“Operational demands” have driven up the FCC’s budget request, which is $388 million for FY 2016, agency Managing Director Jon Wilkins plans to testify Wednesday before the House Communications Subcommittee. “For FY 16, the Commission has been forced to adjust its costs upward to manage and execute activities leading to the termination of our headquarters lease in 2017,” Wilkins says in his written testimony. “Over 70 percent of our requested increase supports ‘unavoidable’ costs such as the restacking and move, inflationary increases, and the OIG [Office of Inspector General] base increase.” The hearing, scheduled for 10:30 a.m. in 2322 Rayburn, is focused on FCC reauthorization. Wilkins will argue that the FCC headquarters transition is “an opportunity to create greater cost savings and efficiencies by significantly reducing the Commission's footprint and instituting new management techniques that encourage greater use of shared space,” saving “over $100 million over the life of our new post-2017 lease.” He will say FCC licensees “will bear the brunt of the move” and that the agency is attempting to “assess fees in a fair and equitable manner,” and will defend the agency as fiscally responsible. This FY 2016 budget will “properly align USF expenditures with cost outlays,” thereby “shifting USF funds to cover our salary and compensation expenditures directly related to USF activities,” he will testify. He plans to discuss the “tough budget decisions” the FCC faced as a result of receiving $36 million less than requested last year. “Flat funding has led to staff reductions,” he will say, also warning of big information technology challenges given the agency’s aging systems. “Limited funds have delayed many improvements and threaten to cost us more each day that we are unable to move ahead.”
Despite FCC Chairman Tom Wheeler’s and Commissioner Mignon Clyburn’s remarks Thursday in approving net neutrality rules, small rural broadband providers are subject to Communications Act Title I, which regulates information services, not to Title II common-carrier regulations as Wheeler and Clyburn claimed, USTelecom Senior Vice President-Law and Policy Jonathan Banks wrote in a blog post Friday. In answering fears the agency would regulate broadband rates after reclassifying broadband under Title II, Clyburn said at the commission meeting that the agency hadn't regulated the rates of 700 rural broadband providers, even though they were subject to “full panoply of Title II regulation.” The “hideous complexities” of the commission’s telecom regulations, Banks said, led the companies to provide Title II wholesale transport services they “’sell’” to themselves, while providing Title I broadband service to customers wanting Internet access, Banks wrote. The Title II wholesale service “is fully and completely regulated by the commission, including rate regulation, down to the penny,” Banks wrote. The “misunderstanding illustrates the lack of clarity and understanding around the debate of Title II being a workable regulatory model for achieving an open and vibrant Internet,” Banks wrote. The rural broadband providers have to contribute to the USF based on their Title II revenue, he said. Clyburn noted that the rural providers make USF contributions, but said, “amazingly, the sky has not fallen and things are OK.” Clyburn’s office did not comment Monday. The Title II regulations Banks referred to don't include the forbearance in the "light touch" net neutrality regulations the commission approved, an agency spokesman said.
The net neutrality order approved Thursday (see 1502260043) prevents states for now from making broadband contribute to states' USF, an agency official told us. Commissioner Mignon Clyburn, in voting for the overall order, opposed the restriction, but NARUC General Counsel Brad Ramsay said he doesn’t expect it to cause the same kind of backlash from states as the commission’s pre-emption at the same meeting of North Carolina and Tennessee municipal broadband laws (see 1502260030).
The Senate Communications Subcommittee will take a swing in the months ahead at a Communications Act overhaul, FCC oversight and making more spectrum available, Chairman Roger Wicker, R-Miss., said Tuesday at Comptel’s Washington summit. He emphasized the FCC’s responsibility “to encourage expansion of rural broadband” and cited a letter he wrote the agency last year to make sure rural consumers receive access to Mobility Fund II support.
Despite FCC discussions about adding broadband to Lifeline, "there should be adequate controls and deterrents in place before considering a revamp of the program,” Commissioner Mike O’Rielly said in a blog post Friday. There's a “legitimate debate whether the Lifeline program should be abolished or significantly scaled back rather than expanding its mission,” he said. O’Rielly proposed a number of principles in examining the program. Lifeline should have a budget, he said, saying it’s the only USF program without one. If broadband is expanded, the reimbursement rate shouldn’t be increased to pay for it, he wrote. The commission should decide what services should be supported, he said. To prevent “double-dipping,” a household should be able to get a subsidy for a voice plan or a combined plan with voice and broadband, but shouldn't be able to get subsidies for both, he wrote. O’Rielly also proposed tightening eligibility requirements, requiring financial contributions from recipients and making carrier involvement voluntary.
FCC Commissioner Ajit Pai disputed Chairman Tom Wheeler’s claims that the net neutrality draft order wouldn't result in rate regulation as “flat-out false.” Pai also assailed Wheeler at a Tuesday news conference and in a fact sheet for not making the document public before the commission’s scheduled Feb. 26 vote. Saying he was “correcting the record” and last week’s “carefully stage-managed rollout” of the draft order (see 1502040055), Pai highlighted what he said are some previously undisclosed aspects of the order that made it “worse than what I imagined.” Among them, Pai said data usage plans would “now be subject to regulation."
The FCC assertion that Chairman Tom Wheeler’s draft net neutrality order would impose no taxes or fees was disputed Friday by Commissioner Ajit Pai, who claimed in a statement it “explicitly opens the door to billions of dollars in new taxes on broadband.” An economist also claimed in a Forbes op-ed that the plan would lead to at least $500 million in federal fees and potentially more in state charges. An FCC spokesman Friday stood by a Wednesday fact sheet’s assertion, telling us the Internet Tax Freedom Act (ITFA) applies to broadband, even at the state and federal level.
Proposed new net neutrality rules based on classifying the Internet as a Title II utility under the Communications Act look like they'll disproportionately burden smaller cable operators and leave cable ISPs open to blocking by leaving out edge providers and content companies, officials at several cable companies and American Cable Association President Matt Polka said in interviews Wednesday. FCC Chairman Tom Wheeler indicated in unveiling some details of the draft net neutrality order that day that forbearance will relieve many of the more burdensome aspects of Title II regulation (see 1502040055). But Polka said that might not immediately alleviate the rule's effect on cable operators. It also remains unclear how Title II rules will affect satellite broadband providers, industry officials said.
The FCC portrayed the reclassification of broadband in Chairman Tom Wheeler’s net neutrality proposal as a modernized Title II. But pledges from senior agency officials not to impose traditional Communications Act common-carriage regulations like rate regulation didn't ease the concerns of reclassification’s opponents.
The FCC’s FY 2016 budget proposal provides additional details on commission plans to move or “restack” agency headquarters and a move to modernize its IT system, which was pushed beyond the breaking point when net neutrality comments flooded into the agency last year. The FCC also proposed to trim 45 full-time equivalent (FTE) employees between FY 2014 and 2016, with only the Office of Inspector General (IG) seeing an increase. The FCC would have its smallest staff in decades, at 1,671, under the proposal. The commission's own budget document provides much more detail than the larger administration budget released Monday (see 1502020051).