Expert Opinion: Business as Usual Despite Departure of Universal Service Administrative Company CEO

Broadband's Impact, Expert Opinion, FCC, IP Transition, Universal Service February 10th, 2014

, Attorney, Dorsey & Whitney

Although it is the Federal Communications Commission (“FCC” or “Commission”) that is charged with implementing the ambitious universal service policy goals set forth in the Telecommunications Act of 1996 (the “Act”), the FCC designated the Universal Service Administrative Company (“USAC”), an independent, not-for-profit corporation, to administer the day-to-day operations of federal universal service. USAC bills and collects contributions to the federal universal service fund (“USF”) from telecommunications providers and disburses the funds to the four federal universal service programs: (1) High Cost; (2) Lifeline; (3) Rural Health Care; and (4) E-Rate. At the head of USAC is its Chief Executive Officer, who is responsible for the management of USAC’s daily operations.

What does this have to do with Scott Barash? As USAC’s first in-house counsel (a post he assumed in 1999) and Acting Chief Executive Officer (a post he assumed in 2006), Scott has been a constant USAC presence for over fourteen years in an otherwise tumultuous telecommunications world. He has had a ringside seat as telecommunications has progressed from primarily PSTN to include wireless, interconnected VoIP and broadband.

In his role as USAC’s first in-house counsel, Scott worked with USAC to develop federal universal service practices and procedures when the federal universal service fund was still in its infancy. As USAC’s Acting CEO, Scott managed USAC’s day-to-day operations, a task which required him to forge strong collaborative relationships with the FCC and USAC Board of Directors. As USAC’s figurehead, and perhaps most well-known employee, Scott was held accountable for USAC’s actions to Congress, the FCC, the USAC Board of Directors, industry participants and telecommunications consumers alike.

Given Scott’s long history with USAC and the importance of his role as Acting CEO, one would think that his recently announced departure would mean significant upheaval at USAC. That is not the case. There is no doubt that USAC faces tough challenges. Technology has rapidly outpaced the current telecommunications laws making it difficult for USAC to align the FCC’s policy goals and regulations with the practical reality of today’s telecommunications providers and the services they offer.

The FCC is grappling with reform in all of the federal universal service programs, as well as attempting comprehensive contribution reform. Lawmakers are also grappling with the task of universal service reform. President Obama has previously called for the overhaul of E-Rate, a task which the FCC initiated with its E-Rate modernization NPRM. In his 2014 State of the Union address, President Obama re-stated his commitment to bring high-speed broadband connectivity to 99% of America’s students with the support of the FCC and philanthropic relationships with companies like Apple, Microsoft, Sprint, and Verizon.

All of these potential changes come at a time when federal universal service has seen a shrinking contribution base and higher contribution factors (16.4% for the first quarter of 2014). With the move away from the Public Switched Telephone Network towards IP-based telecommunications, whether broadband Internet access, text-messaging and enterprise communications providers should be added to the list of federal USF contributors remains a contentious subject. While each of these is a matter of policy that must first be addressed by the FCC,9 each of them will have a significant administrative impact on USAC.

And yet, the old adage is true. The more things change, the more they stay the same. There is no doubt that the loss of Scott’s broad institutional knowledge and practical perspective regarding effective implementation of FCC policy goals will be a significant loss to USAC. However, perhaps the best testament to Scott’s leadership is that because of the strong administrative practices and procedures developed during his tenure, his departure will have little to no impact on the day-to-day administrative aspects of federal universal service.

At least in the short term (i.e., pending any significant Congressional or FCC universal service reform), the day-to-day obligations for federal USF contributors and beneficiaries will look the same after Scott’s departure as they did during his time as USAC’s Acting CEO. Nonetheless, given the rapidly evolving state of telecommunications and the calls for rapid, decisive federal universal service reform, it will only benefit USAC to have a strong, knowledgeable leader at the helm. The board would be wise to nominate, and the FCC to appoint, a new USAC CEO in an expeditious manner.

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