Connect with us

Broadband's Impact

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

Published

on

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.

Broadband's Impact

House Bill to Make Broadband Grants Non-Taxable Introduced

Sen. Mark Warner said last month he is working to pass a companion bill by year’s end.

Published

on

Photo of Rep. Mike Kelly, R-Penn.

WASHINGTON, December 7, 2022 – Reps. Mike Kelly, R-Penn., and Jimmy Panetta, D-Ca., on Wednesday introduced the Broadband Grant Tax Treatment Act, the companion of a Senate bill of the same name, which would make non-taxable broadband funding from the Infrastructure Investment and Jobs Act and the American Rescue Plan Act.

The bill’s supporters say it will increase the impact of Washington’s broadband-funding initiatives, the largest of which is the IIJA’s $42.45 billion Broadband Equity, Access, and Deployment program. The IIJA allocated a total of $65 billion toward broadband-related projects.

Kelly said the proposal “ensures federal grant dollars, especially those made available to local governments through pandemic relief funding, will give constituents the best return on their investment.”

“This legislation allows for existing grant funding to be spent as effectively as possible,” Kelly added.

Sen. Mark Warner, D-Va., sponsored Senate’s version of the bill in September and said last month he is working to push it through by year’s end.

“Representative Panetta’s and Kelly’s bill to eliminate the counter-productive tax on broadband grants is right on the money,” said Jonathan Spalter, president and CEO of trade group US Telecom. “Closing the digital divide in America – especially in our hardest-to-reach rural communities – will require every cent of the $65 billion Congress has dedicated for that critical purpose.”

Continue Reading

Digital Inclusion

Broadband is Affordable for Middle Class, NCTA Claims

According to analysis, the middle class spends on average $69 per month on internet service.

Published

on

Photo of Rick Cimerman, vice president of external and state affairs at NCTA

WASHINGTON, November 22, 2022 – Even as policymakers push initiatives to make broadband less expensive, primarily for low-income Americans, broadband is already generally affordable for the middle class, argued Rick Cimerman, vice president of external and state affairs at industry group NCTA, the internet and television association. 

Availability of broadband is not enough, many politicians and experts argue, if other barriers – e.g., price – prevent widespread adoption. Much focus has been directed toward boosting adoption among low-income Americans through subsidies like the Affordable Connectivity Program, but legally, middle-class adoption must also be considered. In its notice of funding opportunity for the $42.5-billion Broadband Equity, Access, and Deployment program, the National Telecommunications and Information Administration required each state to submit a “middle-class affordability plan.”

During a webinar held earlier this month, Cimerman, who works for an organization that represents cable operators, defined the middle class as those who earn $45,300–$76,200, basing these boundaries on U.S. Bureau of Labor statistics for 2020. And based on the text of an Federal Communications Commission action from 2016, he set the threshold of affordability for broadband service at two percent of monthly household income.

According to his analysis, the middle class, thus defined, spends on average $69 per month on internet service. $69 is about 1.8 percent of monthly income for those at the bottom of Cimerman’s middle class and about 1.1 percent of monthly income for those at the top. Both figures fall within the 2-percent standard, and Cimerman stated that lower earners tended to spend slightly less on internet than the $69-per-month average.

Citing US Telecom’s analysis of the FCC’s Urban Rate Survey, Cimerman presented data that show internet prices dropped substantially from 2015 to 2021 – decreasing about 23 percent, 26 percent, and 39 percent for “entry-level,” “most popular” and “highest-speed” residential plans, respectively. And despite recent price hikes on products such as gas, food, and vehicles, Cimerman said, broadband prices had shrunk 0.1 percent year-over-year as of September 2022.

Widespread adoption is important from a financial as well as an equity perspective, experts say. Speaking at the AnchorNets 2022 conference, Matt Kalmus, managing director and partner at Boston Consulting Group, argued that providers rely on high subscription rates to generate badly needed network revenues.

Continue Reading

Broadband's Impact

Federal Communications Commission Mandates Broadband ‘Nutrition’ Labels

The FCC also mandated that internet service provider labels be machine-readable.

Published

on

Federal Communications Commission Chairwoman Jessica Rosenworcel

WASHINGTON, November 18, 2022 – The Federal Communications Commission on Thursday afternoon ordered internet providers to display broadband “nutrition” labels at points of sale that include internet plans’ performance metrics, monthly rates, and other information that may inform consumers’ purchasing decisions.

The agency released the requirement less than 24 hours before it released the first draft of its updated broadband map.

The FCC mandated that labels be machine-readable, which is designed to facilitate third-party data-gathering and analysis. The commission also requires that the labels to be made available in customers’ online portals with the provide the and “accessible” to non-English speakers.

In addition to the broadband speeds promised by the providers, the new labels must also display typical latency, time-of-purchase fees, discount information, data limits, and provider-contact information.

“Broadband is an essential service, for everyone, everywhere. Because of this, consumers need to know what they are paying for, and how it compares with other service offerings,”  FCC Chairwoman Jessica Rosenworcel said in a statement. 

“For over 25 years, consumers have enjoyed the convenience of nutrition labels on food products.  We’re now requiring internet service providers to display broadband labels for both wireless and wired services.  Consumers deserve to get accurate information about price, speed, data allowances, and other terms of service up front.”

Industry players robustly debated the proper parameters for broadband labels in a flurry of filings with the FCC. Free Press, an advocacy group, argued for machine-readable labels and accommodations for non-English speakers, measures which were largely opposed by trade groups. Free Press also advocated a requirement that labels to be included on monthly internet bills, without which the FCC “risks merely replicating the status quo wherein consumers must navigate fine print, poorly designed websites, and byzantine hyperlinks,” group wrote.

“The failure to require the label’s display on a customer’s monthly bill is a disappointing concession to monopolist ISPs like AT&T and Comcast and a big loss for consumers,” Joshua Stager, policy director of Free Press, said Friday.

The Wireless Internet Service Providers Association clashed with Free Press in its FCC filing and supported the point-of-sale requirement.

“WISPA welcomes today’s release of the FCC’s new broadband label,” said Vice President of Policy Louis Peraertz. “It will help consumers better understand their internet access purchases, enabling them to quickly see ‘under the hood,’ and allow for an effective apples-to-apples comparison tool when shopping for services in the marketplace.”

Image of the FCC’s sample broadband nutrition label

Continue Reading

Signup for Broadband Breakfast

Get twice-weekly Breakfast Media news alerts.
* = required field

Broadband Breakfast Research Partner

Trending