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Federal Communications Commissioner O’Rielly Defends Budget Cap on Universal Service Fund

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WASHINGTON, June 25, 2019- A budget cap to the Federal Communication Commission’s Universal Service Fund will provide “plenty for all,” said FCC Commissioner Michael O’Rielly Tuesday.

The fund is currently paid for through fees imposed by consumers’ phone bills with four sub-programs dedicated to specific groups: high-cost areas, low-income consumers, schools and libraries, and rural healthcare providers.

An upper limit on universal service fund spending is both “necessary and overdue,” said O’Rielly, to ensure that federal subsidies flow to “those who absolutely need them.”

In 2019, more than 10 billion dollars have been spent through the fund, which is administered by the Universal Service Administrative Company, and which is responsible to the FCC. Additional funding authorized by the commission, he said, requires additional money from consumers.

Given the regressive nature of USF fees and their “disproportionate burden” on lower and middle-income Americans, consumers “deserve” an agency that represents their own interests, he said. The new budget would provide ratepayers stability on the amounts they need to pay each month.

O’Rielly said he “strongly supports” capping each of the four sub-programs, and “welcomes” the establishment of a self-enforcing budget on the lifeline program for low-income consumers. With this budget, the FCC would be able to view the USF at a “macro-level,” encouraging debate about priorities for the overall fund before any additional spending is authorized.

Furthermore, he said, the cap would provide the FCC greater incentive to eliminate inefficiencies that “detract from the program’s mission and values.”

O’Rielly also took aim at federal subsidies that he said undermine private investment in broadband networks in rural America. He said government-subsidized overbuilding “harms broadband access in rural America.”

“This overbuilding ‘scheme’ has created serious financial problems for providers in remote areas and in their own communities,” O’Rielly said. “It is equally crucial that federal agencies avoid duplicating each other’s broadband subsidies.”

Regarding the steps the commission has taken to reduce over-building, O’Rielly said that Congress is in process of drafting legislation for agencies to coordinate more efficiently. The commission itself has moved forward in reducing intra-agency competition, which has created “unacceptable burdens” for telecommunications ratepayers.

While the FCC has made improvements to broadband subsidies over the years, he added, reducing wasteful spending will take work from “both inside and outside the agency.”

Digital Inclusion

Broadband Association Argues Providers Not Engaged in Rollout Discrimination

Trade group says telecoms are not discriminating when they don’t build in financially difficult areas.

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Image of redlining from historic map of the Home Owners’ Loan Corporation of Richmond, Virginia, from PBS.

WASHINGTON, September 18, 2023 – Broadband association US Telecom sent a letter to the Federal Communications Commission last week saying internet service providers don’t build in certain areas because it is financially difficult, not because they are being discriminatory.

The FCC proposed two definitions of digital discrimination in December 2022: The first definition includes practices that, absent technological or economic constraints, produce differential outcomes for individuals based a series of protected characteristics, including income, race, and religion. The second definition is similar but adds discriminatory intent as a necessary factor.

“To make business determinations regarding capital allocation, an ISP must consider a host of commercially important factors, none of which involve discrimination,” said the September 12 letter from USTelecom, which represents providers including AT&T, Verizon, Lumen, Brightspeed, and Altafiber.

“As the Commission has consistently recognized, such deployment is extremely capital-intensive…This deployment process is therefore subject to important constraints related to technical and economic feasibility” added the letter.

US Telecom explained that ISPs’ will choose to invest where they expect to see a return on the time and money they put into building broadband.

The association added that factors like population density, brand reputation, competition and the availability of the providers’ other services all go into deciding where broadband gets deployed.

“The starting point of the Commission’s approach to feasibility should be a realistic acknowledgement that all ISPs must prioritize their resources, even those that invest aggressively in deployment,” added the letter.

The association also highlighted the fact that it hopes to see as little government intervention in broadband deployment activity as possible, a concern that has been echoed by lobbyists before.

“Rather than attempting to use Section 60506 to justify taking extra-statutory intrusive actions that could paradoxically undermine ongoing broadband investment, the Commission must enable ISPs to make decisions based on their own consideration of the kinds of feasibility factors discussed above” read the letter.

Section 60506 of the Infrastructure, Investment and Jobs Act says that the FCC may implement new policies to ensure equal access to broadband.

The FCC is also looking to develop guidelines for handling digital discrimination complaints filed against broadband providers.

USTelecom said that ISPs should be allowed to demonstrate financial and logistical concerns as a rebuttal to those claims, in addition to disclosing other reasons for directing investment elsewhere to demonstrate non-discriminatory practice.

Reasons for investment elsewhere would include rough terrain, low-population density, MTE owners not consenting to deployment, zoning restrictions, or historical preservation review.

“To aid in the success of the Infrastructure Act and facilitate equal access, the Commission must continue to foster an environment conducive to ISP investment in the high-speed broadband infrastructure that Congress rightly views as central to our connected future,” concluded the letter.

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FCC Comments

CAF II Auction Recipients Push FCC to Extend Letter of Credit Waiver, Relax Restrictions

The agency proposed a shorter, more restrictive waiver.

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Photo of $100 bills

WASHINGTON, September 14, 2023 – Internet service providers who received project funding under the Connect America Fund Phase II Auction are asking the Federal Communications Commission to continue waiving their letter of credit requirements. 

The FCC requested in August comments on a proposal to extend the waiver for one year — through December 2024 from the current December 31, 2023 date — and limit it to providers who have filed all location reports on time and have finished at least 60 percent of the total locations they agreed to build in each state. In 2020 the FCC waived the letter of credit requirements — requiring a cash collateral on agreements for risk assessment — for auction recipients in response to the pandemic, allowing them to comply with the less restrictive Rural Digital Opportunity Fund letter of credit rules. 

Without the waiver, providers would need to secure letters of credit for all support they had previously received, plus the money they are slated to receive in the coming year. The waiver reduces that requirement to a single year of funding if providers build infrastructure at the agreed upon pace.

Auction recipients, through the Connect America Fund Phase II Coalition, pushed back on both conditions in a filing to the FCC dated Monday and asked for a two-year extension on the waiver, citing long-term economic effects of the pandemic and rising interest rates. That would keep the waiver in place until December 31, 2025, the entire remaining build timeline.

The coalition asked for a lighter deployment threshold, 57 percent of a provider’s obligated locations rather than 60. It also pushed the FCC to include providers who have missed a filing deadline in the waiver, calling the “one strike and you’re out” proposal “disproportionate,” the filing said. 

The CAF II auction provided in 2018 nearly $1.5 billion for providers to build out network infrastructure in areas that are expensive to serve. Recipients of funds under the auction are not required to provide broadband speeds, with a minimum requirement of 10 Mbps upload and 1 Mbps upload.

RDOF, which concluded a similar reverse auction in 2020, has allocated over $9 billion for the same purpose, with up to $11.2 million available for a second phase. 

Future auctions are in jeopardy, though, as providers defaulted on nearly $3 billion of the initial award. Those that have not defaulted are pressing the FCC for more funding.

More than 300 people in the broadband industry asked the National Telecommunications and Information Administration to remove the requirement for the upcoming $42.5 billion BEAD grant program, arguing it prevents smaller providers with less capital on hand from participating.

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FCC

Senate Approves Anna Gomez as Fifth Federal Communications Commissioner

The Democrat-held Senate voted 55-43 in favor of Biden’s second nominee for the spot, after Gigi Sohn withdrew.

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Photo from the National Hispanic Caucus of State Legislators.

WASHINGTON, September 7, 2023 – The Senate voted Thursday to approve Anna Gomez as the fifth commissioner of the Federal Communications Commission, finally completing the panel and breaking the party deadlock in favor of the Democrats. 

The Democrat-held Senate voted 55-43 in favor of President Joe Biden’s May nomination

The vote breaks the almost two-and-a-half year delay in filling the last commissioner seat after the FCC was stuck in a deadlock. 

Gigi Sohn, an internet advocate and co-founder of Public Knowledge, was originally nominated for the fifth commissioner in October 2021, but stepped down earlier this year, citing “dark money political groups” tainting her career. She had been in front of the Senate commerce committee three times about her nomination, with Republicans accusing her of being partial on the relevant issues. 

“Congratulations to Anna Gomez on her confirmation by the United States Senate,” FCC Chairwoman Jessica Rosenworcel said in a statement. “Anna brings with her a wealth of telecommunications experience, a substantial record of public service, and a history of working to ensure the United States stays on the cutting edge of keeping us all connected. 

“Her international expertise will be a real asset to the agency. I look forward to working with her to advance the agency’s mission to ensure the benefits of modern communications reach everyone, everywhere and that the United States can continue to lead in the digital age,” Rosenworcel added. 

Positive comments poured from organizations including Free Press Action, America’s Communication Association, and Competitive Carriers Association. 

“CCA is enthusiastic about collaborating with Commissioner Gomez and a full Commission to address the evolving challenges and opportunities in the rapidly changing wireless landscape” said CCA president and CEO Tim Donovan in a statement. 

Chris Lewis, CEO of Public Knowledge, offered his congratulations to the new commissioner. “We are excited for the diversity and experience Ms. Gomez brings to the agency.” 

Gomez served as a senior advisor for international information and communications policy in the State Department’s Bureau of Cyberspace and Digital Policy. She served as the National Telecommunications and Information Administration Deputy Administrator from 2009 to 2013 and spent over a decade in various positions at the FCC.  

Current commissioners Geoffrey Starks and Brendan Carr were also nominated by Biden in May but have yet to get Senate votes. Starks must be voted in before the end of the year or he must resign; Carr can serve throughout 2024 without reconfirmation. 

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