NTCA called on the FCC to increase funding for rural broadband subsidy support in the wake of recent agency indications there's a USF budget shortfall for rate-of-return carriers. First, the commission announced small rural carriers receiving "non-model" funding would face an average 9 percent reduction in support in the first half of 2017, which the group estimates could cost the carriers $100 million, said CEO Shirley Bloomfield in a blog post Tuesday. Then, she said, the FCC revealed that an additional $150 million in funding for carriers opting into model-based support was $160 million less than the demand. "The sum total of these two numbers -- just under $260 million -- provides proof positive that the high-cost USF program for smaller carriers is woefully underfunded,” she wrote. "Failure to address such budget concerns comprehensively could both undermine the success of model election efforts and have a significant adverse impact on the consumer rates for standalone broadband that were a substantial driver of reform," said a related NTCA filing Wednesday in docket 10-90 on discussions with aides to Commissioner Jessica Rosenworcel and Mike O'Rielly. "In finalizing the implementation of model-based support, the Commission should: (1) ensure appropriate recalibration of buildout obligations in light of any USF support shortfalls; and (2) avoid any adverse impact of any kind now or in the future upon the hundreds of companies that did not elect model-based support but yet already face significant USF support reductions in 2017 due to the 'budget controls' that will hinder their ability to keep investing, to repay loans for investments already made, and to offer affordable, quality broadband services to consumers."
Sen. Kelly Ayotte, R-N.H., seems to have narrowly lost her re-election bid against Democratic Gov. Maggie Hassan, who declared victory Wednesday. The final count for this Senate race was initially unclear at the day’s start (see 1611090001), with Ayotte a fraction of a point in the lead. She would be the only Commerce Committee member to lose this cycle, a contrast to strong GOP showings Tuesday in retaining the House and Senate in addition to winning the White House. Ayotte formally conceded.
Verizon opposed expanding the District of Columbia Universal Service Trust Fund to support broadband for low-income households. "The Commission lacks jurisdiction over broadband services, and thus may not regulate the provision of broadband services," the company commented Monday on the D.C. Public Service Commission’s notice of inquiry in docket FC988. The D.C. Office of the People’s Counsel supported expanding the District’s USF to include broadband as a measure to close the digital divide. “Federal and state programs, like the Lifeline program, designed to facilitate universal access to communications services, must continually evolve to ensure that cost and social barriers do not foreclose the participation of low-income and marginalized consumers,” OPC commented. The USTF should be “updated to reflect changes to the manner in which District residents use communications technologies,” it said. It’s legal for the D.C. program to support broadband because the Communications Act allows states to adopt regulations that advance universal service consistent with FCC rules, and the federal program now supports broadband, OPC said. Section 706(a) directs state commissions to encourage deployment of advanced telecommunications capability, it said. To further close the divide, OPC said the PSC should set up a schools and libraries fund through USTF to supplement the federal E-rate program, and help subsidize the cost of computers for District schoolchildren who participate in the National School Lunch program. In an interview last week, PSC Chairwoman Betty Ann Kane said she expects the her agency will align Lifeline rules with the updated federal program ahead of the December implementation deadline but supports a NARUC resolution seeking waivers for states that need more time (see 1611020045). “It will be tight” meeting the deadline in the District, but doable, she said. Lifeline isn’t a statutory program there, so the PSC merely must make rule changes, she said. However, some other states need legislators to change the statute and probably won’t make the FCC’s deadline, she said.
A draft order by FCC Chairman Tom Wheeler that would provide nearly $500 million in support every year for five years for Phase II of a mobility fund is facing some problems on the eighth floor with a vote scheduled for next week’s commissioners' meeting, agency and industry officials said Tuesday. One FCC official said the order could potentially be held for a later vote, possibly at the December meeting.
Network Services Solutions and its CEO may be fined nearly $21.7 million by the FCC for wire fraud and overbilling the USF Rural Health Care (RHC) program. Also, the commission plans to order the company to refund $3.5 million in improper payments received through the program, the agency said in a Friday news release announcing the notice of apparent liability. Network Services and CEO Scott Madison allegedly used forged and false documents to seek funding from the program, violating the federal wire fraud statute and the program’s competitive bidding rules, the FCC said. Never before has the agency issued an enforcement action involving the RHC program or proposed a fine for wire fraud related to a USF program, the commission said. “Forgery, bribery, bid rigging, and fraud are absolutely unacceptable in any federal program,” said Enforcement Bureau Chief Travis LeBlanc. “The Commission calls on Network Services Solutions and its CEO to account for any misuse of federal funds in this vital program that assists rural communities with access to critical services for health care.” Commissioners Ajit Pai and Mike O’Rielly approved in part and dissented in part. In a statement, Pai agreed that the FCC should recover the unlawfully taken funds, bar the company from getting any further USF subsidies and levy a “hefty fine.” But he questioned the legal reasoning supporting the amount. The NAL “fatally compromises our ability to impose a lawful forfeiture of more than $189,361 upon the carrier,” the Republican commissioner said. Lukas Nace's Russell Lukas, lead attorney for Network Services Solutions, said the company "has cooperated with the FCC in this investigation and looks forward to a full and complete review of the facts underlying the allegations."
A draft order on a new mobility fund, circulated by FCC Chairman Tom Wheeler for the Nov. 17 commissioners' meeting (see 1610270054), is raising some concerns in industry. AT&T complained about the approach in a Monday blog post. Other industry players are reporting on recent meetings with officials prior to an expected sunshine notice cutting off further lobbying. The agency approved a one-time mobility fund in 2011 and five years later is moving forward on Phase II, as Wheeler promised the Competitive Carriers Association in September (see 1609200058).
Tuesday's elections could spell the end of line for some of Capitol Hill’s prominent voices on telecom and tech policy, particularly in the Senate but also the House. Senate Commerce Committee members up for re-election have been particularly vulnerable in a chamber where Democrats are believed to have a decent chance of retaking power, while lawmakers of both parties on the House Communications Subcommittee are virtually all safe. Telecom has seeped into some campaigning.
The Wireline Bureau sought public advice after demand for Alternative Connect America Cost Model (A-CAM) support exceeded the 10-year budget set by the FCC by more than $160 million annually. The bureau said 216 rate-of-return companies submitted letters electing 274 separate offers of A-CAM support in 43 states. NTCA wasn’t surprised by the high demand, and the rural association plans to meet immediately with the agency to offer suggestions, said Senior Vice President Mike Romano in an interview Thursday.
Alaska Communications welcomed the FCC's Monday order setting its service duties for using $19.7 million in annual Connect America Fund Phase II "frozen" USF subsidy support to deploy broadband in the state (see 1610310056). The company "is pleased to reach this important milestone with the FCC, setting the stage for the single largest deployment of affordable broadband under any one program in Alaska,” said Leonard Steinberg, senior vice president-legal, regulatory and government affairs, in a release Tuesday. The funding will assist broadband expansion to rural communities along Alaska's highways but doesn't address middle-mile needs for deploying affordable broadband in bush communities not accessible by road, it said.
New York state officials cited wide support for the state's request for expedited waiver of Connect America Fund requirements that Phase II broadband subsidy support in New York be awarded through competitive bidding. But some in the industry said in replies posted in FCC docket 10-90 that legal issues remain. Empire State Development Corp. is seeking a waiver that would allow it to tap federal CAF II support, declined by Verizon in New York, to help fund the state's own reverse auction of broadband subsidies for the same areas targeted by the FCC auction (see 1610260057). “The minimal opposition to the Petition was based on inaccurate factual and legal assertions of the waiver request and the many public interest benefits it would bring,” New York said. ViaSat said the record confirms legal barriers to granting the request. The waiver sought by New York is inconsistent with federal universal service policy and the statute governing federal USF distribution, the company said. The American Cable Association said the petition has “many potential benefits” for spreading broadband, but opposed it as “legally infirm” and suggested New York reconsider. USTelecom cautioned the FCC not to lose a national focus. It said the agency "must ensure that it balances any equitable allocation of CAF funds among the states, with the need to ensure the overall integrity of the CAF fund.”