NARUC challenged the FCC Lifeline decision to bypass state regulators in setting up a national process for designating providers eligible for new broadband low-income USF support (see 1603310056). "Congress specifies that the FCC simply has no role in the [eligible telecom carrier] designation process unless the State cannot act as a result of State Law," said the state regulatory association in a petition for review Friday with the U.S. Court of Appeals for the D.C. Circuit (NARUC v. FCC, No. 16-1170). It said if upheld on review, the FCC's "flawed view of the power of an Agency vs. the power of Congress to specify the scope of ... agency powers will break new ground transferring yet another substantial swath of authority from Congress to agencies." The NARUC challenge isn't a surprise (see 1604010042).
The industry USF contribution factor for Q3 will stay at 17.9 percent of carrier interstate and international telecom end-user revenue, industry consultant Billy Jack Gregg said in an email update Wednesday. He said the Universal Service Administrative Co. projected industry long-distance telecom revenue for Q3 at $14.56 billion, about $181 million less than in the current quarter. The revenue drop is part of a downward trend that is putting upward pressure on the contribution factor over time, he said, but USF demand for Q3 also is projected to edge down to $2.18 billion, providing an offset.
USF eligible telecom carriers and other stakeholders must file FCC Form 481 by July 1 for "carrier annual reporting data" after the Office of Management and Budget approved the form and its instructions Friday, said a Wireline Bureau notice in docket 14-58 listed in Wednesday's Daily Digest.
A federal court pushed back the briefing schedule for AT&T challenges to two FCC orders from December 2014 and December 2015 on price-cap telco USF duties (see 1601110036). An order (in Pacer) issued Wednesday by the U.S. Court of Appeals for the D.C. Circuit granted an unopposed AT&T motion to extend a previous timetable (see 1605170061) due to deadline conflicts faced by the company's counsel. An initial joint brief from petitioners and supporting intervenors is now due July 12; a brief from respondents FCC and DOJ is due Sept. 2; and a joint reply brief from petitioners and supporting intervenors is due Sept. 19. Petitioner AT&T is joined in the challenges by CenturyLink as a petitioner/intervenor and USTelecom as an intervenor. The consolidated case is AT&T v. FCC, No. 15-1038.
FCC Commissioner Ajit Pai said he appreciated the "responsiveness" of Universal Service Administrative Co. CEO Chris Henderson, who wrote three times in May to answer an April 18 letter from Pai seeking USAC help in fighting waste, fraud and abuse in the Lifeline USF program (see 1604180074). Pai said Henderson's responses confirmed that Total Call Mobile "was not alone" in "apparently overriding third-party identity verification (TPIV) safeguards"; apparent duplicate and ineligible enrollments drew an FCC-proposed $51 million fine against the company (see 1604080032). "Three of the companies identified by Total Call Mobile's agents indiscriminately overrode the TPIV safeguards between October 2014 and February 2015," Pai said in a Tuesday letter to Henderson that blacked out the companies' names. "The aggregate numbers for just these five months of enrollment are staggering. Roughly one third of the 2.5 million Lifeline subscribers enrolled by wireless resellers, or 821,482 subscribers, were enrolled using TPIV override," Pai said. Even without Total Call Mobile included, 11 other wireless resellers were responsible for 616,937 enrollments, he said: "That's outrageous." Pai commended USAC for changing the TPIV override process in February 2015, but said he remains concerned "that existing safeguards still may let unscrupulous carriers exploit the program." He said USAC staff still doesn't review "any document that verifies a person's identity" before a TPIV override is authorized. "Integrity of the process relies on the integrity of the carriers -- the only ones who know if a subscriber's identify is legitimate," he said. Pai asked Henderson for more information on 13 wireless resellers that USAC said frequently engaged in overriding and that weren't identified in his April 18 letter, and to answer various questions about USAC processes and policies.
Rural telcos asked the FCC to reconsider parts of its rate-of-return USF order aimed at helping small carriers maintain and expand broadband service in high-cost areas (see 1603300065). The FCC should address issues of "sufficiency and reasonable comparability," a "cost recovery "black hole" and broadband cost "model election budget issues," among other things, said NTCA in its petition Wednesday in docket 10-90. A WTA email said its petition seeks reconsideration in four areas: "the Commission should reconsider and strengthen its requirements for qualifications as 'unsubsidized competitors' to ensure that customers in affected 'competitive' areas do not suffer loss or degradation of service; the Commission should clarify and expand its rules regarding the treatment of transactions after the ACAM [cost model] and Rate of Return paths are implemented; the Order’s build-out obligations do not consider virtually certain price increases and delays regarding fiber optic cable and construction contractors; and the Order’s benchmark and budgetary controls render it unlikely that retail broadband rates can comply with reasonably comparability ceilings." A Madison Telephone Co. petition asked the FCC to eliminate a “parent trap” rule, which governs high-cost USF support when rural exchanges are sold or transferred.
The FCC approved a Connect America Fund Phase II subsidy auction plan to provide $215 million in annual broadband-oriented support to unsubsidized rural areas traditionally served by larger telcos. At their Wednesday meeting, commissioners voted almost unanimously to adopt an order setting the CAF II auction framework and a Further NPRM to flesh out certain auction specifics, including "weights" for bidders offering different broadband service levels. Commissioner Mike O'Rielly partially dissented on the FNPRM, but even he credited his colleagues with making a fiber-oriented draft item more balanced among technologies: "We are still a long way from home, but at least we're back on course for now."
The FCC said streamlined review of a "study area" waiver petition filed by two rural carriers is inappropriate. Comments are due June 22 and replies July 7 on the waiver sought by Mutual Telephone Co. of Sioux Center, Iowa, and Winnebago Cooperative Telecom Association, said a Wireline Bureau public notice in docket 96-45. The petition asks to "redefine the Consolidated Communications of Iowa f/k/a Heartland Telecommunications Company of Iowa (Heartland) study area" by breaking off the Bancroft and Lakota exchanges to form a new study area for Winnebago, with the remaining Heartland exchanges to be owned by Mutual, the PN said. Although the bureau noted petitioners intend to honor broadband-oriented Connect America Fund Phase II buildout commitments and say the study area change won't raise USF burdens, it said the request raises questions that need further evaluation.
A growing cable industry sense of its concerns being ignored by FCC Chairman Tom Wheeler has raised the likelihood that whatever rules come out of the agency regarding set-top boxes, broadband privacy and business data services almost surely will be met by legal appeals, cable executives and experts tell us. "I think everybody takes for granted that everything is going to end up in court," MCTV President/American Cable Association Chairman Robert Gessner said in an interview Friday.
The FCC plans to consider a Connect America Fund auction order and Further NPRM Wednesday "regarding a competitive bidding process" for CAF Phase II high-cost USF support, said the agenda for the commission's monthly meeting. The FNPRM wasn't mentioned in a May 4 tentative agenda for the meeting that listed an order "adopting rules implementing a competitive bidding process" for CAF Phase II; nor was it mentioned by FCC Chairman Tom Wheeler in a blog post discussing the agenda, nor by an agency official who said the order would set a general framework for the auction, followed by a public notice seeking further comment and another PN setting auction procedures (see 1605050036).