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Resolution on FCC Reform Divides NARUC Committee; Universal Service Fund Changes Less Controversial

WASHINGTON, February 15, 2009 – State regulatory commissioners are split on how strongly to express longstanding grievances with Federal Communications Commission processes. A resolution on reform of FCC management and practices dominated the agenda as the National Association of Regulatory Utility Commissioners continued its winter meeting Sunday.

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WASHINGTON, February 15, 2009 – State regulatory commissioners are split on how strongly to express longstanding grievances with Federal Communications Commission processes. A resolution on reform of FCC management and practices dominated the agenda as the National Association of Regulatory Utility Commissioners continued its winter meeting Sunday.

The resolution, sponsored by Washington State Commissioner Phillip Jones, has been amended multiple times NARUC’s staff subcommittee on telecommunications since it was introducted late Friday.

The original draft resolution was a straightforward, one-page document which welcomed changes at the commission by the new Obama administration, while calling attention to often-cited criticisms of the lack of transparency in operations, the slow pace of action on dockets and delay in open opening new ones, as well as barriers to intra-agency cooperation.

The tenure of former FCC Chairman Kevin Martin was notorious among industry observers for a lack of communication across the FCC’s bureaus and offices. A common criticism of Martin’s chairmanship was that bureaus were effectively forbidden from sharing information among themselves, or even with the other four commissioners or their staffs. Acting Chairman Michael Copps said reversing Martin-era restrictions is a high priority for his reform agenda.

The staff subcommittee met Sunday afternoon to vote on recommending the resolutions to NARUC’s telecommunications committee, which consists of 33 commissioners. The significantly revised draft included language praising Copps for his reform effort, with the caveat that many of the changes had been employed by previous chairmen and suggested by the other two sitting commissioners.

The subcommittee draft went on to specify in detail other NARUC concerns, including problems in the operation of Federal-State Joint Boards and a “lack of definitive action by the Commission on important issues both at a federal and state level” that results in many orders being “deemed granted” through “excessive” use of the forbearance process. Recent rulemakings and orders made it “apparent that the Commission needs to enhance its capabilities in…economics, engineering, and administrative law,” read one clause.

The subcommittee considered amending Sunday’s version to include among the complaints the frequency of ex parte presentations as an aspect of a rulemaking process that effectively minimizes the opportunity for public input. “The average consumer really has no way to come to Washington and meet with commissioners,” said one staff subcommittee member who supported the amendment.

But many members were unsure if such strong criticism would be constructive when NARUC is trying to improve relations between state commissions and the FCC. “I wouldn’t want them to come into [my state commission] and tell me how to do things,” said one member. Another was far more emphatic: “I’m amazed and appalled by [this resolution] when we’re getting into a mode where we can operate with a much more open dialogue [with the FCC].”

The subcommittee then junked the entire resolution, replacing it with a half-page substitute that acknowledged the new administration’s changes and Congress’ intention to review FCC procedure and resolved to support a public review process and offer NARUC’s assistance. The “watered-down” language passed the subcommittee by a vote of 7-4.

But when the full committee convened later in the day, Jones and co-sponsor Commissioner John Burke of Vermont returned with a less caustic, but equally specific, version of the resolution. It replaced the one which had been gutted by the staff subcommittee.

The substitute resolution prefaced the specific criticisms and suggestions by making reference to a 15-page letter sent last December by NARUC president Fred Butler to Susan Crawford, a University of Michigan telecommunications law professor who advised the Obama-Biden transition team on FCC matters. The letter emphasized the success of NARUC’s member commissions in promoting novel programs and solutions, many of which have often been successfully replicated at the federal level.

Butler’s letter also outlined an agenda for FCC reform in hopes that an Obama FCC would avoid missteps of commissions past that often led to court losses for the FCC, often after long and costly litigation. He suggested that the FCC return to the practice of using sworn, in-person testimony with cross-examinations in establishing a record for its decision-making, as well as holding public negotiation sessions with a transcript — practices the FCC has not used since the 1970’s, but still used regularly by state commissions.

Butler’s letter may have gotten NARUC “on the record” with the FCC, said Michael Moffet of Kansas. A resolution with specific suggestions would be redundant, he said. Florida’s Lisa Edgar agreed, suggesting that “less is more.” But Burke questioned the effectiveness of the weaker language. Asking his fellow commissioners if they should “give [the FCC] a road map…or tell them to do the right thing,” he noted with a hint of sarcasm: “Do the right thing hasn’t worked well in the past.”

California Public Utility Commissioner Rachelle Chong, a former FCC commissioner herself, said she was troubled by the tone of the Burke/Jones resolution. Accusing the FCC of being slow would be such a great idea when state commissions are often met with the same criticism, she said. “People in glass houses shouldn’t throw stones,” she said. And such a resolution would be poorly timed when acting chairman Copps is doing “very positive things,” she added.

But Burke said that the resolution wasn’t about demanding an agenda for the FCC, but letting the commissioners know what the NARUC committee thinks would be productive. “We don’t think we’ll wake up tomorrow and the world will be different on the 8th floor [or the floor on which the agency commissioners and their staffs are located]– but this is an opportunity that shouldn’t be missed.”

The committee also briefly discussed Chong’s broadband mapping resolution, and a resolution sponsored by Washington, DC, Commissioner Betty Ann Kane to endorse a pilot program expanding the FCC’s Lifeline and Link Up programs to cover broadband service.

Kane said that some perceived opposition to the resolution among the staff subcommittee came from confusion over the goals of the recently-passed broadband stimulus legislation.

The stimulus is about building networks, not making service affordable, she said. Universal service, whether for voice or broadband, is a “matter of social philosophy,” she added. And while some don’t believe in the program’s goals, Kane argued that there is “no argument that USF [for voice] hasn’t been successful.” She expected her resolution to pass the committee without a problem when it votes on Wednesday.

Andrew Feinberg was the White House Correspondent and Managing Editor for Breakfast Media. He rejoined BroadbandBreakfast.com in late 2016 after working as a staff writer at The Hill and as a freelance writer. He worked at BroadbandBreakfast.com from its founding in 2008 to 2010, first as a Reporter and then as Deputy Editor. He also covered the White House for Russia's Sputnik News from the beginning of the Trump Administration until he was let go for refusing to use White House press briefings to promote conspiracy theories, and later documented the experience in a story which set off a chain of events leading to Sputnik being forced to register under the Foreign Agents Registration Act. Andrew's work has appeared in such publications as The Hill, Politico, Communications Daily, Washington Internet Daily, Washington Business Journal, The Sentinel Newspapers, FastCompany.TV, Mashable, and Silicon Angle.

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FCC

Chairman Pallone Says Service Providers May Be Abusing ACP

‘These reports detail problems customers have faced,” wrote Energy and Commerce Committee Chairman Frank Pallone

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Photo of Rep. Frank Pallone, Jr., D-NJ, obtained from Flickr.

WASHINGTON, October 26, 2022 – Rep. Frank Pallone, Jr., D-N.J., sent letters to thirteen leading internet service providers requesting information on potential “abusive, misleading, fraudulent, or otherwise predatory behaviors” engaged in through the Emergency Broadband Benefit Program and the Affordable Connectivity Program.

Pallone, chairman of the House Energy and Commerce Committee, expressed concern over allegations that providers are conducting business in violation of the programs’ requirements. Pallone cites as evidence several stories, including pieces from The Los Angeles Times and The Washington Post.

“These reports detail problems customers have faced, including either having their benefits initiated, transferred to a new provider, or changed to a different plan without their knowledge or consent,” Pallone wrote.

“Other customers have reported a delay in the application of the benefit or a requirement to opt-in to future full-price service, which has resulted in surprise bills that have been sent to collection agencies.”

“There have also been reports of aggressive upselling of more expensive offerings, requirements that customers accept slower speed service tiers, and other harmful and predatory practices,” he added.

Pallone asked the providers for several categories of records, including each company’s number of benefit recipients, complaint-resolution protocols, degree of knowledge of incorrect customer bills, protections against upselling, and more. Letter recipients include AT&T, Comcast, T-Mobile, and Verizon.

The ACP, established by the Infrastructure Investment and Jobs Act of 2021 and overseen by the Federal Communications Commission, subsidizes monthly internet bills and device purchases for low-income applicants. Non-tribal enrollees qualify for discounts of up to $30 per month, and qualifying enrollees on tribal lands for discounts of up to $75 per month. Enrollees also qualify for one-time discounts of $100 on qualifying device purchases.

The EBB program was the predecessor to the ACP.

The ACP, a favorite of many politicians and federal entities, including the White House, is no stranger to controversy. In September, the FCC Office of Inspector General issued a report that found the ACP doled out over $1 million in “improper payments” to service providers due to “fraudulent enrollment practice[s].”

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Universal Service

Lines Are Sharpening Over Who Drives the Future of Universal Service: Congress or Broadband Providers?

Big communications companies want Congress to tax telecom, while many others want higher fees on broadband service.

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Photo of panel moderator Julie Veach, Alex Minard, Greg Guice, and Angie Kronenberg at AnchorNets 2022.

CRYSTAL CITY, Va., October 14, 2022 – Should contributions to the Universal Service Fund originate from Congress or from fees paid by communications companies to an agency responsible to the Federal Communications Commission? A panel of experts speaking Friday at AnchorNets 2022 debated this issue.

The Universal Service Fund, created in 1997 to improve telecommunications connectivity nationwide, is funded primarily by voice-based services. In recent years, voice-based subscriptions have substantially dropped, creating a revenue crisis and leaving remaining voice-based customers to foot a climbing per-person USF bill.

To rectify this imbalance, industry players have proposed a variety of new funding sources. The two core options are direct taxation by Congress, or by broadening the base of the USF.

The latter option would require broadband providers to contribute to levies collected by the Universal Service Administrative Company, a non-profit entity accountable to the FCC.

Urging Need for FCC Action on Universal Service Fund, Expert Says Congress Too Slow

Speaking at the Friday conference of the Schools, Health and Library Broadband Coalition, Greg Guice, director of government affairs at Public Knowledge, argued that the FCC has the legal authority to require broadband service providers to contribute to the USF.

“The language of the statute says every carrier shall contribute and any other provider of telecommunications that the Commission decides may contribute to Universal Service,” he said.

Angie Kronenberg, chief advocate and general counsel at industry trade group INCOMPAS, said Congress shouldn’t be relied upon for intervention: “It is very helpful when Congress recognizes that there is a problem and is willing to appropriate, but that is not a sustainable, predictable model.”

Petition Challenges Constitutionality of Roles FCC, USAC Play in Universal Service Fund

The USF has of late made substantial investments in broadband projects, and many industry experts say broadband services should be required to contribute thereto. In August, however, the FCC declined to unilaterally reform the fund’s contribution system and asked Congress to review the matter.

“On review, there is significant ambiguity in the record regarding the scope of the Commission’s existing authority to broaden the base of contributors,” the Commission’s report stated.

Alex Minard, vice president and state legislative counsel at NCTA – The Internet and Television Association, suggested Congress should be the driver of USF reform.

Policy Groups Want Bigger Contribution Base to Shore Up the Future of the Universal Service Fund

“Maybe the FCC does have the legal authority – maybe – to include broadband revenues,” said Minard. “If we’re going to…newly tax such a significant part of the economy, maybe it’s Congress that should be making this decision, and not an independent federal regulatory agency.”

Minard also argued the need for USF reform is less urgent than some believe. “It has been in crisis for 20 years,” he said. “What’s a little bit longer?”

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FCC

Library and Education Technology Groups Pan FCC Proposal for New E-Rate Procurement

Responders fear that updating the E-Rate process will increase complexity for applicants.

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Photo of John Windhausen of Schools, Health & Libraries Broadband Coalition

WASHINGTON, August 26, 2022 – Responders to the Federal Communications Commission’s proposed rulemaking to force internet service providers to bid for school and library services through a new portal expressed concern that the proposal would needlessly complicate the process.

The FCC’s E-Rate program supplements schools and libraries securing affordable telecommunications and broadband services through the Universal Service Fund. Earlier this year, the FCC released a proposal that would “streamline program requirements for applicants and service providers, strengthen program integrity… and decrease the risk of fraud, waste, and abuse.”

The proposal suggests implementing a central document repository, called a bidding portal, through which internet service providers would submit bids to the program administrator, the Universal Service Administrative Company, instead of directly to applicants at a state and local level. Currently, libraries and schools announce they are seeking services and service providers apply directly to those institutions.

With the adoption of this proposal, applicants would be required to submit competitive bidding documentation that would enable applicants to compare competing bids and the USAC would establish timeframes on when applicants are able to review the bids that providers submit.

The proposal is in response to a September 2020 report by the Government Accountability Office which addressed what the GAO considers the E-Rate program’s key fraud risks. It reported that E-Rate participants could easily misrepresent self-certification statements by violating competitive-bidding rules or processes. These violations could occur without the Commission’s or USAC’s knowledge because they do not have direct access to the bidding information.

The GAO suggested that allowing the USAC direct access to obtain and monitor bidding information would improve security and strengthen program controls.

Proposal widely panned by CoSN and educational technology directors

However, response to the proposal was widely negative, with commenters raising concern that changing the process would needlessly complicate a system that, according to Verizon, is already promoting fair and open bidding on E-Rate contracts.

The Consortium for School Networking, the State Educational Technology Directors Association, and the National School Boards Association claimed that the Commission’s past reliance on state and local procurement requirements has been a success and has not led to an undue amount of fraud and abuse, negating the need to update the process.

Creating a national bidding portal could also interfere with existing state and local bidding requirements and unduly complicate the bidding process, hindering E-Rate participation, said the National Association of Telecommunications Officers and Advisors in its comment to the FCC.

“A bidding portal would interfere with existing state and local bidding and procurement processes, which would likely cause significant issues for applicants and may cause some to have to drop out of the E-Rate program,” read NATOA’s report.

The establishment of a national E-rate bidding portal would be “unnecessary, burdensome and will increase the complexity of, rather than simplify the E-rate program,” agreed South Dakota’s Department of Education in its statement.

National level or local level changes

Since the FCC’s announcement in December, the proposed changes have been subject to much debate. John Harrington, CEO of Funds for Learning, wrote in April that the E-Rate changes would be detrimental, claiming that procurement decisions are best made at the local level, rather than a “one-size-fits-all system.”

Furthermore, John Windhausen, executive director of the Schools, Health & Libraries Broadband Coalition, said in December that the proposal will burden applicants, despite the potential benefits of eliminating at least some forms of fraud. Windhausen claimed that there is not enough evidence to show that a new portal is needed.

However, the proposal has not been universally dismissed. In a comment filed last week, the United States Department of Justice, Antitrust Division, which is responsible for enforcing antitrust laws, expressed support for the proposal saying that it would “enhance the ability of the FCC’s Office of Inspector General to detect and deter fraud in the E-Rate program.”

The DOJ added that the update would allow for more robust enforcement of laws, including investigation and prosecution of antitrust and related crimes that occur during E-Rate procurements. “All responsive service providers and applicants are in a position to complete the additional step,” said the DOJ in response to critics citing undue burden.

The proposal remains in consideration at the FCC.

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