A telco bid for rural carrier business data service relief at the FCC drew opposition from Sprint, support from TDS Telecommunications and proposals for changes from Smithville Telephone of Mississippi. Sprint said the commission should deny the ITTA and USTelecom rulemaking petition (see 1705250065) to permit rate-of-return telcos receiving model-based USF support to opt into new, relaxed price-cap BDS rules. The rural telcos "would be allowed to raise the going-in BDS rates, to thereafter provide BDS on a largely deregulated basis, and to retain the guaranteed support provided under rate of return regulation of switched access service," said Sprint comments posted Thursday in docket 17-144. Sprint said the proposals are "remarkably one-sided in favor of the rate-of-return ILECs," allowing them "to pick the best of both worlds: freedom to offer BDS on whatever terms they choose, including at increased prices, with minimal or no regulatory oversight, while retaining the revenue assurances" from "more generous" rate-of-return USF and intercarrier compensation (ICC) transition mechanisms. TDS said the rate-of-return BDS burdens for model-based carriers often outweigh the benefits. Updating the regulations would allow "carriers like TDS Telecom the flexibility to compete in the BDS marketplace with other entities that are not subject to cumbersome, legacy regulations," said its comments. Removing burdens would serve "rural broadband goals by providing greater flexibility to invest in new infrastructure," said TDS, which also agreed with the proposal to keep certain USF-ICC transition mechanisms. Smithville Telephone, with seven employees, said it's subject to BDS competition of the sort identified in the price-cap rulemaking, but wouldn't get relief under the petition as written. Its comments "suggest ways to recognize this actual existing competitive situation for Smithville, and likely for other small carriers, so that full deregulated status can be obtained."
AT&T said a recent GAO report on Lifeline highlights the need to improve the efficiency and performance of the FCC's USF subsidy program for low-income consumers. The findings of the report (see 1706290037) "are both expected and surprising -- expected in that the report highlights areas of weakness in the program of which we have long been aware; surprising in that the investigation suggests that the waste and abuse could be much worse than we ever imagined," said Joan Marsh, senior vice president, in a Thursday blog post. "For example, in Michigan a whopping 67.5% of subscribers who enrolled for Lifeline relying on asserted SNAP participation could not be verified by the GAO investigators," she said, referring to the Supplemental Nutrition Assistance Program. The FCC's new national verifier should help, but it won't be fully implemented until 2019, she said, raising questions about whether new enrollments should be restricted in the meantime. "Equally troubling were the report’s observations about the effectiveness of the Lifeline program," she said. "Lifeline participation rates are low compared to the percentage of low income households that pay for phone service. According to the FCC, the participation rate shows that millions of Lifeline-eligible households are obtaining voice service without the Lifeline discount. This is not surprising given how affordable and accessible many market-based services have become." The GAO report points to the difficulties the FCC has in extending "a Reagan-era telephone subsidy to cover broadband access," said Daniel Lyons, an American Enterprise Institute visiting scholar, in another blog post. "Unquestionably, the government should offer assistance to low-income consumers at risk of falling on the wrong end of the digital divide. But that assistance should be designed from the ground up, tailored to the needs of the population it seeks to serve, with controls to protect against fraud and abuse. ... Lifeline needs revolutionary, not evolutionary, change."
Wireless carriers asked the Utah Public Service Commission to not use connections-based contributions to the state USF. Utah is preparing to shift to a connections-based mechanism Aug. 1, which would make it the first state to change to that USF contribution method. But in separate comments filed this week, AT&T and CTIA said the PSC should retain its revenue-based method, or at least provide more time for working out final rules and implementing the change. The proposed rule change “is unnecessary and would create a myriad of legal and logistical problems,” CTIA said in docket 17-R360-01. "The existing contribution mechanism … remains legally sound and demonstrably successful.” The proposed rule may violate state and federal law because it could be read to include broadband lines, CTIA said. Requiring a state USF surcharge on bills could harm less wealthy consumers by making it difficult for carriers to sell "all-in, single-rate service plans that are popular among these consumers," CTIA said. The flat fee would impose "far higher relative costs on low-volume users," it said. In other comments, AT&T said USF contribution reform should be addressed at the national level. The Utah USF has a surplus, so “the haste to make Utah the first state to experiment with switching to a per line contribution base is unwarranted,” the carrier said. Many open questions about the proposed rules make shifting to connections-based contributions by Aug. 1 “unreasonable and impracticable,” it said. The commission should clarify the definition of access lines and providers to include prepaid wireless and exempt non-interconnected VoIP services like Skype and FaceTime, AT&T said. Also, the PSC should ensure the rule doesn’t assess Utah USF fees to wireless consumers who don’t live in Utah, it said. “For example, an out of state college student who is included on her parents’ family wireless plan with a Utah billing address will result in the student’s line being subject to the surcharge, even though that student uses her wireless phone mostly in another state where she is likely already subject to another state USF surcharge.” The Utah Rural Telecom Association supported the change to connections-based contribution, but suggested some tweaks to language, in its comments. Comcast didn’t support or oppose the revamp, but commented that clarifying procedures for counting access lines would ensure contribution is competitively neutral and nondiscriminatory. Other states are also mulling contribution reform (see 1706300049).
NARUC would seek more state and local government members on the FCC's Broadband Deployment Advisory Committee, under a proposed resolution released in draft form Wednesday. State commissioners plan to vote on that and another resolution seeking increased USF high-cost funding, at their July 16-19 Summer Policy Summit in San Diego. With the BDAC, FCC Chairman Ajit Pai is sending the impression he isn't interested in working with states, said District of Columbia Public Service Commission Chairman Betty Ann Kane in an interview.
States are driving broadband deployment and adoption in many ways, the National Regulatory Research Institute said in a Friday paper. They include “direct funding, partnering across state agencies and industry to fund broadband build-out, ‘retooling’ state USF rules to include broadband deployment in programs like Lifeline, and refocusing existing universal service funds from voice support to broadband build out, particularly in those areas where competition allows the state to divert high cost funds from subsidizing incumbent carriers to supporting broadband deployment,” NRRI said. States participated in NTIA broadband mapping and some, including Virginia and Nebraska, are using state funds to keep maps up to date, it said. Some states set up state broadband councils and task forces to develop strategies, but while useful, “they are often separate from the state public utility commissions and thus may not benefit from their direct knowledge of consumer needs and issues,” it said. State legislation this year has increased funding for broadband deployment, created tax incentives for companies and supported public-private partnerships, it said. Moving forward, states must respond to broadband replacing voice as the main focus of the federal USF and determine how to measure and improve broadband adoption and how to coordinate various state broadband authorities, NRRI said.
The FCC opened a pleading cycle on Great Plains Communications' waiver request to allow it to use actual, rather than projected, interstate switched access revenue to calculate switched access rates and cost recovery as the company exits National Exchange Carrier Association pooling arrangements. Comments are due July 31 and replies Aug. 15, said a Wireline Bureau public notice Friday in docket 01-92. Without the waiver, Great Plains' switched access rates will rise almost 150 percent, "amounting to an increase of $2.8 million annually, and elimination of most" of the company's support from a Connect America Fund-intercarrier compensation mechanism resulting from the 2011 USF-ICC overhaul order, said its June 21 petition. The "inaccurate" projected revenue is "based on years-old data," it said.
GAO criticism of FCC Lifeline USF oversight should be analyzed and put in context, said Davis Wright attorney Danielle Frappier, who represents Lifeline wireless providers, in a Friday blog post. She noted some characterized GAO's Thursday report as confirming that waste, fraud and abuse in the low-income subsidy program are "prevalent" and "everything" has gone wrong (see 1706290037). "No one asserts that the program is perfectly structured or administered. And, where corrections and improvements in the program can be made, they should be made," wrote Frappier. "But there are some significant limitations on the data and analysis in the report of which readers should be aware. Probably most importantly, the report is based on data from 2014, and therefore necessarily takes virtually no account of the many additional safeguards and improvements that have been made." She cited specific FCC efforts to improve Lifeline enrollment verification procedures and "some real difficulties in doing large scale comparisons of data cross multiple databases," as GAO did. "The report notes that the Improper Payments Information Act rate for the Lifeline program was 0.45 percent in 2015. That is quite a low number -- lower than for the E-rate program, which in that same year was 6.33 percent (see the FCC Fiscal Year 2015 Agency Financial Report at p. 88) and much lower than the typical improper payment rates for programs such as Medicare, Medicaid, veterans’ benefits, etc.," she wrote. "As a result, the appropriate reaction to an improper payment rate of less than one-half of one percent is to use this data to continue to make improvements to the program, not to treat the program as in any sort of crisis calling for an urgent or hysterical response." The National Grange issued a statement Thursday urging continued support for Lifeline. An FCC Wireline Bureau public notice Thursday in docket 11-42 reminded Lifeline providers of their primary responsibility to ensure the eligibility of consumers seeking program support.
With cracks in state USF availability widening fast, the Regulatory Commission of Alaska is bearing down on a short-term fix and long-term overhaul. Alaska commissioners discussed fixing USF at two public meetings in June. Seeking to stem the bleeding while the RCA considers broader changes, commissioners voted 4-1 at Wednesday’s meeting to seek comment on changing rules about what to do in a USF shortage. Commissioners said they will take further action in late July. State USF revenue is down in many states and Alaska is one of a few eyeing a shift to connections-based contribution as a possible long-term solution.
Hotels wouldn’t have to pay Texas USF fees on guest telecom services under a proposal published Thursday by the Texas Public Utility Commission. Texas commissioners unanimously agreed to open a rulemaking as part of its meeting consent agenda. The PUC proposal in case 46053 asks for comments by July 28 and replies by Aug. 7. The commission will have a hearing, if requested, it said.
California public utilities commissioners all voted for rulemakings on SMS classification and communications infrastructure at their meeting livestreamed Thursday. The SMS rulemaking responds to a CTIA petition asking whether text messaging is a telecom service that must pay into state USF and other programs (see 1706200048). Comments will be due 50 days after the order’s effective date, with replies due 10 days later, the proposed decision said. The infrastructure investigation and rulemaking looks at safety and competition issues for conduit and utility poles used by broadband and other communications providers. The proceeding will be merged into an existing matter on whether to apply right-of-way rules of commercial mobile radio service providers to wireless facilities installed by CLECs. “We have poles that are just crammed with stuff,” CPUC President Michael Picker said. “People want to get access to them.” Also at the meeting, the CPUC discussed but postponed a vote until July 13 on a proposed $27.6 million California Advanced Services Fund (CASF) grant that Frontier Communications protested. The grant would go to a Race Telecommunications fiber-to-the-home broadband project in San Bernardino County, but Frontier argued state funding would fly in the face of federal Connect America Fund money supporting a Frontier upgrade in the area (see 1706280054). Frontier’s upgrade won’t cost the CASF, but it’s DSL -- so it’s slower -- and expected to reach 1,100 fewer households than the Race project, said CPUC Communications Division Director Cynthia Walker. Commissioners Liane Randolph and Carla Peterman said they leaned toward approving the Race project. “You don’t want to discourage applicants from proposing projects in areas that are identified as needing service and then having the rug pulled out from under them after another applicant comes in after the protest period,” Randolph said. But Commissioners Clifford Rechtshaffen and Martha Guzman Aceves said they would like CPUC staff, Frontier and Race to confer and find compromise. “I’m very supportive of getting fiber into these communities, but I’m not sure it needs to be every household,” Aceves said. Picker said he’s “struggling with this one” because the CPUC encourages companies to apply for CASF funds but also urged Frontier to apply for CAF. “Either way we are going to fail somebody we made a commitment to.”