All in USF
On September 21, 2017, representatives from numerous companies that provide broadband service in rural Kansas met with Federal Communications Commission Chairman Ajit Pai to discuss, among other things, the FCC’s plan to move the money that makes up the Universal Service Fund to the U.S. Treasury.
Recent ex parte filings made by NTCA–The Rural Broadband Association and rural broadband providers show that the FCC’s fixed budget for the high-cost portion of the universal service fund is obstructing rural broadband deployment. It’s estimated that the high-cost budget will produce a support shortfall of $173 million over the next 12 months, which has already forced rural carriers to roll back deployment plans. NTCA claims the FCC is obligated to review the budget by the end of this year, which presumably will lead the FCC to conclude that the budget is insufficient to maintain and increase deployment of rural broadband networks. NTCA’s assertion is based on language in the Tenth Circuit’s decision upholding the 2011 USF/ICC Transformation Order. Is the FCC required to make a review or is this something that is merely within the discretion of the FCC?
In the 2016 Rate-of-Return Reform Order, the Federal Communications Commission imposed a strict budget control mechanism over the $2 billion rate-of-return portion of the total $4.5 billion universal service high-cost fund. However, the fixed USF budget will result in a shortfall of support estimated at $173 million over the next 12 months. A recent survey conducted by NTCA—The Rural Broadband Association shows that rural broadband providers have already decided to roll back network investment over the next 12 months because of reduced USF support.
FCC Chairman Ajit Pai has directed the Universal Service Administrative Company to institute a number of safeguards intended to reduce fraud, waste, and abuse in the universal service Lifeline program. Chairman Pai’s command to clean up Lifeline was triggered in large part by a recent GAO report that discovered extensive fraud within the program. USAC is tasked with addressing problems related to ineligible subscribers, oversubscribed addresses, phantom subscribers, deceased subscribers, exact duplicates, and accountability of sales agents. Chairman Pai has asked USAC to report on its progress in implementing the safeguards by August 8, 2017.
As part of its recent report on various problems with the Lifeline program, the U.S. Government Accountability Office recommended that the money that makes up the universal service fund be moved from a private bank account to the U.S. Treasury. According to the GAO, one “benefit” of the move is that USF money could be used to offset federal debts. Is this a good idea?
The Federal Communications Commission has determined that an exclusive license to provide telecommunications services granted by the state of Hawaii to Sandwich Isles Communications, Inc. violates Section 253(a) of the Communications Act, and as a result, has preempted enforcement of the license.
NTCA—The Rural Broadband Association and US Telecom have filed a joint petition requesting temporary forbearance from the application of universal service fund contribution rules to broadband Internet access transmission services provided by rural local exchange carriers. The two broadband associations are seeking forbearance pending the completion of comprehensive USF contributions reform.
FCC Commissioners Michael O’Rielly and Mignon Clyburn have coauthored an article posted on the FCC’s official blog that asks whether means-testing could bring “efficiencies” to the universal service fund’s high-cost support mechanism.
The FCC has approved the National Exchange Carrier Association’s modifications to the formula that will be used to calculate universal service high-cost loop support for average schedule rate-of-return carriers. The new HCLS average schedule formula – in effect from July 1, 2016 through December 31, 2016 – produces a 3.4 percent decrease in HCLS for average schedule study areas which is due to the decrease from 11.25 percent to 11 percent in the prescribed interstate rate of return.
The Federal Communications Commission has released the Lifeline Modernization Order makes significant revisions to the rules governing the universal service Lifeline program. Among other important changes, the order sets new minimum Lifeline service standards for voice and broadband and gradually eliminates support for standalone voice service.
