All in USF

New FCC Rules Outline Which Expenses May Be Recovered Through High-Cost USF Support

The FCC has released a Report and Order, Third Order on Reconsideration, and Notice of Proposed Rulemaking that continue the FCC’s efforts to reform the high-cost universal service fund support mechanism rules that apply to rate-of-return carriers. The Report and Order contains new rules explicitly prohibiting the use of federal high-cost support for expenses that are not used for the provision, maintenance, and upgrading of facilities and services for which support is intended.

FCC Provides More Funding For A-CAM Carriers

The Federal Communications Commission has released a Report and Order, Third Order on Reconsideration, and Notice of Proposed Rulemaking that continue the FCC’s efforts to reform the high-cost universal service fund support mechanism rules that apply to rate-of-return carriers. In the Report and Order, the FCC has decided to increase funding for the Alternative Connect America Cost Model, so that all locations with costs above $52.50 per location will be funded up to a per-location cap of $146.10.

Chairman Pai Proposes Using Over $500 Million In Funding To Promote Rural Broadband Deployment – Part I

According to a recent news release, Federal Communications Commission Chairman Ajit Pai has circulated an Order that will allocate over $500 million to promote rural broadband deployment. While the news release offers only general information on a few aspects of the item, presumably the FCC will use broadband reserve funds to address the current shortfall in high-cost universal service fund support.

A-CAM Companies Make Final Push For More Funding

Over the last few weeks, various rate-of-return incumbent local exchange carriers that voluntarily transitioned to model-based universal service fund support have submitted ex parte letters urging the Federal Communications Commission to allocate additional funding from the high-cost reserves to the Alternative Connect America Cost Model. Specifically, A-CAM carriers want the FCC to fully fund the model – $200 of support per month, per location. The recent burst of advocacy is due to the FCC’s quickly approaching self-imposed December 31, 2017 deadline for deciding whether to increase total annual A-CAM support. However, A-CAM companies are not the only ones staking a claim to the reserve funds. Rate-of-return carriers operating under revised cost-based USF rules are in desperate need of additional funding to address the negative impact of the FCC’s high-cost budget. The FCC faces a difficult decision because there is a limited amount of high-cost reserve funds available for use, and allocating reserve funds to either group of carriers will result in increased broadband buildout in rural areas.

NTCA Presses FCC To Review High-Cost USF Budget

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?

NTCA Survey Says: High-Cost USF Shortfall Harming Rural Broadband Deployment

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 Orders USAC To Clean Up The Lifeline Program

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.

GAO Recommends Moving Universal Service Funds To U.S. Treasury

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?