Allband pressed its case for a 15-year waiver of USF support caps, in meetings Wednesday with FCC officials. Allband already has a 3-year waiver, granted in July by the Wireline Bureau (CD July 27 p6). The bureau had asked Allband to take “all reasonable steps” to meet the $250 per-line per-month cap on USF support, but that’s simply not possible, Allband told aides to commissioners Mignon Clyburn, Jessica Rosenworcel and Ajit Pai. “Even unrealistic steps to reduce costs and increase revenues will not allow Allband to meet the $250 cap” by the time its waiver expires on July 1, 2015, the rural Michigan telco said (http://bit.ly/15Y97pw). That’s why Allband asked for a 12-year extension in August (CD Aug 27 p1), which would let it repay its Rural Utilities Service loan, the telco said. If the application isn’t granted, Allband will require a new waiver in 2014, which will cost at least $50,000 to put together, it said. That kind of expenditure is “inefficient and unnecessary when it is clear that no action Allband can take will allow it to meet the $250 cap,” it said. Allband also took issue with the Wireline Bureau’s dismissal of its request for a waiver of the regression caps on high-cost loop support. The bureau had said the request was moot because Allband would not be affected by the caps, but “the current regression caps do impact Allband,” the telco said. The company “may be able to absorb the 2013 impacts,” but not the 2014 impacts, it said. “As a consequence, Allband will, by 2014 be unable to pay the full amount of its RUS loan obligation, and voice service along with all services provided by Allband will be in jeopardy.”
The FCC may be putting too much focus on cutting abuses in the Lifeline program and not enough on making sure everyone who needs support gets it, said members of the agency’s Consumer Advisory Committee. Lifeline reform was the subject of a contentious hearing Thursday by the House Communications Subcommittee (CD April 26 p1), the day before CAC met at commission headquarters.
Telcos and carriers in favor of the FCC’s USF/intercarrier compensation (ICC) reforms filed several briefs Wednesday supporting the agency’s 2011 order. The FCC “ably refutes” the various claims, intervenors told the 10th U.S. Circuit Court of Appeals, but they wrote separately to “highlight” several points.
House Communications Subcommittee Chairman Greg Walden, R-Ore., said there is “plenty of blame to go around” but the current data on the program “doesn’t paint a picture of success,” in his opening remarks. He said the Lifeline fund grew 226 percent since 2008 and, in 2012, the FCC spent $2.2 billion on the program. “Specifically, it spent $2.2 billion of your money, my money -- virtually every American’s money -- since the Lifeline program and the entire Universal Service Fund is paid for through a charge on phone bills,” he said. “We are spending large sums of money and probably squandering much of it.”
Arguing that the commission overstepped its bounds when it required eligible telecom carriers to use USF support to provide broadband service, the carriers claimed Congress didn’t delegate Title II authority to the FCC to regulate broadband. Section 254(b), which the FCC relied on for jurisdiction, is “clearly” not a jurisdiction-conferring provision, the carriers wrote. “Congress conferred no jurisdiction by its references to ‘advanced telecommunications and information services.’ It merely stated principles to guide the FCC in exercising its authority.” In its response, the FCC argued that argument was “not properly before the court because it was not first presented to the FCC.” The commission also attacked petitioners’ “unsound” argument.
FCC Commissioner Ajit Pai called for a Connect America Fund to support broadband buildout for rate-of-return carriers. Also at an NCTA conference Monday, Rural Utilities Service Acting Administrator John Padalino noted he and U.S. Department of Agriculture Secretary Tom Vilsack had asked for expanded USF support (CD Feb 20 p3). Broadband buildout support for rate-of-return telco carriers “would recognize that line loss in rural America is real, and that direct support for broadband-capable facilities” is “critical,” Pai said. Rural representatives twice interrupted him with applause, as Pai, who grew up in Kansas, repeatedly characterized himself as a friend of rural interests. “My name is Ajit, and I am a rural American,” he said. “When I confront a rural issue, whether it is about call completion or universal service or outdated regulations, it isn’t just an abstraction to me."
The FCC did not act within its discretion when it determined InterCall’s services were “telecommunications” service and required the company to pay into the USF, Arent Fox attorney Ross Buntrock argued for The Conference Group. The agency also did not act properly in issuing the order through adjudication, rather than through the notice-and-comment rulemaking procedures it must follow under the Administrative Procedure Act, Buntrock said.
Border to Border Communications of Texas will go broke and default on its Rural Utilities Service loan in 2014 without an FCC waiver, said an ex parte filing posted Wednesday (http://bit.ly/156pSys). The company and the Western Telecom Alliance met with Commissioner Mignon Clyburn and her staff to ask about its petition to waive the $250 per loop per month cap and quantile regression benchmark limitations of the high-cost support, it said. The waiver has been pending since July. Under Texas law, Border to Border has sought nearly a million dollars from the state USF to make up for FCC reform losses, with a request before the Texas Public Utility Commission (CD April 4 p5). RUS “has suspended Border to Border’s ability to make additional draws on existing loans,” said the company’s FCC filing. “For example, Border to Border is currently unable to replace a 300 foot tower knocked down by a severe wind shear, which is common to its service area, or to fulfill wireless company orders for additional T-1 backhaul facilities.” Border to Border has spent about $100,000 on the waiver proceeding, it said. The Western Telecom Alliance and a representative of South Central Telephone Association also met with Clyburn, said another ex parte filing posted Wednesday. That meeting was about SCTelcom’s requested waiver of the $250 per loop per month cap and quantile regression benchmark limitations of the high-cost support. “Unfortunately, without the requested waiver, reductions in SCTelcom’s high-cost support will put it in likely default of its [RUS] loan covenants within the foreseeable future,” that filing said (http://bit.ly/Zcfnpk). “SCTelcom has been discussing these matters with the RUS staff, but the needed loan restructuring relief appears to require Congressional action.” The company has spent $30,000 on the waiver proceeding, it said.
The FCC is asking Congress for $359.3 million for fiscal year 2014, up $12.5 million from this year, all of which would be paid for through regulatory fees. Under the FCC’s budget (http://bit.ly/YLROE9), the number of full-time equivalent staff would increase from 1,776 this year to 1,821 in FY 2014. The Wireline Bureau would get the biggest staff increase, up 41 to 217. The Office of Managing Director would gain 20 to 223. Staff assigned to the chairman and commissioners would increase by six to 31. The FCC seeks $10.9 million to pay for the increasing cost of overseeing the USF. “More resources are required to continue the Commission’s work to modernize USF, implement reforms, and increase its oversight of the newly-reformed programs,” according to the budget document. “This request will support funding for additional staff” including attorneys, economists, IT specialists, program managers and technologists. The agency asks for $500,000 to help it construct a Public Safety Answering Points Do Not Call Registry, as mandated by Congress last year. But the agency also identified $2 million in cuts, through “identified efficiencies and savings in travel, telecommunications, contracts, and other expenses.” The FCC also asks for $4.8 million to move part of its Enforcement Bureau field operations from an old farmhouse at the FCC’s Columbia, Md., campus to its D.C. headquarters. “If the FCC continues to house employees and equipment in this facility, it must undergo a complete renovation,” the FCC said. “This extensive work would require replacement of walls, ceilings, floors, mechanical and electrical systems, furniture and other equipment. The farmhouse is a historical building, and as a result has presented challenges to any efforts to upgrade the facility."
Universal support for telecom around the world needs to be reviewed and cut down, said the mobile operators of the GSM Association Wednesday (http://bit.ly/ZhtgiK). It released a new report (http://bit.ly/10SIKvk) concluding “most funds are not succeeding in delivering their stated goal of widening access to telecommunication services and that alternative market-based solutions are more effective,” noting the amounts of unused funds in these USFs. There’s $11 billion “languishing” in these various funds unused, with India having a particularly high amount, it said. The report surveyed 64 funds, with over a third estimated to not yet give out contributions in any effective way. GSMA Chief Regulatory and Government Affairs Officer Tom Phillips called the USFs “a convenient form of taxation on the telecommunications industry,” which often “should be closed down and the balance of monies held used to extend access to mobile services to those unable to afford them, or those groups that live in particularly remote areas,” according to an association statement. The report discusses the November 2011 reform of the U.S. USF, particularly emphasizing the change to the FCC’s high-cost support and Lifeline program. It called the U.S telecommunications market “highly competitive.” Nearly half of the surveyed USFs were shown to be of limited activity or inactive, but the U.S. USF was judged active.