With Utah on the cusp of a state USF overhaul, the Public Service Commission sought comment on how to handle assessment of prepaid wireless services. In a Tuesday request in docket 17-R360-01, the PSC asked which prepaid services are assessable and which should be exempted in the commission’s proposed connections-based USF contribution mechanism. Comments are due Oct. 4. Also, the PSC asked for reply comments by Oct. 17 on possible rule language for Utah USF assessment of prepaid wireless. If the PSC makes a rule, it will file a proposed rule Nov. 1 with the state Division of Administrative Rules to be published Nov. 15 in the Utah State Bulletin, the PSC said. Comments would be due a month later and the rule could take effect Dec. 22, it said.

The FCC invited input on National Exchange Carrier Association-proposed changes to its rural carrier "average schedule" USF high-cost loop support mechanism. Comments are due Oct. 5, replies Oct. 20 on NECA's proposed formula, which if approved would cover 2018, said a Wireline Bureau public notice Tuesday in docket 05-337.

An FCC regulatory fee order includes a hike on direct broadcast satellite providers from 27 cents per subscriber to 38 cents per subscriber this year, as proposed in an NPRM, despite opposition from AT&T's DirecTV and Dish Network (see 1708230015 and 1706230027). The commission said it agreed with cable industry arguments that DBS providers occupy Media Bureau resources "similar" to those used by cable (including IPTV), while it noted a disparity in regulatory fee assessments. The DBS increase is "an effort to bring the regulatory fee closer" to the cable fee, which is now 95 cents per subscriber, said the order and Further NPRM in docket 17-134 released Tuesday to collect $356.7 million in regulatory fees in FY 2017 (see 1709050081). The FCC projected about $22 million (6.2 percent of the allocation) in fees from International Bureau regulatees; $89 million (24.9 percent) in fees from Wireless Bureau regulatees; $116 million (32.4 percent) from Wireline Bureau regulatees; and $130 million (36.5 percent) from Media Bureau regulatees. Industry regulatory fee payments are due Sept. 26, said a public notice. The FCC failed to justify a decision to reassign 38 staff full-time equivalents for non-high-cost USF regulatory activities from the Wireline Bureau to an "indirect" category, "meaning that the cost of these programs will be borne by all Commission licensees," said Commissioner Mike O'Rielly, who partially dissented from the order. He also cited a lack of support for AM/FM changes that reduced fees for small broadcasters, but he "hesitantly" backed the DBS fee increase. The FNPRM sought further comment on the appropriate tiers for calculating terrestrial and satellite international bearer circuit fees raised in the 2016 and 2017 NPRMs, and on the methodology for calculating cable-TV subscribers in multiple dwelling units raised in the 2008 NPRM. Attorneys from law firms blogged on details of the actions, including Davis Wright, Fletcher Heald and Wilkinson Barker.

Senate Commerce Committee Chairman John Thune, R-S.D., and other committee members told us Wednesday they Are receptive to calls to delay discussions about a replacement or major overhaul of the Lifeline USF program until the national verifier program instituted in the FCC's 2016 Lifeline overhaul order fully rolls out in 2019. Most witnesses at Commerce's Wednesday Lifeline hearing said Congress should give the FCC a chance to fully implement the 2016 order's provisions. Thune and other committee Republicans also signaled interest in working with Senate Homeland Security Committee ranking member Claire McCaskill, D-Mo., on a Lifeline bill if offered.

USF contributions are projected to spike in Q4, from 17.1 percent to 18.8 percent -- a new high -- of carriers' U.S. interstate and international telecom end-user revenue, said industry consultant Billy Jack Gregg in a Friday email. He said the contribution factor hike is due to Universal Service Administrative Co.'s projected drop in the USF revenue base to $13.02 billion -- down $85 million from Q3 and the lowest ever -- combined with a previous projection that USF quarterly demand will be $2.04 billion. The USF revenue base for all of 2017 is projected to be $53.7 billion, down 30 percent since its 2008 peak, and annual USF demand is projected to be $7.9 billion, $848 million lower than in 2016, Gregg wrote. The contribution factor has been trending higher over time.

Supporters and critics of the Lifeline USF program will closely follow a Wednesday Senate Commerce Committee hearing on issues identified in a critical May GAO report on the program for signs of whether the Senate has a sufficient appetite to pursue legislation to revamp parts of the program, lawyers and lobbyists said in interviews. The hearing and a Sept. 14 Senate Homeland Security Committee one will examine the GAO report, which said the Lifeline program’s management remains deficient despite FCC and Universal Service Administrative Co. efforts to improve controls over finances and enrollment by low-income consumers (see 1706290037).

The Senate Homeland Security Committee will hold a Sept. 14 hearing on issues identified in a May GAO report on continued “weaknesses" in the Lifeline USF program's management, as expected (see 1708300051), a committee spokeswoman confirmed Thursday. That will follow a planned Sept. 6 Senate Commerce Committee hearing on the Lifeline issues. GAO said the Lifeline program’s management remains deficient despite FCC and Universal Service Administrative Co. efforts to improve controls over finances and enrollment by low-income consumers. The report also identified broader problems in USF contribution system oversight, among other issues (see 1706290037). Senate Homeland Security leaders urged the GAO last month to refer its report to the FCC Enforcement Bureau and Office of Inspector General “for further investigation and possible enforcement action” (see 1708150023). FCC Chairman Ajit Pai has reportedly been invited to testify at the Senate Homeland Security hearing. The hearing will begin at 10 a.m. in 342 Dirksen, the committee said.

Comments and petitions on Cincinnati Bell buying Hawaiian Telcom are due Sept. 28, replies and oppositions to petitions Oct. 13, said the International, Wireless and Wireline bureaus in a public notice in Wednesday's Daily Digest in docket 17-207. "Together with HTI, Cincinnati Bell plans to expand the combined company’s fiber network to both urban and non-urban areas in Hawaii" and they "affirm that HTI will 'continue its progress in deploying broadband in census blocks where HTI receives Connect America Fund Phase II USF support,'" said the PN. Cincinnati Bell last month unveiled plans to buy Hawaiian Telcom and OnX Enterprise Solutions for about $851 million (see 1707100051).

The Senate Commerce Committee set a Sept. 6 hearing on issues identified in a May GAO report on continued “weaknesses" in the Lifeline USF program's management, and the Senate Homeland Security Committee is planning a hearing on those issues Sept. 14, several communications sector lobbyists told us. GAO said the Lifeline program’s management remains deficient despite FCC and Universal Service Administrative Co. efforts to improve controls over finances and enrollment by low-income consumers. The report also identified broader problems in USF contribution system oversight and the commission's use of a private bank account rather than the Treasury Department to store $9 billion in USF net assets (see 1706290037). GAO Forensic Audits and Investigative Service Director-Audit Services Seto Bagdoyan, Citizens Against Government Waste Director-Technology and Telecommunications Policy Deborah Collier, American Enterprise Institute visiting scholar Jeffrey Eisenach and South Dakota Public Utilities Commissioner Chris Nelson are to testify at the Senate Commerce hearing, the committee said. The hearing will begin at 10 a.m. in 253 Russell. Senate Homeland Security hadn't announced its hearing at our deadline, but it's expected to include testimony from FCC Chairman Ajit Pai, two lobbyists said. Senate Homeland Security and the FCC didn't comment. Neither hearing is surprising given both Senate committees' existing interest in the GAO's Lifeline report, the lobbyists said. Senate Commerce intended to hold its Lifeline hearing before Congress' August recess but postponed it amid uncertainty about when the Senate would recess (see 1708020029). Senate Homeland Security leaders urged the GAO earlier this month to refer its report to the FCC Enforcement Bureau and Office of Inspector General “for further investigation and possible enforcement action” (see 1708150023).

Nick Degani, aide to FCC Chairman Ajit Pai, said Pai is dead set on digital inclusion and bridging the digital divide. Pai has seen the problem firsthand, Degani told the University of Mississippi Tech Summit Wednesday, according to written remarks. “I don’t mean jet-setting to major technology hubs like Silicon Valley or Boston,” he said. “I’m talking about road trips to visit the people and places we seldom associate with the digital revolution, such as Dillon, Nebraska, and Minneola, Minnesota.” Pai believes overregulation is part of the problem, Degani said. The move to 5G is a big deal for the wireless industry, he said. “Clearing the regulatory underbrush could remove a lot of delays and higher costs as 5G rolls out.” Fifth-generation will be a game changer, he promised: “5G promises exponential growth in the Internet of Things, major advances in augmented and virtual reality, cooperative collision avoidance for cars, remote robotic surgery. And those are just the things we can already foresee.” To "promote digital inclusion, the biggest mechanism in the FCC’s proverbial toolkit would be our universal service programs," he said, saying USF invested $180 million last year in Mississippi. Experts agree it will take more government and industry coordination to further narrow the digital gap between rich and poor (see 1708220036).