A bitterly divided FCC voted 3-2 Thursday to approve a package of proposals and actions to move the Lifeline USF program toward broadband coverage and move to improve oversight and counter abuses. The FCC's Democratic majority said the NPRM and orders would reboot Lifeline for the 21st century by helping low-income consumers gain broadband access and by undertaking further administrative restructuring to ensure program efficiency and integrity. But the Republican minority said Democratic refusal to impose or even propose a Lifeline budgetary cap was fiscally irresponsible and invited further waste, fraud and abuse.
FCC items moving Lifeline USF toward broadband coverage and authorizing VoIP numbering direct access appear likely to be approved Thursday, despite some continuing controversies and even resistance, agency and telecom industry officials told us. The VoIP numbering item is a "slam dunk 5-0 [vote]," said an agency official, but questions remain about whether Lifeline will draw dissent. Signaling different points of emphasis, Commissioner Mignon Clyburn said Wednesday it was time to "reboot" the Lifeline program for this century, while Commissioner Ajit Pai said the FCC needed to focus on establishing a Lifeline budget and reining in abuses if it's going to authorize broadband support.
Judge Patricia Millett of the U.S. Court of Appeals for the D.C. Circuit said she and colleagues are reluctant to agree to en banc review of panel rulings, and judges generally are chosen randomly to hear cases. Answering questions at an FCBA seminar Monday night, Millett, who was nominated by President Barack Obama and joined the court in December 2013, offered a rare look into the inner workings at the D.C. Circuit, which regularly reviews challenges to FCC orders. Also appearing, two senior attorneys of the FCC Office of General Counsel reviewed major telecom and media cases from the past 12 months, with one attorney hailing the agency's victory in defending its 2011 USF and intercarrier compensation order as "stunning" and suggesting it offered some lessons.
Frontier Communications agreed to accept $283.4 million in annual USF support to provide broadband access to more than 650,000 unserved rural locations over the next few years, the company said Tuesday in a news release. Frontier accepted the entire amount it was offered under the FCC Connect America Fund Phase II program, becoming the first price-cap telco to announce its decision. The FCC gave price-cap carriers until Aug. 27 to decide whether to accept CAF Phase II funding, state by state (see 1504290066). Frontier accepted funding for all its 28 states.
The FCC proposed a Q3 industry USF contribution factor of 17.1 percent, said the Office of Managing Director in a public notice in docket 96-45 that also appeared in Monday's Daily Digest. That means telecom carriers would generally have to contribute 17.1 percent of their interstate and international telecom revenue to the USF mechanism, which is slightly down from Q2's 17.4 percent but up from Q3 2014's 15.7 percent. The USF contribution factor has been trending up over time as USF demand increases and the industry interstate/international telecom revenue base erodes. Industry contributions pay for USF's four programs, which are projected to need $2.17 billion in Q3. High-cost rural support remains the most expensive program, needing $1.14 billion (after certain adjustments), followed by schools and libraries (E-rate discounts) at $618.9 million, low income (Lifeline) at $344.6 million, and rural healthcare at $68 million. The industry's interstate/international end-user telecom revenue base was calculated at $15.05 billion, which is down from Q2's $15.15 billion and Q3 2014's $16.02 billion. After adjustments to account for "circularity" (taking out the amount needed to fund USF) and uncollectible contributions, the industry revenue number is divided by the $2.17 billion in projected USF demand to produce the 17.1 percent industry contribution factor. If the FCC takes no further action, the proposed contribution factor will be deemed approved June 26. Carriers are allowed to recover line-item fees on consumer phone bills but those fees can't exceed 17.1 percent of the interstate/international telecom charges.
As the FCC takes up Lifeline reform, it mustn't ignore the important role played by wireless carriers in the USF program, CTIA President Meredith Baker said in a letter to the agency members posted Friday in docket 11-42. “Thirty years after its creation, Lifeline has evolved to reflect the increasing role of wireless as the primary means of communications for millions of low-income and diverse, underserved communities,” Baker wrote. “In the decade since wireless entered the Lifeline program, the telephone subscribership gap between low-income and all households was cut nearly in half, representing over 3 million low-income consumers.” CTIA is also committed to helping clean up the Lifeline program, further making it “more efficient, accountable, and effective,” she said. “Ensuring the fiscal integrity of the Lifeline program is a high priority because wireless carriers and their consumers make up over 44 percent of the contribution base of the Commission’s Universal Service programs.”
Sen. Amy Klobuchar, D-Minn., urged the White House to support reauthorization of the Broadband Technology Opportunities Program, in comments posted Friday on the Broadband Opportunity Council’s (BBOC) request for comment on broadband availability and deployment issues. A group of House Democrats led by House Communications Subcommittee ranking member Anna Eshoo, D-Calif., and Rep. Jared Huffman, D-Calif., urged the U.S. Department of Agriculture in a separate filing to “modernize” regulations for the Rural Utility Service’s Telecom Infrastructure Loan and Loan Guarantee program to “better facilitate high-speed rural broadband deployment.” BBOC, which the White House created March 23 to spur broadband investment and adoption (see 1503230064), sought comment on ways the federal government can modernize “outdated regulations,” identify regulatory barriers to broadband deployment and promote broadband adoption.
Friday was a “red letter day” for consumers, innovators and those who build networks, FCC Chairman Tom Wheeler told the Consumer Advisory Committee Friday, as February net neutrality rules formally took effect (see 1506120036). Wheeler said, “There have never been rules this extensive and this flexible going forward in existence.” The CAC received a briefing on the role it will play in helping shape how the rules are enforced.
AT&T, CenturyLink and Verizon expressed concerns about a possible FCC requirement that telecom carriers providing Lifeline-supported service retain sensitive consumer documentation that's submitted to demonstrate eligibility for the USF program. The large telcos said the FCC shouldn't move forward with the proposal or should consider it further in a Lifeline NPRM the FCC is planning to vote on along with a Lifeline order at its June 18 meeting. Meanwhile, wireless Lifeline providers and others continue to lobby the FCC, backing the possible expansion of traditional Lifeline voice support to broadband access.
The Competitive Carriers Association supports Lifeline overhaul, teed up for a vote at next week’s FCC meeting (see 1505280037), but not at the expense of other USF programs, CCA officials said in a series of meetings at the agency. CCA members participate in the program, it said in an ex parte filing posted Wednesday in docket 11-42. “CCA and its members support efforts to restructure the Lifeline program to meet today’s most pressing communications needs, including providing low-income consumers affordable access to broadband, as long as the Commission does not abandon support for voice services -- especially in rural areas -- and these changes are not made at the expense of other USF programs.” Some CCA members serving rural communities are concerned about uncertainty on available high-cost universal service support “for operating, upgrading, and expanding wireless networks in rural areas,” CCA said. This support is key to “facilitating investment, which promotes competition and broadens the number of providers who can offer services through the Lifeline program,” the association said.