Sandwich Isles Communications hit an FCC proposal to initiate proceedings to revoke the carrier's licenses, including under Communications Act Section 214. The commission's Dec. 5 notice of apparent liability against the company for alleged USF violations "is based on a series of premises that are factually and legally unfounded," SIC said in comments posted Thursday in docket 16-405 responding to a Feb. 14 public notice (see 1702140063). "The more this proceeding moves along, the more transparent the Commission’s motives become, that is, to put SIC out of business to the detriment of the people of the Hawaiian Home Lands ('HHL') based on the FCC’s prejudgments rather than the actual evidence and law." The Hawaii Public Utilities Commission said it didn't object to the FCC initiating revocation proceedings against SIC licenses. The HPUC "shares the FCC's commitment to maintain service to all customers on Hawaiian Home Lands, and stands ready to work with the FCC to take appropriate action and coordinate efforts to ensure that said service will be provided," the regulator commented. Scores of individuals in the docket generally supported SIC.
Recent changes to the USF high-cost fund resulting in a budget shortfall will mean fewer areas without broadband will be reached, delivering comparatively lower speeds and higher rural consumer broadband rates, said Kurt Gruendling, vice-president-marketing and business development at Waitsfield and Champlain Valley Telecom (WCVT) in Vermont and on behalf of NTCA, in testimony prepared for a House Digital Commerce and Consumer Protection Subcommittee hearing Thursday. "This budget shortfall cuts support to companies like WCVT that still need to upgrade portions of their network, and it thus undermines the ability of committed companies like WCVT to deliver -- and keep delivering -- on the promise of broadband that creates Smart Rural Communities," he said, referring to the NTCA initiative to deploy broadband-enabled applications to improve community services. It's just as critical to sustain network infrastructure and affordability of services, citing challenges of distance and density, he said. Otherwise, he said rural Americans don't get the benefits of broadband and it's a "terrible waste of resources" to build it. The hearing focused on how communities use technologies to serve their residents in various ways. Other witnesses included representatives from Chicago; Columbus, Ohio; Pittsburgh; and Portland, Oregon.
Arizona Corporation Commissioners voted unanimously to adopt a state broadband fund for rural schools. At an ACC meeting Tuesday, they approved amendments to state USF rules to set up the $8 million state-matching fund, which will allow Arizona to take advantage of up to $100 million in federal E-rate Category One funding for broadband (see 1701300033). The commission released a proposed order March 7, but the final decision wasn't immediately available Tuesday. In the days leading up to the vote, companies continued to demand limits on fund distribution. In Monday comments, Cox urged the commission to say funding is for last-mile projects only and not for overbuilding. The ACC should make clear that the agency isn't extending its regulatory authority to broadband services, the cable operator said.
Rural telcos said "illogical and inequitable" application of a USF budget control mechanism (BCM) is hindering rural telco broadband expansion. NTCA and other industry representatives targeted a Universal Service Administrative Co. calculation of reduced high-cost loop support (HCLS) under the BCM. For rate-of-return telcos subject to a "parent trap" rule, they said USAC was multiplying a per-line reduction amount by a carrier's total lines, including acquired lines not eligible for HCLS. "Acquired lines that are not eligible for HCLS have no impact on the demand for HCLS and overall rate-of-return carrier high-cost support, and thus have no bearing on the BCM being effectuated," said accounting firm Moss Adams' filings (here and here) posted Tuesday in docket 10-90 on meetings with aides to all three FCC commissioners and Wireline Bureau staffers. The rural telcos urged the FCC to "restore fairness" by ensuring the BCM per-line component isn't applied to HCLS-ineligible "parent-trapped lines." The officials also "discussed the unintended consequences that the Maximum Average Per Location Construction Project Loop Plant Investment Limitation (Limitation) of the Capital Investment Allowance for rate-of-return carriers may have on broadband investment and deployment," said the filing, which said the rule was eliminating all associated investment, not limiting excess investment. "We also discussed other general concerns that are causing confusion among rate-of-return carriers on the calculation of the Limitation and the additional accounting and regulatory burdens resulting from these calculations."
The FCC proposed a Q2 industry USF contribution factor of 17.4 percent of interstate and international telecom service revenue from end users, said a public notice from the Office of Managing Director in docket 96-45 in Tuesday's Daily Digest. Telecom consultant Billy Jack Gregg projected March 2 the contribution factor would rise from Q1's 16.7 percent due to a drop in industry revenue (see 1703020079).
The FCC E-rate funding cap was raised to $3.99 billion for the 2017 funding year beginning July 1 to account for inflation, said a Wireline Bureau public notice Monday in docket 02-6. It was a 1.3 percent increase from the current $3.94 cap, the PN said. It noted the commission in 2010 began to index the E-rate USF budget for inflation to ensure the USF subsidy program keeps pace with school and library broadband/telecom needs.
NTCA urged prompt FCC action to address concerns about a USF "rate floor" that's having "continuing adverse effects" on consumers of rural telcos. "The rate floor policy yields no benefits with respect to managing universal service fund budgets, but at this point -- after several years of serial rate increases -- is only harmful and disruptive to rural consumers, especially given that the lack of affordable standalone broadband services makes it more difficult for those same rural consumers to cease purchasing voice service even as it becomes increasingly expensive," the rural telco group said in a filing posted Monday in docket 10-90 on a "follow-on" conversation with an aide to Commissioner Mike O'Rielly. NTCA said "an immediate pause to any further rate floor increase would only help rural consumers and afford the Commission reasonable time to consider on a more informed basis any next steps with respect to the policy."
FCC Commissioner Mignon Clyburn urged USF reform, in a speech Monday to the WTA in Hilton Head, South Carolina. Last year, the FCC adopted reforms aimed at stabilizing the high-cost program, Clyburn said, according to written remarks. “Like with any significant reform, there are choppy waters ahead that need careful navigation.” Clyburn stressed the importance of partnerships, which “have the capability to help your bottom line, and provide a benefit for your communities.” The FCC needs to tweak some of its rules for rate-of-return carriers, she said. “I hear you when you talk about affordability, and the need to have flexibility to price your services as you see fit in the market,” she said. “I am concerned, about the affordability of rates in both rural and urban areas. It is a shame that deregulation has often meant higher rates in both urban and rural areas. But I believe rural areas should not be penalized, simply because of poor legislative or regulatory judgment. That is why I would support hitting the ‘pause’ button on rate floor increases, while we figure out a path forward that does not unduly impact rural consumers or the universal service fund.” Clyburn noted, as a Democrat, she's now in the minority at the FCC. She said she got used to that when she was a South Carolina regulator. “The difference in my role and status are readily apparent,” she said. “I was in the minority as a commissioner here in South Carolina for many years. ... I always start at the 50-yard line when it comes to formulating policy with anyone who may see the world differently than I do. … I will never entertain compromising my principles.” Among those principles, “removing consumer protections and harming competition are always going to be non-starters for me,” she said. “I will continue to sit at the table, even when we are discussing issues that have practical impacts that may make me uncomfortable.”
Nine small New York ILECs may recover revenue losses resulting from the phase-out of terminating access charges mandated by the FCC’s 2011 Connect America Fund order, the New York Public Service Commission ruled in an order released Friday. The commission decided the companies should receive the full amounts requested, adding up to a $47,490 total, the commission said. Eight of the companies requested additional state USF money to recover the revenue, while the ninth requested accelerated amortization of a deferred credit balance, the commission said.
The Kentucky Public Service Commission ended Lifeline support for about 149,000 cellphone users, refocusing funds on about 17,000 eligible elderly and rural customers with landlines, the state commission said in a Friday news release. Meanwhile, the Utah legislature passed a bill Thursday that includes making wireless companies eligible for state Lifeline support. Under the Kentucky PSC order, the state on May 1 will no longer give $3.50 monthly for low-income customers’ wireless services, it said. With the FCC phasing out Lifeline subsidies for landline voice services in December 2021, Kentucky will gradually increase its Lifeline subsidy for those services to $7.50 per month, it said. With far fewer customers to be supported by Kentucky Lifeline, the state USF surcharge on customer phone bills will drop to 3 cents from 14 cents on July 1, the PSC said. The commission launched a review of the state USF in February last year after seeing the fund was on the verge of running out, a problem also seen in other states (see 1607010010). The agency decided an increasing number of wireless customers qualifying for Lifeline shrank the USF balance, it said. Last March, the PSC tried increasing the contribution surcharge to 14 cents from 8 cents, but then three more wireless providers with about 85,000 Lifeline customers applied for state Lifeline funds, it said. Supporting them would have required the PSC to increase the surcharge again to 21 cents, but the agency decided that was an unreasonable burden for the public, it said: “What is clear is that the program cannot continue in its current form.” Low-income customers can still get a $9.25 monthly federal subsidy for wireless service and competition should keep wireless rates low even without the state Lifeline subsidy, it said. In Utah, another state with a shrinking USF fund, the legislature passed SB-130, which includes a provision adding wireless Lifeline support. The Senate voted 26-0 Thursday to concur with a House amendment after the House voted 74-0 in support the same day. It says telecom companies providing access lines, connections or wholesale broadband internet access service qualify for state USF distributions. It requires each provider to contribute to the USF and requires the PSC to develop a method for calculating the amount of each contribution. The bill could add revenue to the state USF, said a fiscal note Monday (see 1703060050).