The February FCC net neutrality order may provide momentum to any congressional proposal to end the FTC’s common carrier exemption, industry observers told us. That exemption precludes FTC Act Section 5 jurisdiction over common carriers subject to the Communications Act, and the FCC order reclassifies broadband as a common carrier service under Title II of the Communications Act, potentially upsetting jurisdictional boundaries. Any proposal may get entangled in net neutrality, complicating the issue in a messy legislative battlefield over agency authority for the FCC and FTC, observers said.
Beyond the usual difficulty in getting the Supreme Court to take a case, petitions (see 1504080050) seeking review of the 2011 USF/intercarrier compensation order (see 1405270045) face some obstacles, former FCC Chairman Reed Hundt and other telecom attorneys told us. U.S. Cellular’s argument that the net neutrality order adds to the urgency to deal with the agency’s Telecommunications Act 706 authority through the Universal Service Fund/ICC case is unlikely to move justices, they said.
U.S. Cellular urged the U.S. Supreme Court to decide the FCC doesn't have authority under Telecommunications Act Section 706 to regulate broadband, and said in its Wednesday brief that if the court agrees it would remove the “strong legal foundation” of both the net neutrality and the USF/intercarrier compensation order (ICC). “The validity of both sets of rules will have to be addressed in further rulemakings,” the brief said. The argument came as the company replied to the FCC’s opposition to various petitions for the court to review the 2011 USF/intercarrier compensation order (see 1405270045).
NCTA’s proposal to cut Connect America Funds from ILECs that don't meet the new FCC 25 Mbps download/3 Mbps upload standard (see 1501290043) is “baseless,” Frontier Communications said in reply comments on a notice of inquiry on ways to increase broadband deployment. NCTA had said in initial comments that the funds should be shifted to any broadband provider able to meet the standard (see 1503060064). Frontier called the proposal a “last-minute attack” and said pursuing the change would “severely delay the deployment of broadband to rural areas.” NTCA and the American Cable Association, in replies posted Tuesday in docket 14-126, also urged the agency to enact reforms to curb increasing programming costs. An ACA study took particular aim at “'Cablization’ of the Internet,” in which content providers charge ISPs fees on a per-subscriber basis to permit the broadband providers’ customers to access the content, said ACA's filing. Should “content providers pursue this business model, the effect on broadband deployment will almost certainly be immediate and grave,” ACA said. Among other reforms, the association urged the agency to monitor for “cablization” and address commercially unreasonable actions. Using Telecom Act Section 706 to deal with the costs of programming would not “present the challenges” of using the provision to pre-empt state anti-municipal broadband laws, the cable association said. Making video content available at affordable rates and under reasonable terms and conditions “spurs rural broadband investment,” NTCA said. It urged changes to USF to support smaller rural companies. Frontier noted that CAF Phase II is “specifically targeted to the areas that most need funding.” By requiring only 10 Mbps download/1 Mbps upload speeds for CAF, the agency is recognizing “a tradeoff between the number of households reached and the speeds achieved,” Frontier said.
Rep. Adam Kinzinger, R-Ill., wants to pursue “legislation to ensure forbearance will be permanent” in the FCC net neutrality order, which reclassifies broadband as a Communications Act Title II service and forbears from many Title II provisions, his spokeswoman told us this week. Kinzinger pressed FCC Chairman Tom Wheeler on the possibility at an FCC oversight hearing last month, as did Sen. Ted Cruz, R-Texas, zeroing in on making rate regulation forbearance permanent.
The FCC should set a timetable and move forward with USF contribution overhaul, Ad Hoc Telecommunications Users Committee counsel Andrew Brown, of Levine, Blaszak, told Nicholas Degani, an aide to Commissioner Ajit Pai, and Travis Litman, an aide to Commissioner Jessica Rosenworcel, in separate meetings March 31, according to an ex parte filing posted in docket 09-51 Thursday. The group represents large businesses in various industries that purchase telecommunications and IT services. The agency made significant progress in USF spending in its 2011 overhaul and temporarily stabilized the fund's size, Brown and consultant Susan Gately told the aides, according to the filing. The agency never finished the updates because it hasn’t dealt with contributions to the fund, the filling said. The fund’s contribution factor will continue to rise and December’s $1.5 billion increase in the E-rate annual spending cap (see 1412110049) threatens the stability of the fund, the ad hoc committee said. An agency federal-state joint board is charged with recommending by Tuesday whether broadband customers should pay into USF, though a footnote in the net neutrality order said the recommendation may be slightly delayed (see 1503120053).
Ohio’s Department of Rehabilitation and Correction (DRC) said it negotiated its current contract with Global Tel*Link (GTL) to “drastically reduce” its inmate calling service (ICS) rates effective Wednesday to 5 cents per minute plus applicable taxes and federal USF fees for all calls within the U.S. The rate reduction is meant to comply with the FCC’s 2013 ICS rate cap order, which took effect last year, DRC said Tuesday. The FCC capped interstate call rates at 25 cents per minute for collect calls and 21 cents per minute for debit and prepaid calls. A 15-minute collect call cost would be capped at $3.75 under the FCC’s rules, while a 15-minute prepaid call fee would be capped at $3.15 (see report in the Aug. 12, 2013, issue). A 15-minute inmate call in Ohio cost $17.14 before the rate reduction, DRC said. GTL said it plans to replace all of its more than 2,000 phones in Ohio prisons by the end of the year and will install an additional 500 phones.
The Wireless ISP Association urged the FCC to exempt small ISPs from any USF charges that may be imposed on broadband. Imposing new costs and burdens on unsubsidized broadband providers “will make broadband less affordable for customers, including many in those areas most in need of access services,” WISPA said in a letter to the commission posted Tuesday in docket 96-45.
A petition for U.S. Supreme Court review of the 10th U.S. Circuit Court of Appeals denial of petitions to review the 2011 USF/intercarrier compensation (see 1405270045) order should be denied, the FCC said in a brief filed with the high court. U.S. Cellular, Cellular South and the Rural Independent Competitive Alliance said the FCC lacked authority to require broadband buildout in order to receive USF, but none of the petitioners has standing to challenge the requirement, the agency said. The petitioners’ argument rests on the classification of broadband as an information service, but “the FCC has now reversed that classification,” the brief said. The appeals court also correctly said the agency was authorized to impose the broadband requirement even when broadband was classified as an information service, the agency said.
Industry groups are upset over an FCC policy statement creating what they call “draconian” treble damages for amounts owed to USF and other funds. CTIA, Comptel, NCTA and USTelecom filed petitions for reconsideration and a stay, saying the statement violates notice requirements and the “inflexible” triple damages violates the Communications Act. ITTA filed comments supporting the joint petitions.