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FCC Set to Press Forward on 'White Spaces,' But Pulls Comprehensive Overhaul of Telecom Payments

WASHINGTON, November 4 – The Federal Communications Commission on Monday deleted one of the four big-ticket items that it planned to tackle at its Tuesday open meeting, but resisted pressure to spike a rule that would force broadcasters to share the vacant spaces between television channels.

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News: Special Election Day Report

By Drew Clark, Editor, BroadbandCensus.com; and Drew Bennett, Special Correspondent, BroadbandCensus.com

WASHINGTON, November 4 – The Federal Communications Commission on Monday deleted one of the four big-ticket items that it planned to tackle at its Tuesday open meeting, but resisted pressure to spike a rule that would force broadcasters to share the vacant spaces between television channels.

In pulling FCC Chairman Kevin Martin’s plan to overhaul both the universal service fund and inter-carrier compensation system – or the rates that telephone companies pay each other to connect calls – Martin ran up against a four-commissioner revolt against his plan.

In dueling press releases on Monday, Martin blamed his fellow commissioners for seeking a one-month delay of the plan. He said that they will not “be prepared to address the most challenging issues” come December.

The other four commissioners – two Republicans and two Democrats – cited the need to circulate the comments more widely. “Any reform proposal [must] receive the full benefit of public notice and comment – especially in light of the difficult economic circumstances currently facing our nation,” said the four commissioners.

But Martin hasn’t backed down yet from his goal to force broadcasters to share the “white spaces” on the television dial. Broadcasters’ fears of interference have kept stations far, far, apart on the television dial. For example, in Washington, no more than four of the 21 channels between 30 and 50 are occupied: 32, 45, 47 and 50. That leaves 17 available as white spaces.

The channel numbers vary from city to city, and will likely change with the transition to digital television (DTV) on February 17, 2009. Still, a lot of vacant frequencies remain vacant in the airwaves.

Martin has resisted pressure from broadcasters and their allies – including the major football leagues, Broadway producers and mega-churches, including House Energy and Commerce Committee Chairman John Dingell, D-Mich. – and is apparently siding with the high-tech companies, including Google, Microsoft, Phillips and others, that seek to use the frequencies for transmitting broadband signals over low-power devices.

The commission is apparently set to accept a report of the agency’s Office of Engineering and Technology that would set technical parameters for the operation of such devices.

Additionally, the FCC is apparently also pressing forward to authorize the merger of mobile provider Sprint with Clearwire, a providers of wireless broadband, and the merger of Bell company Verizon and regional telecommunications company Alltel.

Pushing for Telecommunications Changes on Election Day

The universal service fund and intercarrier compensation (USF and ICC) regimes combine to dictate, to a large extent, the revenue and subsidy flows between large, integrated telecommunications providers that serve comparatively wealthy and urban populations on the one hand (Verizon, for example) and smaller rural carriers who serve comparatively lower-income customers in areas where deployment and service costs are high on the other (like Century Tel).

Among the key policy components of the inter-carrier compensation and universal service regimes the prices that rural carriers charge to terminate wireline voice services, the methodology by which subsidies are extracted from urban carriers to contribute to the USF, and the expansion of services that are eligible to receive universal service funding.

While most telecommunications stakeholder groups agree that inter-carrier compensation rates and universal service funding methods need to be changed, there was a great deal of discontent over the impact that Martin’s proposed rule changes would have on carriers that serve low-income and rural consumers, often at the highest costs.

Additionally, critics charged that Martin was rushing to overhaul a portion of telecommunications regulation that could severely impact the landscape of the industry for years to come – on the heels of his departure from the commission with a new presidential administration.

The National Telecommunications Cooperative Association reacted positively to news that the USF/ICC item had been pulled. The group, which represents rural telephone co-ops, praised the four commissioners “for recognizing the importance of due process and in providing all interested parties the opportunity to fully review and comment on the proposal.”

OPASTCO and the Western Telecommunications Association, which also represent rural carriers, were dismayed by the news. “OPASTCO and WTA believe that a delay in the vote for the comprehensive plan, as negotiated by the two associations,… will have extremely negative consequences for rural carriers and the rural customers they serve,” the organization said in a statement.

“We worked in good faith with the FCC, communicating with all of the FCC commissioners’ offices to ensure that each office understood the negative affects a plan without these modifications would create,” OPASTCO President John Rose stated.  “Delaying the vote from Nov. 4th will make it virtually impossible for the FCC to achieve such a beneficial comprehensive plan for rural areas.”

Randolph May, President of the market-focused Free State Foundation, said: “It is disappointing that the FCC won’t be voting on Chairman Martin’s plan to fundamentally reform the intercarrier compensation and universal service regimes. In this instance the public has had adequate notice and opportunity to comment on the substance of the proposals put forward by Chairman Martin.”

Wireline Regime Reform: Averting a Byzantine Failure

In 2006, FCC Commissioner Michael Copps commented that inter-carrier compensation “is Byzantine…it’s broken and has been dissolving quickly.” A recent discussion on Capitol Hill sponsored by the Free State Foundation also labeled both regimes “archaic” and featured Commissioner Deborah Taylor Tate who started the session by agreeing that “archaic is certainly an apt description” and submitted that changes to inter-carrier compensation and universal service are long past due.

Following Commissioner Tate at the Free State Foundation’s event, Gerald Brock, Professor of Telecommunication and of Public Policy and Public Administration at The George Washington University, described the long and tortured history of three of the open dockets involved that date back anywhere from seven to twenty years.

Intercarrier compensation rates, for example, were first structured in 1984, when the break-up of “Ma Bell” (AT&T) separated incumbent local carriers from long-distance and regional providers and dictated high access rates that these carriers would charge each other to complete a telephone call that passed over multiple providers’ wires. While these regulated rates are significantly lower today, they still disproportionately favor rural incumbents and are not sensitive to more sophisticated forms of service (like Internet service) that have evolved since the break-up.

The inter-related universal service regime, designed to fund the build-out of rural telephone lines, is also criticized as being cumbersome and punitive by nationally integrated providers who must pay the bulk of the fees. Meanwhile, the services that the fees fund have not evolved either and many telecommunications experts have cited a need for high-speed Internet services to be integrated into the regime.

In a September 22, letter to the FCC, the Mercatus Institute presented results from a variety of studies that show the antiquated access rates to be burdening consumer welfare with at least a $1 billion deadweight loss, as recently as 2002. The Mercatus researchers and other groups concerned with the economic burden placed on regional carriers and their comparatively urban and wealthy customer-base by the current regime recommend the Commission minimize the access charges on price-sensitive services like long-distance wireline telephone calls and wireless calls in general.

In a separate letter, Verizon Communications recommended the Commission set a reduced flat rate access rate for all carriers, all jurisdictions and all service types. In an effort to recover lost revenue for high-cost rural carriers, the regional carrier also recommends the Commission increase the monthly charge for an access line, a reform also referred to as a “numbers based approach” to Universal Service Fund reform.

Given this platform for potential reforms to be examined by the Commission, many interest groups also wanted to see the Universal Service Fund expanded to include broadband services.

Many Industry Groups Want Change to Wait

While an array of industry stakeholders agree with the likes of Tate and Brock that change is overdue, many perceive Martin’s recent efforts to be rushed and overly-ambitious.

“I am concerned that expedited consideration of this draft proposal won’t allow sufficient time for interested parties to review and comment on its impact,” Sen. Lamar Alexander, R-Tenn. said in a recent letter addressed to the Commission and signed by 60 other lawmakers.

The National Association of Regulatory Utility Commissions (NARUC) echoed the sentiments of this letter and urged the FCC in a press release last week to “allow more time for due process and public comments before it acts on a sweeping proposal that will revamp intercarrier compensation and the Universal Service Fund.”

NARUC, whose members include the state regulatory commissions that play a distinct role in setting compensation and universal service rates along with the FCC, is particularly concerned with the possibility that the federal commission will make the most drastic changes to rules that determine interstate rates that carriers charge and that currently fall under the jurisdiction of state regulatory bodies.

Without an official public statement regarding the exact rule changes that will be considered on November 4, NARUC and others are left to speculate and the association has recommended a stay of 90 days on any decisions and the issuance of a public notice “summarizing the…discrete issues…and proposed legal theories.”

Some groups have even levied cynical charges against the commission that imply a rush towards massive reforms on November 4th that might slip under the national radar in the midst election day.

“A ‘phony crisis’ is being manufactured by FCC Chairman Kevin Martin and some on Capitol Hill who want to change the USF fee on long-distance to a flat per-line charge that would increase phone taxes  by up to $700 million for 43 million U.S. households, most of them low-income seniors, rural residents and minorities,” said the report by the Keep Universal Service Fund Fair Coalition.

On the other hand, the agency faces a November 5 deadline to resolve issues concerning the termination of service bound for a dial-up internet providers.

Leveling the Playing Field or Tilting it Further?

Whenever the agency follows-through on the intercarrier compensation and universal service funding mechanisms, then the revenue flows between providers in the telecommunications industry could be dramatically shifted.

NARUC asked the Commission to consider whether reforms to the regimes will “increase wireless/cellular or broadband deployment in unserved or underserved high cost areas, or actually undermine deployment” and whether they will “put upward pressure on local rates.”

Some say that a “numbers based approach” to universal service reform may lower some consumers long-distance rates and it would also, according to Verizon’s letter, raise the monthly flat rate for owning a residential phone line from $6.50 to $10.50.

Consumer groups claim that the reaction to such a rate-hike by consumers in low-income areas would be to forgo telephone adoption altogether, cutting off a segment of the population from vital communication services, even in the case of an emergency.

Groups like the Mercatus Institute, however, counter with studies that reveal consumers to be more price-sensitive to long-distance charges then to flat rates for line ownership and are pushing for a numbers-based approach to reduce deadweight losses to overall consumer welfare that would be complimented by programs that ensure emergency connectivity for consumers who lack access otherwise.

Drew Clark is the Editor and Publisher of BroadbandBreakfast.com and a nationally-respected telecommunications attorney at The CommLaw Group. He has closely tracked the trends in and mechanics of digital infrastructure for 20 years, and has helped fiber-based and fixed wireless providers navigate coverage, identify markets, broker infrastructure, and operate in the public right of way. The articles and posts on Broadband Breakfast and affiliated social media, including the BroadbandCensus Twitter feed, are not legal advice or legal services, do not constitute the creation of an attorney-client privilege, and represent the views of their respective authors.

Expert Opinion

Adrianne Furniss: Lifeline Needs A Lifeline

The FCC should hit the pause button on a current plan to zero out support for voice-only services.

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The author of this Expert Opinion is Adrianne Furniss, Executive Director of the Benton Institute for Broadband and Society

In less than three months, nearly 800,000 low-income people who receive telephone subsidies through the Universal Service Fund’s Lifeline program will be negatively impacted by changes scheduled to go into effect at the Federal Communications Commission on December 1. That is one of the most troubling — and pressing — conclusions of an independent evaluation of the FCC’s Lifeline program conducted by Grant Thornton. As the COVID-19 pandemic rages on, the FCC must act now to ensure people can retain essential communications services.

As of June 20, 2021, approximately 6.9 million subscribers were enrolled in the Lifeline program; most (approximately 94 percent) are enrolled in supported wireless plans. Voice service remains a desired service for both Lifeline subscribers and the general American consumer. Only 1 percent of surveyed American adults live in a home with neither fixed nor mobile voice service, and mobile-only voice subscribers comprise more than 60 percent of U.S. households.

In 2016, the FCC adopted a comprehensive reform and modernization of the Lifeline program. For the first time, the FCC included broadband as a supported service in the program. Lifeline program rules allowed support for stand-alone mobile (think cell phone) or fixed broadband Internet access service (think home broadband service delivered over a wire), as well as bundles including fixed or mobile voice and broadband. The 2016 decision also set in motion a plan to zero-out support for voice-only services.

In its February 2021 report, Thornton found that the phase-down and ultimate phase-out of voice services by December 1, 2021 may negatively impact 797,454 Lifeline consumers (that’s over 10 percent of all Lifeline enrollees) who use voice-only services for fundamental needs. So that’s nearly 800,000 households that could face being disconnected from phone service this winter.

The FCC needs to change course and help more Americans keep connected to communications services that are essential to navigate the ongoing public health and economic crisis.

And it needs to act before December 1.

Most importantly, the FCC should act swiftly and hit the pause button on the 2016 plan to zero-out support for voice-only services. During the pandemic, the stakes are just too high for anyone to be disconnected from essential communications networks.

Then the FCC should launch a new effort to reform and further modernize the Lifeline program, informed by what we’ve witnessed during COVID, and the findings in Thornton’s and the FCC’s own recent review of the Lifeline program.

First, Lifeline needs to have foundational governance documents—such as strategic plans, performance objectives, and an integrated communications plan—to assist in the longitudinal success and guidance of the program.

Second, the FCC has to consider raising Lifeline’s monthly subsidy, $9.25, so it can make more meaningful services affordable for low-income families. Home-broadband prices (both for fixed and wireless service) remain disproportionately high when compared to the Lifeline program subsidy. The FCC should evaluate minimum service standards in relation to the average cost of wireless, wireline, and broadband data plans and determine if the subsidy will cover all, or even the majority of costs to provide Lifeline services.

Third, the FCC must adopt changes in the program so it better benefits the people it was created to connect.

  • The FCC should seek to understand the composition of Lifeline households and what services various members need (i.e., school-aged children, telecommuters, etc.). The minimum services supported by Lifeline should address the needs of the entire household.
  • Just 25 percent of the people eligible to participate in the Lifeline program actually enroll. The FCC must understand why and should consider ways to improve awareness of the Lifeline program. One idea is to partner with other federal benefit programs, and the state agencies that administer those programs, to not only increase outreach about Lifeline, but ideally to integrate Lifeline’s application processes into those program applications.
  • The FCC should adopt program rules that incorporate Lifeline consumer feedback to ensure the program works for the most vulnerable people in society.

Fourth, changes in the Lifeline program should encourage all telecommunications and broadband service providers to compete to serve low-income households in their service areas.

Finally, the FCC should also consider revising its measure of affordability of broadband for low-income consumers. Currently, the FCC considers “affordable service” as 2 percent of disposable income of those below 135 percent of the federal poverty level. Instead, the FCC should consider affordability in the context of a subscriber’s purchasing power in a geographic location and balanced with availability of services and choice of providers. The FCC should evaluate the pricing packages of voice and broadband services offered by Lifeline carriers and provide assurance that packages offered are in the reasonable standard of affordability for low-income consumers. And the FCC should institute a structured process to regularly review the Lifeline program’s pricing packages and incorporate measures of both the subsidy rate and service standards for similar programs (like the Emergency Broadband Benefit), income statistics of current consumers, and the percentage of Lifeline subscribers who pay out of pocket for services.

The commitment to connecting people with low incomes to essential communications services is not new. But the past 18 months have offered stark reminders of the importance of universal service. We need the FCC to act now to keep everyone connected. And we need the FCC to update the Lifeline program so everyone can rely on a basic level of connectivity no matter how much income they have.

Adrianne Furniss is the Executive Director of the Benton Institute for Broadband and Society. She manages the institute’s staff and relationships with Benton experts, partners, and supporters in service to Benton’s mission and in consultation with Benton’s Trustees and Board of Directors. Previously, she held management positions at both non-profit and for-profit content creation companies, focused on program development, marketing, and distribution. This piece was originally published in the Benton Institute’s Digital Beat, and is reprinted with permission. © Benton Institute for Broadband & Society 2021. Redistribution of this publication – both internally and externally – is encouraged if it includes this copyright statement.

Broadband Breakfast accepts commentary from informed observers of the broadband scene. Please send pieces to commentary@breakfast.media. The views expressed in Expert Opinion pieces do not necessarily reflect the views of Broadband Breakfast and Breakfast Media LLC.

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Universal Service

Experts Concerned About Connectivity After Emergency Broadband Benefit Fund Runs Dry

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Screenshot taken from CCA event

April 1, 2021 – Experts are concerns about the long-term implications of the $3.2-billion Emergency Broadband Benefit program (EBB) running out of money without a plan for what happens after.

The fund, created by Congress in December, provides up to $50 in a monthly internet discount for families and $75 for tribal lands to access broadband internet. The fund will cease when all the money is used up or within six months, whichever happens sooner.

Clare Liedquist Andonov, principal at Herman and Whiteaker, LLC, said Wednesday during the CCA mobile carriers show that if all people on Lifeline — an older FCC program that provides monthly discounts for eligible low-income subscribers for internet and telephone services – subscribe to the fund, the money will “be exhausted within about four months.”

John Nakahata, partner at Harris, Wiltshire and Grannis LLP, said both the EBB and Emergency Connectivity programs are simply short-term stimulus plans that are not designed to last long.

Andonov said she is concerned about what happens after such funding ceases to exist. “What happens after four months?” she asked. “Do you disconnect those people?” She said the infrastructure built to connect people online in the first place would go to waste if the EBB program ceased operations in a matter of months, alongside the administrative costs to run the program.

To combat the expenditure of EBB funding in the mere four months projected by Andonov, Senator Amy Klobuchar, D-MN), co-chair of the Senate Broadband Caucus, and House Majority Whip James Clyburn, D-SC, introduced comprehensive bicameral broadband infrastructure legislation on March 12 to expand access to affordable high-speed internet for all Americans.

“In 2021, we should be able to bring high-speed internet to every family in America — regardless of their zip code,” said a press release from Klobuchar’s office. “This legislation will help bridge the digital divide once and for all.” If passed, Cole said it would allow the EBB program to last for an entire year; but even then, one year is not enough, they say, as broadband should be accessible for people indefinitely.

To address this challenge, there is some $100 billion set for recently-introduced broadband infrastructure bills being considered in Congress. That money is spread between three bills that would change the nation’s definition of served and unserved people with broadband by dramatically upping the threshold for broadband speeds.

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Education

Sen. Ed Markey Celebrates Telecom Act as Telecom Lawyers Tell Congress to Be Specific

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Photo of Sen. Ed Markey by NASA

February 2, 2021 – Democratic Sen. Ed Markey’s communications policy focus this Congress will be on net neutrality, children and climate change, the long-serving Massachusetts lawmaker said at a Federal Communications Bar Association event Tuesday to celebrate the 25th anniversary of the Telecommunications Act.

Reminiscing on the 1996 landmark legislation during his keynote, Markey focused on broadband accessibility and affordability, especially for children. He praised the Federal Communications Commission’s E-rate program, which subsidizes broadband access for schools and libraries.

But Markey also linked broadband to concern about climate change, highlighting the concern about how miles of broadband cable conceivably could be under the sea due to receding coastlines.

Most of all, he pushed on net neutrality. He said it was a major issue, and much-needed to prevent big companies from stifling smaller competition or consumers’ access to the internet.

Senator Markey’s remarks led into a panel discussion about the impact of the Telecommunications Act since it became law.

During that discussion, former FCC Commissioner Michael O’Rielly said that Congress needed to be more specific about what it does or doesn’t want the FCC to do. Too little specificity can lead the FCC to write bad rules that Congress doesn’t like.

John Nakahata, who worked for FCC Chairman Reed Hundt at time of the Telecom Act’s passage, agreed. Too much ambiguity by legislators has caused huge headaches for the FCC. For example, the very issue of net neutrality exists because of uncertainty about whether broadband should be classified as a Title II telecommunication service: It wasn’t, and then it was under former president Barack Obama, and then it wasn’t again.

O’Rielly said that more leeway was granted to the FCC in the past because Congress had faith in their ability to enact legislation. But legislators’ trust in the FCC has eroded.

Randolph May, president of the Free State Foundation, said that FCC regulation should look like antitrust law. He said it should be through incentives that competition is promoted, rather than through Title II regulation.

Former FCC chief of staff Ruth Milkman expressed desire to see funding for FCC programs, such as the E-rate program, used to maximum benefit where they are needed most.

The panelists agreed that legislation needs to address where technology is headed, rather than looking backward to solve past problems.

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