarily mean a blanket ban. Smaller wireless carriers said they must buy equipment from Chinese providers Huawei and ZTE and don’t have good alternatives (see 1803260037). “One bright-line approach would be to prohibit use of USF funds on any purchases whatsoever from companies that have been identified as raising national security risks,” the FCC says in the draft. “Would such a rule be most appropriate here? Another approach would be to limit the scope of the proposed rule to equipment and services that relate to the management of a network, data about the management of a network, or any system the compromise or failure of which could disrupt the confidentiality, availability, or integrity of a network.” The FCC asks about a phased-in schedule for the ban and whether an effective date should be later for smaller USF recipients. The FCC also asks about potential waivers. “Should we establish a separate process from our general waiver provision for waivers of our proposed rule?” it asks. “If we provide such a waiver process, how should it function? Should we require a higher standard than good cause for granting waivers, such as ‘extraordinary circumstances?’”

An FCC rural call completion order and Further NPRM draft seek new ways to solve problems with long-distance calls to rural areas, which often aren't connected or are dropped. The draft item in docket 13-39 would shift from "covered provider" data reporting and related requirements to relying on monitoring of "intermediate carrier" performance, and seek to implement a new rural calling law. Another draft NPRM in docket 17-144 would offer business data service (BDS) "incentive regulation" to rural telcos receiving model-based Connect America Fund USF subsidy report. Both items were put on the April 17 commissioners' meeting tentative agenda announced Monday and released Tuesday (see 1803260028 and 1803270052).