Federal Universal Service Fund

Arizona should tap the state USF to bring broadband to rural students, said Arizona Corporation Commissioner Andy Tobin. In a Monday letter in docket RT-00000H-97-0137, Tobin supported Republican Gov. Doug Ducey’s call for high-speed internet in rural and tribal areas. Tobin proposed a partnership with the governor, state superintendent and nonprofit EducationSuperHighway to create a state match of rural broadband funds for schools and libraries totaling $8 million to $13 million, the state commission said in a Tuesday news release. Tobin proposed a one-time distribution of $8 million from the Arizona USF to support the state match. The state match could help school districts obtain an estimated $80 million to $100 million in federal E-rate Category One funding, but Arizona must act quickly to meet a likely April deadline to submit funding applications to Universal Service Administrative Co., he said. To make the deadline, the state commission should open an emergency rulemaking, he said. Later this year, the commission should open another rulemaking examining the high-cost portion of the state USF, he said. “There is a real and troubling digital divide when it comes to internet access in our urban and rural areas,” Tobin wrote. “Every student must be afforded the same opportunity to learn, including those who live on tribal lands, in some inner city areas, or in the most remote reaches of the state.” Ducey said in the governor’s State of the State address Monday that “too many students, specifically in our rural areas, and in our tribal nations, are missing out. It’s 2017, but outside of our urban areas, broadband is still spotty. Let’s fix this, by connecting these rural schools to high-speed internet.” The proposed program will be discussed at a commission staff meeting Wednesday at 10 a.m. MST, the commission said.

Sandwich Isles Communications faces $77 million in repayment duties and proposed fines from the FCC for violations and apparent violations of the USF high-cost program in Hawaii, with more repayments to come. The commission also ruled against SIC in a cost dispute with AT&T and the National Exchange Carrier Association (NECA) over an undersea cable. The agency noted Sandwich Isles has continuing obligations to its customers and can't discontinue telecom service without express authorization.

Verizon opposed expanding the District of Columbia Universal Service Trust Fund to support broadband for low-income households. "The Commission lacks jurisdiction over broadband services, and thus may not regulate the provision of broadband services," the company commented Monday on the D.C. Public Service Commission’s notice of inquiry in docket FC988. The D.C. Office of the People’s Counsel supported expanding the District’s USF to include broadband as a measure to close the digital divide. “Federal and state programs, like the Lifeline program, designed to facilitate universal access to communications services, must continually evolve to ensure that cost and social barriers do not foreclose the participation of low-income and marginalized consumers,” OPC commented. The USTF should be “updated to reflect changes to the manner in which District residents use communications technologies,” it said. It’s legal for the D.C. program to support broadband because the Communications Act allows states to adopt regulations that advance universal service consistent with FCC rules, and the federal program now supports broadband, OPC said. Section 706(a) directs state commissions to encourage deployment of advanced telecommunications capability, it said. To further close the divide, OPC said the PSC should set up a schools and libraries fund through USTF to supplement the federal E-rate program, and help subsidize the cost of computers for District schoolchildren who participate in the National School Lunch program. In an interview last week, PSC Chairwoman Betty Ann Kane said she expects the her agency will align Lifeline rules with the updated federal program ahead of the December implementation deadline but supports a NARUC resolution seeking waivers for states that need more time (see 1611020045). “It will be tight” meeting the deadline in the District, but doable, she said. Lifeline isn’t a statutory program there, so the PSC merely must make rule changes, she said. However, some other states need legislators to change the statute and probably won’t make the FCC’s deadline, she said.

A draft order on a new mobility fund, circulated by FCC Chairman Tom Wheeler for the Nov. 17 commissioners' meeting (see 1610270054), is raising some concerns in industry. AT&T complained about the approach in a Monday blog post. Other industry players are reporting on recent meetings with officials prior to an expected sunshine notice cutting off further lobbying. The agency approved a one-time mobility fund in 2011 and five years later is moving forward on Phase II, as Wheeler promised the Competitive Carriers Association in September (see 1609200058).

New York state officials cited wide support for the state's request for expedited waiver of Connect America Fund requirements that Phase II broadband subsidy support in New York be awarded through competitive bidding. But some in the industry said in replies posted in FCC docket 10-90 that legal issues remain. Empire State Development Corp. is seeking a waiver that would allow it to tap federal CAF II support, declined by Verizon in New York, to help fund the state's own reverse auction of broadband subsidies for the same areas targeted by the FCC auction (see 1610260057). “The minimal opposition to the Petition was based on inaccurate factual and legal assertions of the waiver request and the many public interest benefits it would bring,” New York said. ViaSat said the record confirms legal barriers to granting the request. The waiver sought by New York is inconsistent with federal universal service policy and the statute governing federal USF distribution, the company said. The American Cable Association said the petition has “many potential benefits” for spreading broadband, but opposed it as “legally infirm” and suggested New York reconsider. USTelecom cautioned the FCC not to lose a national focus. It said the agency "must ensure that it balances any equitable allocation of CAF funds among the states, with the need to ensure the overall integrity of the CAF fund.”

AT&T warned about possibly long implementation for some universal service fund contribution reform options, in a phone call with a state member of the Federal-State Joint Board on Universal Service. AT&T Executive Director-State and Legislative Affairs Jolynn Butler Friday phoned Michigan Public Service Commission Chairman Sally Talberg, said an AT&T ex parte letter posted Wednesday in docket 06-122. “The Joint Board should be mindful of the relative administrative ease and costs associated with the various options for contribution methodology reform,” AT&T said. “Some changes to the contribution methodology would entail longer implementation periods than others.”

Comments are due Nov. 9, replies Nov. 16 on a telecom industry petition for FCC reconsideration of a policy statement instituting treble damages for violations of rules for payments to USF and other funding programs. The pleading cycle was triggered Wednesday by Federal Register publication of an FCC notice, which created docket 16-330. "The policy statement adopts a new treble damages formula for calculating forfeitures for telecommunications service providers' failure: (1) to timely pay their assessments for the federal Universal Service Fund (USF), Telecommunications Relay Service (TRS) Fund, local number portability (LNP), North American Numbering Plan (NANP) and regulatory fee programs; and (2) to file data required to assess payment obligations for these programs," said a petition filed March 6, 2015, by CTIA, NCTA, Comptel (now Incompas) and USTelecom (see 1503310052). The FCC's goals are laudable, the groups said, but the policy statement must be vacated because it wasn't promulgated with notice and comment under the Administrative Procedure Act. On substance, the treble damages policy is arbitrary and capricious, reflecting "a results-oriented effort by the Commission to drive the relevant forfeiture amounts as high as possible," said the groups, which pressed the agency in August to open a docket and seek comment on their petition (see 1608050061).

States are preparing low-income phone programs for federal changes to Lifeline, as the FCC Dec. 1 implementation deadline nears. With several Lifeline rules taking effect Dec. 2, under an FCC schedule (see 1610030040), NARUC General Counsel Brad Ramsay predicted some states will support a USTelecom petition to give some states more time. The Kentucky Public Service Commission plans to issue soon an order about how the changes affect its program, the Minnesota PUC released an order last week, and commissions in California and the District of Columbia are collecting comments. States have sued the FCC over the order, which added broadband internet access service (BIAS) as a supported service in the program.

Mulling effects of the FCC Lifeline order, the District of Columbia telecom regulator gave more time for comments on a notice of proposed rulemaking (NOPR) about changes required by the federal order adding broadband support to the low-income fund (see 1609260067). The comments were due Monday, but the D.C. Public Service Commission extended the deadline to Oct. 17, and reply comments to Oct. 31 from Oct. 17. “Due to the requirement that the rule changes required by the Lifeline Modernization Order be in effect by December 1, 2016, there can be no further extensions of time for this NOPR,” the commission said in the Friday notice. Meanwhile, the Kentucky Public Service Commission previewed changes to Lifeline in a news release Monday. "The PSC is currently examining the future of the Kentucky Universal Service Fund (KUSF), which provides the state portion of the Lifeline subsidy," the Kentucky commission said. "The KUSF had been rapidly depleted in recent years, prompting the PSC in March to temporarily increase the surcharge in order to keep the fund solvent while determining its long-term viability." Revenue from contributions to state USFs has declined in multiple jurisdictions, our July canvassing found (see 1607010010).

It’s too risky to increase New Mexico definitions of broadband and unserved and underserved areas in the state’s Rural USF, Public Regulation Commission staff said Monday. In comments on proposed rules taking effect Jan. 1 for the RUSF, the PRC's Telecom Bureau staff urged only conservative actions to avoid litigation. That followed industry opposition in Oregon last week to a proposal to include “access to broadband” in the definition of basic phone service.