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States Take Aim at USF and ICC reform

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WASHINGTON December 8, 2011 – Wednesday TheHill.com reported that the Pennsylvania Public Utility Commission filed suit against the Federal Communications Commission for it’s Order and Further Notice of Proposed Rulemaking to reform the Universal Service Fund and Intercarrier Compensation regime.  The suit, filed in the 3rd Circuit, alleges that the FCC order is “arbitrary and capricious” and that it violates the 10th amendment by compromising the powers of the state commissions.

Core Communications a small telephone company has also filed suit.  Apparently any group seeking to block the FCC’s Order must file by December 9th.

It has been a number of weeks since the FCC released their Order and FNPRM.  Right after the October Commission meeting where the Executive Summary was released, a majority of stakeholders generally praised the reform efforts.  There were a couple complaints from a number of companies, consumer advocates and state utilities, but since then there has been relative silence.

In their October press release, by the National Association of Regulatory Utility Commissioners (NARUC) stated that they were pleased with “the proposal to prevent traffic pumping and eliminate inefficient fund disbursements,” and appreciated the FCC’s acknowledgement of the role that States play regarding carriers of last resort and “Eligible Telecommunications Carrier”(ETC) designations.

NARUC hinted at some disappointment by adding, “We and many of our members have a number of concerns about preemption of State authority in other aspects of today’s decisions. Some elements raise a host of unanswered legal and procedural questions but also the specter of unintended consequences for consumers.”

In a phone conversation with Commissioner Anne Boyle from the Nebraska Public Service Commission last month, the Commissioner would not mention whether her state was gearing up to challenge the FCC order but did express disappointment in the one size fits all formula for intrastate rates threatened by the intercarrier compensation reform.  In general she felt that the states did not have a fair seat at the table in the drafting process.

As mentioned above the states were not upset with many of the broader provisions of the Order. They appreciated that only ETCs were eligible for Phase II competitive bidding support under the Connect America Fund.  Additionally the $300 million allocated yearly to the Mobility Fund  Phase I will be limited to ETCs in order to deliver support for wireless infrastructure to under-served and unserved areas.

In its effort to reestablish the Connect America Fund as one that supports deployment of broadband, the Order also places a number of new requirements on ETCs.  ETCs will be required to offer stand alone voice services throughout their area at rates that are comparable to urban rates.  The FCC adjusted the definition of “voice telephony services” to allow for voice services to be delivered through VoIP.  Furthermore, ETCs receiving support under the current High Cost fund, it will be required to offer broadband in their supported areas.  These are serious requirements that mandate, services must meet the basic designated broadband speed set by the FCC and must be able to support services like VoIP.  Finally the FCC has instituted a series of reporting obligations for ETCs that reflect their broadband obligations.

These are some serious new requirements that will be levied on the state designated carriers.

The part of the FCC Order that impedes the most on traditional State authority is the ICC reform.  This reform begins by capping the Local Exchange Carrier’s (LECs) interstate and intrastate rates.  This cap is effective immediately.  The FCC has adopted a bill-and-keep model as the national framework for intercarrier compensation that will eventually phase down termination charges to zero.  By 2013 all intrastate access rates will be brought down to interstate levels.  The total phase down for large carriers is scheduled for 2018 while smaller carriers have until 2012.

This section of the order also sets new rules for intercarrier compensation with respect to VoIP. All VoIP calls whether interstate or intrastate will immediately be subject to the interstate access charges.

In an effort to compensate the incumbent local exchange carriers for their lost termination revenues under the ICC reforms, the FCC will allow ILECs to impose monthly fees on end user customers.  State Commissions and consumer interest groups have disapproved of this measure and share similar concerns that this is not the time to be raising prices for the average American.

The FCC caps what they call Access Recover Charges (ARC) at 50 cents a year for residential and $1.00 for multi-line businesses. The Order does not establish any recovery for Cable Local Exchange Carriers (CLECs) because they are not subject to government regulation when it comes to raising end user rates. This raises a whole new set of issues and questions about disagreements between various stakeholders.

Now that we have been through roughly 700 pages of the FCC’s Order and FNPRM, Broadband Breakfast plans to follow up with summary and analysis of the document along with comments and opinions from a number of the stakeholders themselves.

FCC

Broadband Labels Should Include Practical Applications of Internet Packages: MIT Researchers

The FCC’s broadband label might include the number of movies one can watch at a time with a certain plan.

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Photo of MIT's David Clark used with permission

WASHINGTON, September 19, 2022 – The Federal Communications Commission’s upcoming broadband transparency labels should include “interpretive” information that helps consumers understand the practical implications of their internet performance, such as the number of movies they can watch at a time, according to researchers Friday at the Massachusetts Institute of Technology.

As directed by Congress in the Infrastructure, Investment and Jobs Act, the FCC is currently working on a “label” service providers will be required to fulfill that features details of broadband service plans, including monthly price, typical download and upload speeds, latency, packet loss, and other relevant information. The labels, which must be finalized by November, are meant to help consumers make a more informed decision when choosing an internet plan.

Because consumers are often unaware of how aspects of network performance affect the user experience, David Clark and Sara Wedeman of MIT’s Computer Science and Artificial Intelligence Laboratory said Friday at the TPRC 2022 conference that simply displaying technical metrics – e.g., an average upload speed of 20 Megabits per second (Mbps) – is unlikely to facilitate better user decision making.

The pair recommends the FCC adopt and require of service providers the equivalent of a nutritional label’s daily value field: a “Satisfactory Service Label.” Just as the daily value field makes complicated nutritional information actionable for the average consumer, the SSL will clarify how the technical metrics of an internet package affect performance, Clark said.

“One can propose a somewhat simple SSL for download speed by noting that for each simultaneous HD stream, no more than…about 9 mb/s is necessary. One could probably watch 3 HD streams at once over a 25 mb/s service,” said the paper on which Clark and Wedeman’s TPRC presentation was based.  

Difficulties in the labeling process

Paroma Sanyal and Divya Goel of the consulting firm Brattle Group also presented a paper on broadband labeling at TPRC. They argued that mandatory labeling will likely lead to lower prices and higher quality internet plans but also presents economic and legal risks if implemented incorrectly. Sanyal said that the standardized labeling regimes often introduce compliance costs and harm innovation, recommending instead a simple, clear system to minimize the emergence of unintended consequences.

Sanyal’s and Goel’s paper – coauthored with the Brattle Goup’s Coleman Bazelon – argues that the FCC’s current guidance doesn’t provide a specific definition of “typical” network performance, leaving much interpretation to broadband providers.

The paper also notes a multitude of technical factors outside the provider’s control that could affect performance. “For fixed broadband factors such as the vintage of equipment on the consumer premises…for mobile broadband, the vintage and type of handsets, weather, and location of the consumer are important,” the paper reads.

“As an illustration, typical speeds in a DC neighborhood may not be the typical speeds in a Baltimore neighborhood, which begs the question of how geographically targeted such labels should be, and, of course, the associated costs,” the paper adds.

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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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FCC Encouraged to Limit Data Collection on Affordable Connectivity Program, Others Want More

One trade group warns about providers leaving the program if data collection too onerous.

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Photo of Jonathan Spalter, CEO of US Telecom, from ISE

WASHINGTON, August 9, 2022 – The Federal Communications Commission is being warned not to overly burden internet service providers with its Congress-mandated order to collect pricing and subscription rates data from participants in the Affordable Connectivity Program.

Under the Infrastructure, Investment and Jobs Act, the FCC is required by November 15 to adopt rules to collect annual data relating to the price and subscription rates of each internet service offering by a provider participating in the broadband subsidy program, which offers up to $30 per month for low-income households (up to $75 per month on tribal lands) and a one-time $100 off a device.

But a number of submissions are warning the FCC against rules that require any additional data collection efforts beyond the scope of the law so as not to unduly burden providers and, at least one other trade group said, push providers away from participating in the program.

Telecommunications company Lumen, for example, recommended the commission limit the scope of the annual reporting to monthly pricing and to exempt “excessively granular” requirements, such as promotional rates, grandfathered plans, or subscriber-level data, which the commission is proposing to collect.

Communications companies and industry groups want to limit data collection

T-Mobile said in its submission that Congress told the FCC to rely on the broadband consumer labels, which are due this November, for pricing. The commission asked for comment on the interpretation of the IIJA requiring a reliance on price information displayed on the consumer labels.

For subscription information, T-Mobile urges the commission to look at data collection from the Universal Service Administrative Company – which administers high-cost broadband programs for the Universal Service Fund – to avoid “adopting a largely redundant collection that would impose additional burdens” on all parties.

“The IIJA leaves the Commission no discretion to collect any additional price information, and the statute does not require collection of data on other service plan and network characteristics,” such as speed and latency and data allowances, the submission said.

“Collection of this additional data would create additional burdens and is unnecessary,” the submission added.

Similar limitations were also proposed by telecom Starry Inc., which pushed for privacy protection by collecting data at a higher level (such as the state) and working with information collected in other transparency efforts, such as the consumer labels.

Industry association IMCOMPAS, which represents internet and competitive communications networks, told the FCC in a submission that data collection should be limited to the state level to protect consumer privacy and proprietary information of the providers; streamline other data collection, including the consumer labels; and provide instruction on how to providers to better understand the data collection rules.

Concurring with this position is the Wireless Internet Service Providers Association, which said data collection must be simple and should not go to a level of detail that goes beyond what the IIJA calls for. The trade group, which represents small providers, said such data collection beyond that required in the law could burden companies with small teams.

The included data, WISPA said, should be an annual aggregate of items including broadband plans subscribed to by ACP customers, number of subscribers for each plan, and pricing minus promotional rates, taxes, discounts or pricing breakdowns for bundled services. Any additional onerous collection could see providers leave the program, it added.

Industry groups US Telecom and NCTA – Internet and Television Association similarly urged a simple annual report that captured undiscounted monthly pricing of each broadband service offering and the number of customers subscribed. The Competitive Carriers Association and the Cellular Telecommunications and Internet Association also recommended a limited data collection approach.

ACA Connects, a trade group representing small and medium-sized independent operators, said the FCC should direct providers to report numbers of ACP households “that are applying their benefit to each speed tier along with the standard price of each tier on a state-by-state basis” – rather than the FCC-proposed continuous collection of subscriber-level data via the National Lifeline Accountability Database, it said, adding the commission should be mindful of the time it takes for completion, as smaller providers have limited resources.

Others pushing for subscriber-level, more data

The cities of New York and Seattle, in their submissions, said the FCC should collect subscriber-level information to assess different service adoption rates on different plans over time – publishing categories based on price, plan and performance by the zip code. It added it is not seeking information about the households itself, and said this would not be a privacy concern as others have pointed out.

Similarly, the Connecticut Office of State Broadband said the commission should go beyond the IIJA requirements by mandating information including performance of the plans and whether a device is offered.

For the National Digital Inclusion Alliance, data collection on the ACP should include data beyond what’s included in the consumer labels, and should include other items such as installation, equipment, service, miscellaneous, data and usage fees, and state and local taxes.

In a joint submission, non-profit media group Common Sense and internet advocacy group Public Knowledge recommended data collection that is necessary to monitor the ACP, which include promotional rates, taxes, overage costs and device and equipment costs. This way, they say, the FCC can get a better idea of how much is going toward internet access after applying the subsidy. They are also asking for the commission to collect information on whether the subsidy is being used to upgrade or discount current service, and how customers are becoming aware of the program.

The commission is currently trying to get more Americans on the program, which has over 13 million households signed up. That number, the commission said last week, should be much higher. As such, it ordered the development of an outreach program to market the subsidy.

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