December 15, 2020 — The Federal Communications Commission recently announced the winners of the Rural Digital Opportunity Fund. In the reverse auction,180 bidders won $9.2 billion in federal monies to be distributed over the course of 10 years, to provide broadband to 5.2 million locations across the United States.
For the winning bidders, the next step in the RDOF process is to submit so-called “long form” applications, or the FCC’s Form 683, by January 21, 2021. The long form application process provides FCC staff with the opportunity to make sure they are comfortable with the winning applicants before they distribute the funds.
On Tuesday, the trade group US Telecom, together with the Wireless Internet Services Providers Association, hosted a question-and-answer session on preparing the long form with an expert panel, and further, published recorded video guides, meant to assist those working through the Long Form application process, on Tuesday.
“The short form is made easy, as the FCC wants increased participation and competitive bidding. You may have done it yourself,” said Jon Wilkins, partner at Quadra Partners, detailing the ease of the introductory step bidders took in July to be considered for Auction 904.
While filing the long form might seem as easy as filing the short form, Wilkins said it will prove far more complex. At this point, “staff at the FCC are in the mode of thinking that they have billions of federal dollars that they will be held responsible, to some degree, for distributing effectively.”
Certifications about USF, financial and technical plans, public interest obligations and ETC status
“Applicants should be prepared to be responsive and converse with FCC staff members,” said Steve Coran, attorney at Lerman Senter.
RDOF winners will be required to provide four certifications, detailing general Universal Service Fund information, financial and technical plans, public interest obligations, and an Eligible Telecommunications Carrier certification.
For winning bidders, the first financial requirement are to submit a credit commitment letter from an eligible bank by February 25, indicating the amount of support being provided, which can be no less than the first year of support needed.
Winners must also issue a breakdown of funding sources, detailing how they plan on providing the required funds, the dollars they have available to support the first two-and-a-half years of future networks, and the estimated overall project cost, he said.
Because many bid winners may not yet have an ETC certificate, RDOF winners must apply for one and provide proof of ETC certification within 180 days of December 7, the day winners were announced.
Coran warned bidders that any major modifications made during the short form and long form process can result in disqualification, unless the bidder receives a waiver from the FCC. For example, “if an owner goes from holding 12 percent of the company to 15 percent, you have an obligation to update that information with the FCC,” he said.
The pair noted specific spectrum requirements facing fixed wireless bidders. “With the short form process, the FCC provided a detailed road map of the spectrum bands available. It is going to be far more rigorous” than the long form, said Coran. Fixed wireless bidders must detail bandwidth plans for the last mile, on top of providing a number of additional spectrum licenses and authorizations.
Data from CostQuest Associates and its role in RDOF finalization
Wilkins also highlighted the broadband data that CostQuest Associates provides. Winning bidders who fail to completely follow through with the RDOF process can be fined by the agency. The default penalty is to charge bidders $3,000 for each census block district that they forfeit. The maximum penalty is to charge 15 percent of the total dollar amount of the potential awarded funds.
For those unsure of what to look out for, Coran recommended “watching all of CQA’s videos, bringing in professional help, reading all the instruction materials, and engaging with people who have been through it before.”
“You’re not going to get it right the very first time,” said Coran. FCC staff members “will have questions and will come back to you. A lot of it will be because you missed something or answered something incorrectly.”
Experts Urge FCC Unilaterally Broaden Revenue Base of Universal Service Fund
Consultants say the Federal Communications Commission has the authority to do so.
WASHINGTON, November 3, 2021 – Telecommunications experts are recommending that the Federal Communications Commission unilaterally expand the revenue base of the Universal Service Fund to include broadband revenues, rather than waiting on Congress to do so.
Advocates such as Public Knowledge Director of Government Affairs Greg Guice cite congressional infighting over the bipartisan infrastructure bill as an example of inefficiency in the legislature that would stall the passage of urgent reform for the USF, a fund that helps deliver basic telecommunications services to low-income Americans and those in remote regions.
Telecommunications policy experts said at the INCOMPAS Show in Las Vegas October 25, on which Guice was a panelist, that it is essential that the USF force broadband revenues into the pool of funds, as the fund’s overreliance on voice revenues – even as those revenues decline – is putting a strain on the programs.
Guice and Carol Mattey, principal of Mattey Consulting LLC and former deputy chief of the FCC, told Broadband Breakfast Tuesday that the agency has the jurisdiction to broaden the base of the contribution to the USF under the Telecommunications Act of 1996 if it is in the public interest.
“My view is the FCC has the statutory authority to assess broadband internet access service,” said Mattey in an email. “Under existing law — specifically, section 254(d) of the Telecommunications Act of 1996 — the FCC has the statutory authority to require any ‘providers of interstate telecommunications’ to contribute to the universal service fund if the public interest warrants.
“The FCC has classified broadband internet access service as an information service,” she added. “Under the ’96 Act, the definition of an information service is a service that offers the capability to generate, acquire, store, transform, etc. etc. information ‘via telecommunications.’”
Recommendations for reform
Mattey published a report in September that laid out the case for the fund to be expanded to incorporate a broadband range of money sources, including broadband.
And there has been no shortage of recommendations to help the fund prosper. Earlier this year, a panel of experts debated the merits of having Congress wholly assume contributions to the fund from general tax dollars, while others suggested that recommendation would destabilize the fund because it would swing with the political winds. Those people, instead, focused on simply broadening the base to include other sources, including broadband.
More recently, FCC Commissioner Brendan Carr penned an op-ed in Newsweek recommending the fund include contributions from Big Tech because that industry benefits from broadband. It was a suggestion that FCC Chairwoman Jessica Rosenworcel called “intriguing.”
But while Guice and Mattey argue for the FCC to step in and make changes unilaterally, in a one-on-one interview with the Internet Innovation Alliance in September, FCC Commissioner Nathan Simington – in pontificating about Carr’s recommendation for Big Tech contributions – said he didn’t want to get ahead of Congress on the matter, suggesting a wait and see approach.
USF in need of change
Over the last two decades, the USF has seen the revenues subject to its assessment decline by 63%. This money goes to support four main programs: high cost support for rural areas, Lifeline for low income areas, the E-rate program for schools and libraries as well as a rural healthcare support program.
This year, the contribution percentage relative to revenues hit an all time high.
The panel at the INCOMPAS show pinpointed the major factor behind declining USF revenues as decreases in mobile service revenues due to providers setting lower mobile rates. These decreases come despite continual increases in communications revenues overall.
Adrianne Furniss: Lifeline Needs A Lifeline
The FCC should hit the pause button on a current plan to zero out support for voice-only services.
In less than three months, nearly 800,000 low-income people who receive telephone subsidies through the Universal Service Fund’s Lifeline program will be negatively impacted by changes scheduled to go into effect at the Federal Communications Commission on December 1. That is one of the most troubling — and pressing — conclusions of an independent evaluation of the FCC’s Lifeline program conducted by Grant Thornton. As the COVID-19 pandemic rages on, the FCC must act now to ensure people can retain essential communications services.
As of June 20, 2021, approximately 6.9 million subscribers were enrolled in the Lifeline program; most (approximately 94 percent) are enrolled in supported wireless plans. Voice service remains a desired service for both Lifeline subscribers and the general American consumer. Only 1 percent of surveyed American adults live in a home with neither fixed nor mobile voice service, and mobile-only voice subscribers comprise more than 60 percent of U.S. households.
In 2016, the FCC adopted a comprehensive reform and modernization of the Lifeline program. For the first time, the FCC included broadband as a supported service in the program. Lifeline program rules allowed support for stand-alone mobile (think cell phone) or fixed broadband Internet access service (think home broadband service delivered over a wire), as well as bundles including fixed or mobile voice and broadband. The 2016 decision also set in motion a plan to zero-out support for voice-only services.
In its February 2021 report, Thornton found that the phase-down and ultimate phase-out of voice services by December 1, 2021 may negatively impact 797,454 Lifeline consumers (that’s over 10 percent of all Lifeline enrollees) who use voice-only services for fundamental needs. So that’s nearly 800,000 households that could face being disconnected from phone service this winter.
The FCC needs to change course and help more Americans keep connected to communications services that are essential to navigate the ongoing public health and economic crisis.
And it needs to act before December 1.
Most importantly, the FCC should act swiftly and hit the pause button on the 2016 plan to zero-out support for voice-only services. During the pandemic, the stakes are just too high for anyone to be disconnected from essential communications networks.
Then the FCC should launch a new effort to reform and further modernize the Lifeline program, informed by what we’ve witnessed during COVID, and the findings in Thornton’s and the FCC’s own recent review of the Lifeline program.
First, Lifeline needs to have foundational governance documents—such as strategic plans, performance objectives, and an integrated communications plan—to assist in the longitudinal success and guidance of the program.
Second, the FCC has to consider raising Lifeline’s monthly subsidy, $9.25, so it can make more meaningful services affordable for low-income families. Home-broadband prices (both for fixed and wireless service) remain disproportionately high when compared to the Lifeline program subsidy. The FCC should evaluate minimum service standards in relation to the average cost of wireless, wireline, and broadband data plans and determine if the subsidy will cover all, or even the majority of costs to provide Lifeline services.
Third, the FCC must adopt changes in the program so it better benefits the people it was created to connect.
- The FCC should seek to understand the composition of Lifeline households and what services various members need (i.e., school-aged children, telecommuters, etc.). The minimum services supported by Lifeline should address the needs of the entire household.
- Just 25 percent of the people eligible to participate in the Lifeline program actually enroll. The FCC must understand why and should consider ways to improve awareness of the Lifeline program. One idea is to partner with other federal benefit programs, and the state agencies that administer those programs, to not only increase outreach about Lifeline, but ideally to integrate Lifeline’s application processes into those program applications.
- The FCC should adopt program rules that incorporate Lifeline consumer feedback to ensure the program works for the most vulnerable people in society.
Fourth, changes in the Lifeline program should encourage all telecommunications and broadband service providers to compete to serve low-income households in their service areas.
Finally, the FCC should also consider revising its measure of affordability of broadband for low-income consumers. Currently, the FCC considers “affordable service” as 2 percent of disposable income of those below 135 percent of the federal poverty level. Instead, the FCC should consider affordability in the context of a subscriber’s purchasing power in a geographic location and balanced with availability of services and choice of providers. The FCC should evaluate the pricing packages of voice and broadband services offered by Lifeline carriers and provide assurance that packages offered are in the reasonable standard of affordability for low-income consumers. And the FCC should institute a structured process to regularly review the Lifeline program’s pricing packages and incorporate measures of both the subsidy rate and service standards for similar programs (like the Emergency Broadband Benefit), income statistics of current consumers, and the percentage of Lifeline subscribers who pay out of pocket for services.
The commitment to connecting people with low incomes to essential communications services is not new. But the past 18 months have offered stark reminders of the importance of universal service. We need the FCC to act now to keep everyone connected. And we need the FCC to update the Lifeline program so everyone can rely on a basic level of connectivity no matter how much income they have.
Adrianne Furniss is the Executive Director of the Benton Institute for Broadband and Society. She manages the institute’s staff and relationships with Benton experts, partners, and supporters in service to Benton’s mission and in consultation with Benton’s Trustees and Board of Directors. Previously, she held management positions at both non-profit and for-profit content creation companies, focused on program development, marketing, and distribution. This piece was originally published in the Benton Institute’s Digital Beat, and is reprinted with permission. © Benton Institute for Broadband & Society 2021. Redistribution of this publication – both internally and externally – is encouraged if it includes this copyright statement.
Broadband Breakfast accepts commentary from informed observers of the broadband scene. Please send pieces to firstname.lastname@example.org. The views expressed in Expert Opinion pieces do not necessarily reflect the views of Broadband Breakfast and Breakfast Media LLC.
Experts Concerned About Connectivity After Emergency Broadband Benefit Fund Runs Dry
April 1, 2021 – Experts are concerns about the long-term implications of the $3.2-billion Emergency Broadband Benefit program (EBB) running out of money without a plan for what happens after.
The fund, created by Congress in December, provides up to $50 in a monthly internet discount for families and $75 for tribal lands to access broadband internet. The fund will cease when all the money is used up or within six months, whichever happens sooner.
Clare Liedquist Andonov, principal at Herman and Whiteaker, LLC, said Wednesday during the CCA mobile carriers show that if all people on Lifeline — an older FCC program that provides monthly discounts for eligible low-income subscribers for internet and telephone services – subscribe to the fund, the money will “be exhausted within about four months.”
John Nakahata, partner at Harris, Wiltshire and Grannis LLP, said both the EBB and Emergency Connectivity programs are simply short-term stimulus plans that are not designed to last long.
Andonov said she is concerned about what happens after such funding ceases to exist. “What happens after four months?” she asked. “Do you disconnect those people?” She said the infrastructure built to connect people online in the first place would go to waste if the EBB program ceased operations in a matter of months, alongside the administrative costs to run the program.
To combat the expenditure of EBB funding in the mere four months projected by Andonov, Senator Amy Klobuchar, D-MN), co-chair of the Senate Broadband Caucus, and House Majority Whip James Clyburn, D-SC, introduced comprehensive bicameral broadband infrastructure legislation on March 12 to expand access to affordable high-speed internet for all Americans.
“In 2021, we should be able to bring high-speed internet to every family in America — regardless of their zip code,” said a press release from Klobuchar’s office. “This legislation will help bridge the digital divide once and for all.” If passed, Cole said it would allow the EBB program to last for an entire year; but even then, one year is not enough, they say, as broadband should be accessible for people indefinitely.
To address this challenge, there is some $100 billion set for recently-introduced broadband infrastructure bills being considered in Congress. That money is spread between three bills that would change the nation’s definition of served and unserved people with broadband by dramatically upping the threshold for broadband speeds.
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