News Update - August 2022
Rural Digital Opportunity Fund: FCC Ready To Authorize 2,072 RDOF Winning Bids
August 31, 2022 – The FCC’s Rural Broadband Auctions Task Force, Wireline Competition Bureau, and Office of Economics and Analytics have announced they are ready to authorize support for 2,072 Rural Digital Opportunity Fund (RDOF) Phase I auction winning bids. This is the twelfth set of RDOF winning bids that are ready to be authorized. A list showing each winning bid ready to be authorized, the corresponding long-form applicant, each winning bid’s total amount of 10-year support, and other details is available as Attachment A to the Public Notice. The 2,072 winning bids belong to AMG Technology Investment Group, LLC (Nextlink Internet), California Internet, L.P. dba GeoLinks, Connect Everyone LLC, GigaBeam Networks, LLC, Safelink Internet LLC, and Shenandoah Cable Television, LLC.
Attachment B contains a list of winning bids associated with winning bidders or their assignees that have notified the FCC that they do not intend to pursue all or some of their winning bids in a state. RDOF support will not be authorized for the winning bids listed in Attachment B.
To be authorized to receive the listed support amounts, however, each RDOF winning bidder must submit acceptable irrevocable stand-by letters of credit and Bankruptcy Code opinion letters for each state where they have winning bids that are ready to be authorized prior to 6:00 p.m. ET on September 15, 2022. The FCC will continue to review RDOF long-form applications on a rolling basis, and will announce other approvals of long-forms in future public notices. Additional information on broadband providers set to receive RDOF Phase I auction support and RDOF funding amounts by state are available on the FCC’s RDOF auction website.
Treasury Announces $408 Million In Capital Projects Fund Awards For Arkansas, Connecticut, Indiana, Nebraska, & North Dakota
August 30, 2022 – The U.S. Department of the Treasury has announced the approval of Coronavirus Capital Projects Fund awards for Arkansas, Connecticut, Indiana, Nebraska, and North Dakota. Total award funding amounts to approximately $408 million, and will be used to connect more than 90,000 homes and businesses to affordable, high-speed internet service. Below is a short summary of each state’s CPF awards:
Arkansas was approved for $47.5 million which will be distributed through the Arkansas Rural Connect grant program to connect 5,500 homes and businesses by building high-speed internet service in rural and remote areas lacking reliable internet connections.
Connecticut was approved for $40.8 million which will be distributed as competitive grants through the Connecticut Broadband Infrastructure Program. Funding will be used to connect 10,000 homes and businesses to affordable high-speed internet by focusing on low-income and multi-family home and business and areas lacking reliable high-speed internet connections.
Indiana was approved for $187 million which will be distributed through the Next Level Connections Broadband Grant Program to connect 50,349 homes and businesses to affordable, reliable high-speed internet services.
Nebraska was approved for $87.7 million which will be distributed through the Nebraska Broadband Bridge Program to connect 21,000 homes and businesses to affordable, reliable high-speed internet services.
North Dakota was approved for $45 million which will connect 3,965 homes and businesses to affordable, reliable high-speed internet service.
T-Mobile & SpaceX Announce Plan For Satellite-To-Cellular Service
August 25, 2022 – T-Mobile and SpaceX have announced a new partnership they call “Coverage Above and Beyond,” which is a satellite-to-cellular service that is expected to bring cell phone connectivity everywhere. The service will utilize T-Mobile’s nationwide mid-band spectrum and SpaceX’s Starlink low Earth orbit satellite constellation to initially provide text message capability. According to T-Mobile, the vast majority of smartphones already on T-Mobile’s network will be compatible with the new service using the device’s existing radio. SpaceX provided the following description of the new satellite-to-cellular service:
Leveraging Starlink, SpaceX’s constellation of satellites in low Earth orbit, and T-Mobile’s wireless network, the companies are planning to provide customers text coverage practically everywhere in the continental US, Hawaii, parts of Alaska, Puerto Rico and territorial waters, even outside the signal of T-Mobile’s network. The service will be offered starting with a beta in select areas by the end of next year after SpaceX’s planned satellite launches. Text messaging, including SMS, MMS, and participating messaging apps, will empower customers to stay connected and share experiences nearly everywhere. Afterwards, the companies plan to pursue the addition of voice and data coverage.
Kansas Broadband Office Receives Applications For Capital Project Fund Program; Announces Public Comment Window
August 25, 2022 – The Kansas Office of Broadband Development has announced it has received 141 applications seeking broadband funding from the Capital Project Fund (CPF) Program. In total, the applications request over $600 million in funding from the $83.5 million program. The Kansas Broadband Office has also announced that the public comment window for 118 Phase Two CPF Program applications is now open. The comment window is available from August 24, 2022, through 11:59 pm CST September 6, 2022. The public comment portal and applications are available online. Application materials include project summaries and maps of the proposed service areas. The Kansas Office of Broadband Development encourages ISPs, the public, and other interested stakeholders to participate by expressing either support or specific concerns for the proposed CPF projects. CPF grant applicants will have an opportunity to respond to any public comments directed at their projects. The Kansas Broadband Officer intends to post comments and grant applicant responses received during the public comment period to the CPF Grant Program Public Comment website.
FCC Releases Mobile Wireless Carriers’ Responses To The FCC’s Request For Information About Data Retention & Privacy Practices; Announces Investigation
August 25, 2022 – Federal Communications Commission Chairwoman Jessica Rosenworcel has released the responses from the nation’s 15 top mobile carriers to the FCC’s request for information about their data retention and data privacy policies and practices. In July 2022, the FCC requested the information by asking each wireless providers to provide information on their policies around geolocation data, such as how long geolocation data is retained and why and what the current safeguards are to protect this sensitive information; their processes for sharing subscriber geolocation data with law enforcement and other third parties’ data sharing agreements; and whether and how consumers are notified when their geolocation information is shared with third parties. Responses from each of the 15 top mobile carriers are available on the FCC’s website. Chairwoman Rosenworcel released the following statement about the FCC’s inquiry and the mobile carriers’ responses:
“Our mobile phones know a lot about us. That means carriers know who we are, who we call, and where we are at any given moment. This information and geolocation data is really sensitive. It’s a record of where we’ve been and who we are. That’s why the FCC is taking steps to ensure this data is protected.”
“Today, I’m publishing the responses I received from mobile carriers on how they handle geolocation data to help shed light on this issue for consumers. Additionally, I have asked the Enforcement Bureau to launch a new investigation into mobile carriers’ compliance with FCC rules that require carriers to fully disclose to consumers how they are using and sharing geolocation data,” said Chairwoman Rosenworcel. “Finally, if you, as a consumer, have concerns or complaints about how your provider is handling your private data, the FCC is making it easier for you to file complaints and make your concerns known – so we can take action under the law.”
Mergers & Acquisitions: ATN Purchasing Sacred Wind & Operating Companies In New Mexico
August 25, 2022 – The FCC’s Wireline Competition Bureau is seeking public comment on a Section 214 application filed by Sacred Wind Enterprises, Inc. (Sacred Wind) and Alloy, Inc. (Alloy) requesting consent to transfer control of Sacred Wind’s wholly-owned operating subsidiaries to Alloy. Comments are due on or before September 8, 2022. Reply comments are due September 15, 2022.
Sacred Wind is a privately-owned, New Mexico-based corporation formed in 2006 to provide, through its operating companies, telephone and broadband services to unserved and underserved homes on the Navajo Reservation and near-Reservation lands in New Mexico, as well as to Navajo schools, businesses, and government locations, such as local Navajo Chapter houses. Sacred Wind’s operating companies – the subsidiary Section 214 Holders – are Sacred Wind Enterprises, Inc. (SWC), SW DinehNet, LLC (SW DinehNet), and SWC Telesolutions, Inc. (SWC Telesolutions).
SWC is a rural incumbent local exchange carrier (LEC) and Eligible Telecommunications Carrier (ETC) serving a population of approximately 23,300 customers, 98% of whom are Navajo citizens, in an area comprising approximately 3,200 square miles. SW DinehNet is a subsidiary of SWC, an ETC, and provides competitive telecommunications and broadband services outside of SWC’s incumbent LEC territory. SW DinehNet receives Connect America Fund Phase II support in New Mexico, and has been authorized to receive $2.598 million in Rural Digital Opportunity Fund support to serve 635 locations in New Mexico. SWC Telesolutions provides interexchange services to SWC and SWC DinehNet customers and also provides broadband services in areas adjacent to SWC’s service territory.
Alloy is a Delaware holding corporation that was formed for the purpose of acquiring Sacred Wind and the Section 214 Holders. Alloy is a wholly-owned subsidiary of ATN International, Inc. (ATN), a publicly-traded Delaware corporation. ATN has affiliates that provide incumbent LEC services in the U.S. Virgin Islands and Alaska and competitive LEC, wireless, and broadband services in several states, including New Mexico.
Pursuant to a Stock Purchase Agreement, Alloy will acquire all issued and outstanding shares of Sacred Wind’s common stock, and as a result, indirect control of Sacred Wind’s wholly-owned operating subsidiaries. Immediately prior to the consummation of the transaction, ATN will contribute, via a contribution agreement, all of the issued and outstanding shares held by ATN in each of Commnet Wireless, LLC and Commnet Broadband, LLC, which are wholly owned by ATN. Because ATN will continue to have ultimate control of Commnet after the contribution of Commnet shares, the contribution is a pro forma transaction notice of which will be provided separately pursuant to Section 63.03(d) and Section 623.24(f) of the FCC’s rules. The Section 214 application will be considered on a non-streamlined basis by the FCC because the proposed transaction involves the exchange and assumption of Universal Service Fund high cost mechanism obligations.
FCC Commissioner Brendan Carr Issues Full Statement On FCC Denial Of Starlink RDOF Funding
August 24, 2022 – FCC Commissioner Brendan Car, the senior Republican on the FCC, has released his full statement on the FCC’s decision to reject Starlink Services, LLC’s long-form application to receive Rural Digital Opportunity Fund (RDOF) auction support. Starlink won $885,509,638.40 in 10-year RDOF support to serve 642,925 locations in 35 states.
Following extensive review of Starlink’s long-form application, the FCC concluded Starlink has “failed to demonstrate that [it] could deliver the promised service.” In the Public Notice denying Starlink’s RDOF long-form application, the FCC’s Rural Broadband Auctions Task Force, Wireline Competition Bureau, and Office of Economics and Analytics provided the following explanation of why they denied Starlink’s application: The Bureau has determined that, based on the totality of the long-form application, the expansive service areas reflected in its winning bids, and its inadequate responses to the Bureau’s follow-up questions, Starlink is not reasonably capable of complying with the Commission’s requirements.
In his full statement criticizing the FCC’s decision, Commissioner Carr puts forth four general reasons as to why he disagrees. Below is Commissioner Carr’s first argument against the decision:
First, the FCC’s announcement claims that the agency is acting to ‘avoid extensive delays in providing needed service to rural areas.’ Yet that is exactly the outcome that this decision ensures. The FCC’s 2020 award to Starlink secured a commitment for the delivery of high-speed Internet service to 642,925 unserved rural homes and businesses across 35 states. By reversing course, the FCC has just chosen to vaporize that commitment and replace it with . . . nothing. That’s a decision to leave families waiting on the wrong side of the digital divide when we have the technology to get them high-speed service today.
Mergers & Acquisitions: Lumen Technologies Announces FCC Has Approved Sale of Lumen ILECs To Brightspeed
August 22, 2022 – Lumen Technologies has announced that the FCC has approved the sale of Lumen’s incumbent local exchange carrier (ILEC) business in 20 states to Brightspeed. The transaction is now expected to close early in the fourth quarter of 2022, following the other remaining customary closing conditions. In August 2021, Lumen announced it had entered into an agreement to sell its ILEC business, including its consumer, small business, wholesale and mostly copper-served enterprise customers and assets, in 20 states to funds managed by affiliates of Apollo Global Management, Inc. for $7.5 billion, including debt assumption of approximately $1.4 billion. The approval announcement contained the following update on Brightspeed’s plans for the business:
Brightspeed plans to make significant investments to build an expanded fiber optics network that will bring fast, reliable internet and Wi-Fi to communities throughout the 20-state footprint it is acquiring. These plans include providing fiber facilities that are expected to reach up to three million homes and businesses over the next five years, including in many rural and suburban locations where fiber and advanced technology have not yet been deployed.
NTIA Announces All U.S. States & Territories Have Applied For BEAD Program Initial Planning Funds
August 17, 2022 – The U.S. Department of Commerce’s National Telecommunications and Information Administration (NTIA) has announced that all U.S. states and territories have submitted applications for initial planning funds as part of the $42.45 billion Broadband Equity, Access, and Deployment (BEAD) Program. Initial BEAD planning fund applications were due August 15, 2022. NTIA will now evaluate the applications and make awards available as expeditiously as possible. Within 270 days of receiving their planning funds, states and territories must submit a BEAD Program 5-year plan, which will help establish a state’s goals and priorities for distributing BEAD Program grants. BEAD planning funds can be used for a number of broadband access planning activities, including: research and data collection; publications, outreach, and communications support; providing technical assistance to potential subgrantees; training for broadband program employees; establishing, operating, or increasing capacity of a broadband office; broadband mapping functions; conducting surveys of unserved, underserved, and underrepresented communities; and promoting the Affordable Connectivity Program. Additional information about the BEAD Program is available from NTIA’s BEAD website and InternetforAll.gov.
FCC Gives Congress Report On The Future Of Universal Service
August 15, 2022 – The Federal Communications Commission (FCC) has provided a Report on The Future Of Universal Service to Congress. Pursuant to Section 60104(c) of the Infrastructure Investment and Jobs Act, the FCC was required to submit to Congress “a report on options of the Commission for improving its effectiveness in achieving the universal service goals for broadband in light of this Act…and other legislation that addresses those goals.” In general, the FCC describes the Report as follows:
This Report provides recommendations for further actions by the Commission and Congress to build upon that investment and improve the ability of the Commission to achieve its goals of universal deployment, affordability, adoption, availability, and equitable access to broadband through the Universal Service Fund (USF or Fund) and other Commission programs, to ensure that all of us have the broadband needed to succeed and thrive today.
The Report is broken down into four primary sections: Universal Service Goals for Broadband; Interagency Coordination; Recommendations; and Arguments Concerning the Lawfulness of the Universal Service Fund Under Section 254.
The Recommendations section breaks down into five subsections: Reorientation of the High Cost Program; Lifeline and the Affordable Connectivity Program; E-Rate and Emergency Connectivity Fund Programs; Health Care Equipment and the Rural Health Care Program; and Universal Service Fund Contributions.
FCC Begins Urban Rate Survey For 2023
August 15, 2022 – The FCC’s Office of Economics and Analytics and Wireline Competition Bureau have announced the commencement of the urban rate survey for 2023, which “will be used to develop voice and broadband reasonable comparability benchmarks that will be in place in 2023.” To set the 2023 benchmarks, FCC staff will collect rates offered by a random sample of providers of fixed voice and broadband services. Separate samples will be collected in up to 500 urban census tracts for voice services and up to 2,000 urban census tracts for broadband services. Providers selected to complete a rate survey will be notified via an email sent on August 15, 2022 to the provider’s FCC Form 477 contact person and certifying official. The surveys will be due on September 19, 2022. Additional information is available on the FCC’s Urban Rate Survey Data & Resources website.
Federal Trade Commission Begins Exploring Rules To Crack Down On Commercial Surveillance and Lax Data Security Practices
August 11, 2022 – The Federal Trade Commission (FTC) has issued an Advance Notice of Proposed Rulemaking (ANPRM) which “seeks public comment on the harms stemming from commercial surveillance and whether new rules are needed to protect people’s privacy and information.” Comments are due on or before 60 days after the date the ANPRM is published in the Federal Register. The FTC defines commercial surveillance as “the business of collecting, analyzing, and profiting from information about people.” In the ANPRM, the FTC is seeking comment on a number of concerns stemming from commercial surveillance, including Lax Data Security, Harms to Kids, Retaliation, Surveillance Creep, Inaccuracy, Bias and Discrimination, and Dark Patterns. Public comment is request on the nature and prevalence of harmful commercial surveillance practices; the balance of costs and countervailing benefits of such practices for consumers and competition; and proposals for protecting consumers from harmful and prevalent commercial surveillance practices. Additionally, the FTC will hold a virtual public forum on commercial surveillance and data security on September 8, 2022, from 2 p.m. until 7:30 p.m.
FCC Rejects LTD Broadband’s Long-Form Application For Rural Digital Opportunity Fund Support
August 10, 2022 – The FCC has announced it is rejecting LTD Broadband LLC’s long-form application to receive Rural Digital Opportunity Fund (RDOF) auction support. LTD Broadband initially won $1,320,920,718.20 in 10-year RDOF support to serve 528,088 locations in 15 states. It was later declared to be in default of winning bids in seven states after failing to timely receive eligible telecommunications carrier status, but was waiting to have its RDOF long-form application approved for the remaining states. However, the FCC has ultimately concluded that LTD is “not reasonably capable of deploying a network of the scope, scale, and size required by LTD’s extensive winning bids.” The News Release announcing the FCC is rejecting the long-form applications of both LTD Broadband and Starlink contains the following statement from FCC Chairwoman Jessica Rosenworcel on the decision:
“After careful legal, technical, and policy review, we are rejecting these applications. Consumers deserve reliable and affordable high-speed broadband,” said Chairwoman Rosenworcel. “We must put scarce universal service dollars to their best possible use as we move into a digital future that demands ever more powerful and faster networks. We cannot afford to subsidize ventures that are not delivering the promised speeds or are not likely to meet program requirements.”
FCC Rejects Starlink’s Long-Form Application For Rural Digital Opportunity Fund Support
August 10, 2022 – The FCC has announced it is rejecting Starlink Services, LLC’s long-form application to receive Rural Digital Opportunity Fund (RDOF) auction support. Starlink, through its parent SpaceX, initially won $885,509,638.40 in 10-year RDOF support to serve 642,925 locations in 35 states. Following extensive review of Starlink’s long-form application, the FCC concluded Starlink has “failed to demonstrate that [it] could deliver the promised service.” The News Release announcing the FCC is rejecting the long-form applications of both LTD Broadband and Starlink contains the following statement from FCC Chairwoman Jessica Rosenworcel on the decision:
“After careful legal, technical, and policy review, we are rejecting these applications. Consumers deserve reliable and affordable high-speed broadband,” said Chairwoman Rosenworcel. “We must put scarce universal service dollars to their best possible use as we move into a digital future that demands ever more powerful and faster networks. We cannot afford to subsidize ventures that are not delivering the promised speeds or are not likely to meet program requirements.”
“Starlink’s technology has real promise,” continued Chairwoman Rosenworcel. “But the question before us was whether to publicly subsidize its still developing technology for consumer broadband – which requires that users purchase a $600 dish – with nearly $900 million in universal service funds until 2032.”
Rural Digital Opportunity Fund: FCC Ready To Authorize 80 RDOF Winning Bids
August 10, 2022 – The FCC’s Rural Broadband Auctions Task Force, Wireline Competition Bureau, and Office of Economics and Analytics have announced they are ready to authorize support for 80 Rural Digital Opportunity Fund (RDOF) Phase I auction winning bids. This is the eleventh set of RDOF winning bids that are ready to be authorized. A list showing each winning bid ready to be authorized, the corresponding long-form applicant, each winning bid’s total amount of 10-year support, and other details is available as Attachment A to the Public Notice. The RDOF winning bids belong to E Fiber San Juan, LLC; Monster Broadband; and Northern Arapaho Tribal Industries. Also, Attachment B to the Public Notice is a list of RDOF bids that are in default. These include winning bids made by LTD Broadband and Starlink.
FCC staff reviewed the long-form applications associated with the winning bids, and determined they met all legal, financial, and technical requirements. To be authorized to receive the listed support amounts, however, each RDOF winning bidder must submit acceptable irrevocable stand-by letters of credit and Bankruptcy Code opinion letters for each state where they have winning bids that are ready to be authorized prior to 6:00 p.m. ET on August 24, 2022. The FCC will continue to review RDOF long-form applications on a rolling basis, and will announce other approvals of long-forms in future public notices. Additional information on RDOF funding amounts by provider and by state are available on the FCC’s RDOF auction website at https://www.fcc.gov/auction/904.
FCC Announces CAF II Auction Eligible Locations Adjustment Process Reply Period: August 23rd to September 22nd
August 10, 2022 – The FCC’s Wireline Competition Bureau has announced the opening of a 30-day reply period for the Connect America Fund (CAF) Phase II auction Eligible Locations Adjustment Process (ELAP), beginning August 23, 2022, 12:01 AM ET and ending September 22, 2022, 11:59 PM ET. During the reply period, CAF Phase II auction support recipients participating in the ELAP whose ELAP information has been challenged by a registered stakeholder may access and review all certified information submitted by that stakeholder and submit additional information opposing the challenge. Replies must be submitted using the Universal Service Administrative Company (USAC) ELAP module. Additional information and an ELAP Participant Reply Guide is available online from USAC.
Google Fiber Wants To Bring FTTH Service To Communities In Arizona, Colorado, Nebraska, Nevada, And Idaho
August 10, 2022 – Google Fiber has announced it is looking to grow its service area in a handful of states over the next several years. In a blog post, Google Fiber CEO Dinni Jain said the company is “talking to city leaders” in Arizona, Colorado, Nebraska, Nevada, and Idaho, “with the objective of bringing Google Fiber’s fiber-to-the-home service to their communities.” In addition to expanding in these states and the metro areas where it already is providing service, Mr. Jain said Google Fiber is interesting in helping communities “build their own fiber networks.” He noted that Google Fiber has experience partnering with cities to deliver broadband services. Google Fiber was the first tenant of the city of West Des Moines’ open conduit network, and the company collaborated with the city of Huntsville, Alabama to lease fiber from Huntsville Utilities for the delivery of high-speed broadband services to residents.
Mergers & Acquisitions: Illinois Fiber Connect To Become Indirectly Wholly-Owned By Wabash Telephone Cooperative
August 9, 2022 – The FCC’s Wireline Competition Bureau is seeking public comment on a Section 214 application filed by EJ Water Cooperative, Inc. and Independent Telcom Associates, Inc., requesting consent to transfer EJ Water Cooperative’s interest in Illinois Fiber Connect, LLC to Independent Telcom Associates. Comments are due on or before August 23, 2022. Reply comments are due August 30, 2022.
Illinois Fiber Connect is an Eligible Telecommunications Carrier that provides service as a competitive local exchange carrier (LEC) in Cumberland, Effingham, and Shelby counties, in Illinois. It receives Connect America Fund Phase II (Auction 903) support to serve locations in Illinois. Illinois Fiber Connect is currently owned by EJ Water Cooperative (49%), an Illinois-based water company, and Independent Telcom Associates (51%). In addition to owning a 51 percent majority interest, Independent Telcom Associates is the Managing Member of Illinois Fiber Connect.
Independent Telcom Associates is an Illinois corporation wholly-owned by Wabash Telephone Cooperative, Inc. d/b/a Wabash Communications Group. Independent Telcom Associates provides Internet and video services over Wabash Telephone Cooperative’s network.
Wabash Telephone Cooperative is an incumbent LEC serving nine exchanges in Clay, Wayne, Edwards, and Effingham Counties, in Illinois. It is owned by its member-subscribers and no single member-subscriber owns or controls 10% or more of the equity interests of the cooperative.
Pursuant to a Membership Interest Purchase Agreement, Independent Telcom Associates will acquire the remaining 49 percent membership interest of Illinois Fiber Connect from EJ Water Cooperative. Under the terms of the transaction, “the current majority owner will remain the majority owner and continue to be the only entity that exercises control in almost all respects.”
SpaceX Launches 52 More Starlink Internet Satellites
August 9, 2022 – SpaceX has launched 52 more Starlink internet satellites into low earth orbit from Kennedy Space Center in Florida. SpaceX has now launched 3,009 Starlink internet satellites into orbit. The total number of Starlink satellites include prototypes and test units that are no longer in service. According to Spaceflight Now, the recent launch was “the 54th SpaceX mission primarily dedicated to hauling Starlink internet satellites into orbit.”
FCC Fines Q Link Wireless Companies $100K For Failing To Respond To FCC Investigation Of Q Link Mobile App Security Flaws
August 5, 2022 – The FCC’s Enforcement Bureau has issued a Notice Of Apparent Liability For Forfeiture (NAL) which finds that “Q Link Wireless LLC, Hello Mobile Telecom LLC, and Quadrant Holdings LLC apparently willfully and repeatedly violated the law by failing to respond to a Commission order to provide information and documents concerning an alleged security flaw in the Q Link mobile app, which may have permitted unauthorized access to consumer proprietary information.” The Bureau has proposed a forfeiture of $100,000 against the companies for their apparent violation of Section 503(b)(1)(B) of the Communications Act. Following an article by Ars Technica on a flaw in Q Link’s data management practices, the Bureau’s Telecommunications Consumers Division opened an investigation and issued a Letter of Inquiry to the Q Link companies “directing them to provide information and documents regarding their duty to protect CPNI and other proprietary information.” However, the companies’ responses to the Bureau’s inquiry were ultimately found to be insufficient, resulting in the issuance of the NAL. The companies have 30 calendar days to pay the fine in full or provide a written statement seeking reduction or cancellation of the proposed forfeiture.
Rural Digital Opportunity Fund: FCC Authorizes RDOF Support For 95 Winning Bids (12th RDOF Authorization)
August 5, 2022 – The FCC’s Wireline Competition Bureau has authorized Rural Digital Opportunity Fund (RDOF) Phase I auction support for 95 winning bids. This is the twelfth Public Notice authorizing RDOF support. Attachment A to the Bureau’s Public Notice contains a list of the authorized winning bids and the corresponding support amounts which will go to the following eight entities: Cebridge Telecom KY, LLC (Kentucky); Cebridge Telecom LA, LLC (Louisiana); Cebridge Telecom WV, LLC (West Virginia); Cogeco US (Delmar), LLC (Virginia); Megawatt Communications LLC (Tennessee); Miles Communications LLC (Iowa); North Texas Fiber, Inc. (Texas); and TCA Communications, LLC (Arkansas).
The authorizations were granted after the Bureau reviewed long-form application information for each authorized winning bidder, including letters of credit and Bankruptcy Code opinion letters, and concluded the submissions were acceptable. Consequently, the Bureau has directed and authorized the Universal Service Administrative Company to obligate and disburse Universal Service Fund support to each winning bidder. Support will be disbursed in 120 monthly payments, beginning at the end of August 2022.
The first service obligation that must be met by the RDOF support recipients authorized by the Public Notice is the deployment of broadband service to 40% of locations in a state by December 31, 2025. The broadband service must meet the standards for which support was received (i.e., speed levels and latency). After that, these RDOF support recipients must achieve the following broadband service deployment obligations: 60% of locations in a state by December 31, 2026; 80% of locations in a state by December 31, 2027; and 100% of locations in a state by December 31, 2028.
Mergers & Acquisitions: Moss Adams Acquires Alexicon
August 4, 2022 – Accounting and consulting firm Moss Adams has announced it has entered into an agreement to acquire Alexicon, a consulting firm that focuses on rural telecommunications with offices in Colorado Springs, Colorado, and Tulsa, Oklahoma. Alexicon (12 employees) will join Moss Adams, effective September 1, 2022. The firms did not disclose the agreement’s financial terms.
RUS Issues ReConnect Program Funding Opportunity Announcement
August 4, 2022 – The U.S. Department of Agriculture’s Rural Utilities Service has issued a Funding Opportunity Announcement (FOA) for the second funding round in fiscal year 2022 for the Rural eConnectivity Program – more commonly referred to as the ReConnect Program. Under the program, RUS will award loan and grant funding for projects that bring high-speed broadband service to eligible rural areas. Applicants can apply for ReConnect funding from three award categories:
100 Percent Loan. Up to $150 million is available for loans. The maximum amount that can be requested in an application is $50 million.
50 Percent Loan and 50 Percent Grant Combination. Up to $150 million is available for loans and up to $150 million is available for grants. The maximum amount that can be requested in an application is $25 million for the loan and $25 million for the grant. Loan and grant amounts will always be equal.
100 Percent Grant. Applicants must provide a matching contribution equal to at least 25 percent of the cost of the overall project. Up to $150 million is available for grants. The maximum amount of grant funds that can be requested in an application is $25 million.
The application filing window opens on September 6, 2022, and closes at 11:59 a.m. Eastern on November 2, 2022. Applications can be submitted through the RUS on-line application portal. Additional information on program requirements can be found in the FOA and on the RUS ReConnect website.
Mergers & Acquisitions: NCP Mercury (Northleaf Capital Group, Ltd.) Acquiring Control of Mercury Wireless Indiana, LLC & Mercury Wireless Kansas, LLC
August 3, 2022 – The FCC’s Wireline Competition Bureau is seeking public comment on a Section 214 application filed by Mercury Holdings, Inc. (Transferor), Mercury Wireless Indiana, LLC (MWI), Mercury Wireless Kansas, LLC (MWK, and together with MWI, Licensees), and NCP Mercury AIV LP (NCP Mercury or Transferee) requesting consent to transfer control of MWK and MWI to NCP Mercury. The Application has been accepted for non-streamlined processing because the proposed transaction involves the exchange and assumption of Universal Service Fund high-cost mechanism obligations. Comments are due on or before August 17, 2022, in WC Docket No. 22-279. Reply comments are due August 24, 2022.
In their application, the parties explain that the transaction, occurring at the holding company level, “will promote the public interest by providing additional financial resources and support that will allow [Mercury Wireless Indiana, LLC and Mercury Wireless Kansas, LLC], both of whom receive Phase II support from the Connect America Fund and have been awarded support from the Rural Digital Opportunity Fund, to accelerate their deployment of high-speed broadband services to customers in underserved and rural areas in the Midwest, thereby helping to bridge the digital divide.”
Mercury Holdings, a Kansas corporation, currently holds 92.71% of the equity and voting interests in Mercury Broadband, LLC, a Kansas limited liability company, which is the direct parent and sole member of both Mercury Wireless Indiana, LLC and Mercury Wireless Kansas, LLC.
Mercury Wireless Kansas, LLC currently provides wireless broadband and voice services in Kansas and Missouri. It receives Connect America Fund (CAF) Phase II Auction support in Kansas and Missouri, and was recently authorized to receive $8,228,680.40 in Rural Digital Opportunity Fund (RDOF) Auction support to provide service to 13,450 locations in Kansas, Missouri, and Illinois.
Mercury Wireless Indiana, LLC provides wireless broadband and voice services in Indiana and Michigan. It receives CAF Phase II support in Indiana, Michigan, and Ohio, and was recently authorized to receive $53,493,220.80 in RDOF support to provide service to 109,296 locations in Indiana, Michigan, and Ohio.
NCP Mercury is a Delaware limited partnership that was formed to acquire indirect control of Mercury Wireless Indiana, LLC and Mercury Wireless Kansas, LLC through its direct wholly-owned subsidiary, Mercury TopCo, LLC. NCP Mercury and Mercury TopCo are holding companies and do not hold any FCC licenses or authorizations or provide telecommunications services.
NCP Mercury is ultimately controlled by Northleaf Capital Group, Ltd., “a global private markets investment firm based in Toronto, Canada with US$19 billion of private equity, private credit, and infrastructure capital commitments raised.” Northleaf is controlled (50.1%) by its three founders, Michael W. Flood, Jeffrey E. Pentland, and Stuart D. Waugh, and certain other members of its senior leadership team, who generally vote in a block pursuant to a shareholders’ agreement. Armstrong, L.P., a Canadian entity, holds the remaining 49.9% non-controlling interest in Northleaf.
Pursuant to the terms of a Contribution Agreement, Mercury Holdings will contribute its interest in Mercury Broadband, the direct parent of Mercury Wireless Indiana, LLC and Mercury Wireless Kansas, LLC, to Mercury TopCo in exchange for preferred units in Mercury TopCo. As a result, Mercury TopCo will become the direct parent of Mercury Broadband and the indirect parent of Mercury Wireless Indiana, LLC and Mercury Wireless Kansas, LLC, both of which will remain direct, wholly owned subsidiaries of Mercury Broadband. After that, Mercury Holdings, NCP Mercury, and Mercury TopCo will enter into an Amended and Restated Limited Liability Operating Company Agreement of Mercury TopCo, Inc., pursuant to which NCP Mercury will acquire indirect control of Mercury Broadband (and Mercury Wireless Indiana, LLC and Mercury Wireless Kansas, LLC) by virtue of its control of the board of managers of Mercury TopCo.
Bright House Networks Agrees To 11th-Hour Copyright Infringement Lawsuit Settlement With Recording Industry
August 2, 2022 – Internet service provider Bright House Networks, LLC and a group of the largest U.S. record labels have agreed to a settlement, ending the record labels copyright infringement lawsuit. An August 2nd filing notified the court that the record labels resolved their “case against Bright House, without disclosing the specifics of the settlement.” The filing was made one day before the trial was to commence. Terms of the settlement were not disclosed.
In March 2019, the recording companies (i.e., Universal, Warner, Sony) filed a copyright infringement lawsuit against Bright House in the U.S. District Court for the Middle District of Florida. The record labels alleged that through the provision of high-speed broadband service, “Bright House has knowingly contributed to, and reaped substantial profits from, massive copyright infringement committed by thousands of its subscribers, causing great harm to Plaintiffs, their recording artists and songwriters, and others whose livelihoods depend upon the lawful acquisition of music.” The lawsuit was similar, if not identical, to other copyright infringement lawsuits filed by content owners against ISPs, all of which allege the ISPs failed to meet their safe harbor obligations under the Digital Millennium Copyright Act. Like those other lawsuits, the record labels alleged Bright House refused to take action against subscribers who were alleged to have engaged in repeated copyright infringement using BitTorrent and other online peer-to-peer distribution networks. Specifically, the record labels claimed that from March 2013 to May 2016, they sent hundreds of thousands of copyright infringement notices to Bright House, but Bright House “persistently turned a blind eye to the massive infringement of Plaintiffs’ works occurring over its network.”
USAC Files Estimated Fourth Quarter 2022 Universal Service Funding Requirements
August 2, 2022 – The Universal Service Administrative Company (USAC) has filed the Federal Universal Service Support Mechanisms Fund Size Projections for the fourth quarter of 2022. The filing details the universal service fund’s (USF) total budget for 4Q 2022, which includes costs that can be directly attributed to the High Cost, Low Income, Rural Health Care, and Schools and Libraries Support Mechanisms, as well as Connected Care Pilot Program costs, and projected administrative expenditures of each mechanism. USAC’s data shows the following total projected 4Q 2022 funding requirements for each USF support mechanism:
High Cost Support Mechanism – $1.085 billion (the 3Q 2022 funding requirement was $992.51 million; the 2Q 2022 funding requirement was $880.14 million; and the 1Q 2022 funding requirement was $1.04452 billion). USAC initially calculated the funding requirement as $1.1 billion, but the amount was decreased by prior period adjustments of $33.62 million and increased by administrative costs of $17.94 million.
Low Income Support Mechanism – $211.43 million (the 3Q 2022 funding requirement was $269.22 million; the 2Q 2022 funding requirement was $220.47 million; and the 1Q 2022 funding requirement was $137.51million). USAC initially calculated the funding requirement as $290.07 million, but the amount was decreased by prior period adjustment of $107.73 million and increased by $29.09 million in administrative costs.
Rural Health Care Support Mechanism – $0.11 million (the 3Q 2022 funding requirement was $159.25 million; the 2Q 2022 funding requirement was negative $7.62 million; and the 1Q 2022 funding requirement was $11.72 million).
Connected Care Pilot Program – $8.36 million (the 3Q 2022 funding requirement was $8.34 million; the 2Q 2022 funding requirement was $7.81 million; and the 1Q 2022 funding requirement was $9.21 million).
E-Rate Schools and Libraries Support Mechanism – $609.07 million (the 3Q 2022 funding requirement was $606.99 million; the 2Q 2022 funding requirement was $563.22 million; and the 1Q 2022 funding requirement was $637.95 million).
USAC projects a consolidated budget of $75.63 million for 4Q 2022. This breaks out to $44.55 million in direct costs for all four support mechanisms, and $31.08 million in joint and common costs which include costs associated with billing, collection, and disbursement of universal service funds. This is an increase in USAC administrative costs for three consecutive quarters. USAC projected consolidated budgets of $61.60 million for 3Q 2022, $58.09 million for 2Q 2022, and $55.57 million for 1Q 2022.
The FCC will use the of the quarterly funding requirements for the four USF Support Mechanisms, the projected administrative expenses, and the USF contribution base amount to calculate the quarterly USF contribution factor. Copies of USAC’s historical USF filings are available on its website.
FCC Releases Report On Status Of Voice Telephone Services As Of June 30, 2021
August 1, 2022 – The FCC’s Office of Economics and Analytics, Industry Analysis Division, has released a report on the status of voice telephone services as of June 30, 2021. The report includes data on retail voice telephone service connections provided using wireline technologies (end-user switched access lines and interconnected VoIP) and mobile wireless. Key details shown in the report include the following:
In June 2021, there were 32 million end-user switched access lines in service, 67 million interconnected VoIP subscriptions, and 357 million mobile subscriptions, for a total of 457 million retail voice telephone service connections in the United States.
Over the 2018-2021 time period, interconnected VoIP subscriptions increased at a compound annual growth rate of 0.5%, mobile voice subscriptions increased at a compound annual growth rate of 1.4%, and retail switched access lines declined at a compound annual growth rate of 11.6% per year.
Of the 99 million wireline retail voice telephone service connections (including both switched access lines and interconnected VoIP subscriptions) in June 2021, 46 million (or 46%) were residential connections and 54 million (or 54%) were business connections.
Cross-classified by technology and the retailer’s regulatory status, the 46 million wireline residential connections in June 2021 were: 27.0% ILEC switched access lines, 56.8% non-ILEC interconnected VoIP subscriptions, 14.5% ILEC interconnected VoIP subscriptions, and 1.7% non-ILEC switched access lines. Similarly, the 54 million wireline business connections were: 24.2% ILEC switched access lines, 55.6% non-ILEC interconnected VoIP subscriptions, 8.3% ILEC interconnected VoIP subscriptions, and 11.8% non-ILEC switched access lines.
