The FCC had 90 outstanding audit recommendations Sept. 30 at the end of FY 2017, it said Wednesday in its annual financial report. They included 58 from the Office of Inspector General and 32 from GAO. In FY 2017, the FCC closed 58 audit recommendations and received 48 new ones, it said. An independent auditor said the FCC financial statements "were fairly presented in all material respects, in conformity with U.S. generally accepted accounting principles," said an attached Nov. 15 letter by OIG. But the auditor noted two "significant deficiencies," also reported in prior years, on USF budgetary accounting and IT controls at the FCC and Universal Service Administrative Co. "Inaccurate invoicing deadlines increase the risk of premature deobligations," the auditor said of the FCC's USF budgetary accounting. "Because invoicing deadlines for seven of our samples were January 2018 instead of January 2019, USAC was at risk of improperly de-obligating $29M in FY 2018." On the agency's IT controls, the auditor "found that FCC had not implemented effective policies, procedures and processes over its general support system, FCCNet, and its financial management system, Genesis." The FCC concurred with the auditor's recommendations and said it's acting to address the deficiencies. The FCC had $20.8 billion in total assets in FY 2017, down 4 percent from FY 2016, and $11.6 billion in total liabilities, down 12 percent from the previous fiscal year, the agency said. That left the commission at a total net position of $9.2 billion for FY 2017, up 8 percent from the previous fiscal year, it said. The agency's net cost of operations was $10.2 billion, up 3 percent from FY 2016, and its total budgetary resources were $10.9 billion, up 45 percent from the year before, it said.
CTIA asked the Utah Public Service Commission to reverse its decision to adopt a connections-based contribution system for state USF. CTIA filed an application Monday for hearing and request for stay in docket 17-R360-01 that would hold back the new method and return the state to a revenue-based mechanism. The effective rule isn’t competitively neutral and non-discriminatory between prepaid and postpaid providers, doesn’t comply with Utah law and would burden the federal USF, CTIA said. CTIA on Monday also asked the Nebraska PSC to reconsider its decision to adopt a connections-based contribution method, but the filing isn’t yet online, a PSC spokesman said Wednesday. The state chair of the Federal-State Joint Board on Universal Service said this week that state members agreed to a recommendation on revamping USF contribution systems but are waiting for federal members (see 1711130035).
BALTIMORE -- State members of the Federal-State Joint Board on Universal Service are ready to recommend how to revamp USF contribution, said State Chair Chris Nelson at a NARUC meeting. State members met unofficially Sunday without their FCC counterparts, Nelson told us. Monday, the NARUC Telecom Committee delayed voting on two competing Lifeline resolutions, but voted for a draft resolution to support requiring direct dialing of 911 in hotels and other enterprises.
The FCC set 2018 rural benchmark rates for ILEC fixed voice and broadband services supported by high-cost USF subsidies, based on an urban rate survey. The new monthly average urban voice service rate (rate floor) is $25.50 and the statutorily mandated "reasonable comparable" rural benchmark rate will be $45.38, requiring USF-backed ILECs to certify their basic residential rates don't exceed that level, said a Wireline Bureau public notice in docket 10-90 in Thursday's Daily Digest. Noting a May USF rate freeze (see 1705180061), the PN said the carriers won't be subject to any support reductions for any rate of at least $18 but must still report in Form 481 filings their rates if they're below the $25.50 floor. Most rural broadband benchmark rates were set between $85.54 and $94.36, depending on data speeds and capacity allowances; for Alaska Plan carriers, the benchmarks range from $109.89 to $115.66. The bureau raised the 160 GB minimum monthly usage allowance to 170 GBs for price-cap and rate-of-return carriers.
The Colorado Public Utilities Commission must do all it can to close the rural broadband gap, a member said Thursday at a livestreamed information meeting on the state’s USF high-cost support mechanism. State broadband officials said limited funding makes it tough to spread broadband. Supporting municipal broadband efforts and phasing out high-cost support for traditional phone service could be ways forward, consumer advocates said. PUC staff pointed to continued decline in USF contributions due to changing technology.
FCC actions to spur broadband infrastructure deployment and close the digital divide will remain at the top of Chairman Ajit Pai's agenda, said aide Jay Schwarz at a Thursday FCBA panel of all five commissioner wireline advisers. Other aides cited USF budgetary concerns -- including for rural healthcare (RHC) support -- jurisdictional separations, phone numbering and spectrum issues as priorities. Agency process reform was another focus, with the two Democratic aides joining the three Republicans in speaking positively about FCC release of draft items for meetings, an issue detailed in our Special Report (see 1711060006).
The Regulatory Commission of Alaska agreed to ask stakeholders if the state USF is fulfilling statutory goals after supporting a short-term fix to Alaska USF addressing what to do in a shortage situation. At a Wednesday meeting, commissioners voted 4-1 for the short-term measure and 4-1 to seek comment on broader USF questions. Under the short-term item, the Alaska USF administrator would distribute funds first for administrative costs, then the Lifeline program, then other universal service programs with oldest claims first and “pro-rated among claimants within a monthly accounting period based on the total unpaid claims for that period.” Except for claims before the effective date, the administrator wouldn’t pay claims that remain unpaid more than six months after accrual, it said. Commissioner Jan Wilson voted no on the short-term measure because she objects to the commission not fully funding USF by adopting a surcharge less than what was requested, she said. It should be fully funded until the fund size is reduced, she said. The long-term item seeks comment on several questions by Commissioner Rebecca Pauli, who previously backed setting a date to terminate AUSF and come up with a replacement (see 1710250022). Pauli asked if universal intrastate interexchange service, regardless of technology, is provided at reasonable rates throughout the state. If not, Pauli wants more details and an assessment of how to get there, she said. Chairman Stephen McAlpine voted no on the long-term proposal, saying, “Sometimes it’s more important that you make a decision than is the decision that you make.”
FCC Chairman Ajit Pai said "more fundamental reforms" are needed to shore up USF support for rural telcos, despite a 2016 overhaul designed to boost broadband. "I wish I could tell you that the FCC has fixed this problem," Pai wrote in a recent letter responding to Rep. Mike Bost, R-Ill., and other lawmakers. "I repeatedly hear from small carriers that offering stand-alone broadband would put them underwater, that the rates they have to charge exceed the rates for bundled services because of the different regulatory treatment." Citing the complexity of funding controls, Pai said rural carriers under the legacy rate-of-return system lack certainty needed for long-term investment to improve connectivity. "I am committed to exploring how this situation can be changed and to determine the appropriate budget levels," he wrote. "The Commission should address the uncertainty caused by the current budget control mechanism -- such as guaranteeing at least some minimum level of support to ease the unpredictability and allow reasonable capital planning -- while being mindful of mitigating incentives to operate inefficiently."
FCC Chairman Ajit Pai said the hurricane devastation in Puerto Rico is "unimaginable," and more funds may be necessary. He concluded a two-day trip Monday during which he met with government and industry officials. The recovery path has challenges, "most notably the lack of power and functional infrastructure," he said Tuesday. "I’m heartened by the dedication of our public safety community to the people of Puerto Rico." He said everybody is pitching in: the people of territory, its Telecommunications Regulatory Board, Federal Emergency Management Agency staffers and native and Public Safety Bureau's Roberto Mussenden. "Amateur radio operators, broadcasters, cable operators, fixed wireless companies, wireline carriers, and mobile providers have stepped up to the plate, working overtime," Pai said. "Recovering ... requires an all-hands-on-deck effort. The FCC remains committed to doing everything we can to help restore communications networks." Noting the FCC's $77 million in advanced USF support, he said he believed more funding would be needed.
Ajit Pai’s first 10-plus months as FCC chairman featured contentious public interactions with congressional Democrats and favorable treatment from Republicans. Democratic lawmakers we spoke with insisted their animus overwhelmingly involves the FCC’s policy agenda. At the agency itself, Pai oversees many split votes as he pursues his deregulatory agenda (see 1711070024 and 1711050001).