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Congress, Industry Execs Agree on Broadband in Revamped Universal Service Fund

WASHINGTON, March 12, 2009 -The Obama administration’s priority in broadband deployment injected an undercurrent of excitement into a Thursday hearing of the House Energy and Commerce Subcommittee on Technology, Communications, Technology and the Internet.

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WASHINGTON, March 12, 2009 – The Obama administration’s priority in broadband deployment injected an undercurrent of excitement into a Thursday hearing of the House Energy and Commerce Subcommittee on Communications, Technology, the Internet.

While the hearing was scheduled to be focused on reforming the universal service fund high-cost program, both members and witness spent much of the hearing debating how best to use the fund to deploy broadband internet access to all Americans.

“Broadband has emerged as a critical part of our telecommunications infrastructure,” said Chairman Rick Boucher, D-Va. “New funding sources must be tapped” in order to bring access to unserved areas, he said.

“Broadband is to communications today what electricity and telephone service were 100 years ago,” Boucher said. And while he acknowledged the impact of $7.2 billion in stimulus funding for broadband was a subject for debate, Boucher reiterated his view that broadband is “clearly deserving…of universal service fund support.”

But Ranking Member Cliff Stearns, R-Fla., said the stimulus plans made expansion of the fund irrelevant. Instead of expanding the USF, Stearns suggested examining the successes and failures of the stimulus program while it is implemented.

Congress should focus efforts on reducing waste and fraud in current USF programs and adding a cap prevent more “uncontrolled growth” of the fund, Stearns said.

“Throwing money at this crumbling program makes no sense,” he said. Instead of more subsides, Stearns suggested using “market-based, technology-neutral systems” to encourage broadband deployment.

Industry leaders were in agreement on Boucher’s plan for expanding the USF to include broadband service. “The core principle of competitive telecommunications for every American remains an important and worthy goal,” said U.S. Cellular Chairman LeRoy Carlson. “[T]he proper role of [the USF] must be to ensure that [rural] areas have modern, high quality telecommunications infrastructure” that is both feature and price comparable with their urban and suburban counterparts, he said.”

Broadband and mobile wireless services are two ‘must-have’ functionalities consumers expect and demand for home and business, Carlson declared,” whether they live in urban or rural areas. “I believe a reformed program can effectively…address those problems, and if tailored correctly, can even be complimented by leveraging the [broadband stimulus funds],” he said.

“A central goal of this program must be to provide rural citizens with access to high quality mobile voice and broadband services, everywhere that people live, work and travel,” said Carlson.

Verizon executive vice president Tom Tauke told the subcommittee he believes that consumers, industry and policymakers agree that modern and affordable communications services are “a prerequisite for economic growth, and an essential platform to address major social challenges.”

But the high-cost fund “remains focused on yesteryear’s technology,” Tauke said. “Attempts to fit new technologies into a telecom framework.” This process has not allowed the fund to meet its “fundamental objective: providing universal service.”

Qwest Communications Executive Vice President Robert Davis agreed for the need to reform the fund to allow for new technologies. “The grants for broadband deployment that will be provided by the [stimulus program] are a start,” he said, “but no one believes that this money will result in ubiquitous deployment of [broadband] to currently underserved areas.” There remains a crucial role for universal service funding,” David declared.

Adopting broadband as part of universal service would also resolve questions on how to stop what some lawmakers described as “runaway” increases in USF fees. AT&T vice president Joel Lubin suggested that moving from charging consumers based on a portion of their bill to a per-number charge.

While Lubin acknowledged revenues paid into the fund from telephone network access charges might temporarily decrease under such a plan, he predicted that the drop would be inevitable as more Americans move to voice over internet protocol (VoIP) services.

The increasing number of phone numbers used by consumers in next-generation technologies such as mobile phones, VoIP lines, and multi-line business systems would more than make up for the temporary drop, Lubin said.

“Broadband is a disruptive technology that redefines the game,” Lubin said. “Local calling areas are now the whole world.” A broadband based USF program would eliminate access charges while providing “more capability, without the complexity of old narrowband pipes”

Free Press research director Derek Turner noted both “critics and defenders of the high-cost fund all agree that broadband is the essential communications infrastructure of the 21st Century.” When USF was created in 1996, “internet access was an application that used telephony as an infrastructure,” he said.

By contrast, Turner said in today’s world, “telephony is one of the many applications that are supported by broadband infrastructure.” And while the FCC can take steps to modernize the USF regulatory structure, Turner emphasized that “meaningful and lasting reform” can come only from congressional action. “Achieving this goal…will require the complete upending of the status quo and direct confrontation of difficult and politically challenging choices,” he said.

When Boucher asked the panel if the law should explicitly allow USF to cover broadband, there was no disagreement that the 1996 Telecommunications Act should be changed to allow USF funding to explicitly cover broadband services.

But there was some disagreement over whether a “USF 2.0,” as one witness put it, should be limited to wireline services only. While Davis said a program should be “technology neutral” once speed and price targets had been determined, Carlson said that both were equally important – and that wireline and wireless could be subjected to different speed requirements.

And while Turner acknowledged wireless could have a role in reducing costs, he wasn’t convinced. “I’m not sure if checking Facebook while driving at 70 miles per hour is [needed in USF programs]. But Tauke pointed out that fixed and mobile wireless have different use cases and potentials. Rep. John Shadegg, R-Ariz., agreed, calling the two technologies “a different ballgame.”

The Federal Communications Commission is currently accepting comments on a proposal to expand the USF-funded Life Line and Link Up programs to include broadband services. In response to a question from Rep. G.K. Butterfield, D-N.C., Tauke said he didn’t support the proposal in its current form.

Tauke later said in an interview that Verizon believes it is important for all Americans to have access to broadband and that USF should be included, but he could not offer specific alternatives to the Life Line/Link Up proposal except to suggest the program be technology-neutral.

And while AT&T’s Lubin was wary of subsidizing access devices, he agreed that the choice of wired or wireline service, even under Life Line/Link Up, should be “in the mind of the consumer.”

The Life Line/Link Up proposal was endorsed by the National Association of Regulatory Utility Commissioners at its winter 2009 meeting last month.

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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