WASHINGTON, March 17, 2022 – Some organizations are calling for the Federal Communications Commission to turn the onus of financially supporting key programs for expanding basic telecommunications services from service providers to the general public via taxation, according to rolling submissions to the agency.
The rationale is that the communications landscape since the 1997 adoption of the Universal Service Fund, which goes to support multiple high-cost programs for universal broadband, has changed significantly to where all Americans are reliant on more modern communications. And with that, there are calls to reform the program beyond its reliance on dwindling voice service revenues.
“Direct appropriations [general taxation] would be the most straightforward means of spreading the funding requirements for such programs – which benefit all American businesses and consumers – over the broadest and most equitable funding base,” said AT&T in its submission, which has supported such a position previously.
Thursday was the last day to submit comments to the FCC’s study of the future of the USF. The program supports the schools and libraries E-rate subsidy program, the low-income Lifeline program, the Rural Health Care program and the Connect America Fund for rural areas.
But the USF has been operating under an escalating burden that has gone unchanged for decades: Its reliance on voice service revenues – downloaded onto customers – has put stress on the roughly $8-9 billion per year program, which saw a tax that reached a record 33.4 percent of declining voice revenues last year.
“The Commission has placed increased weight on a small subset of communications services and providers with a shrinking subscriber base to achieve the nation’s universal broadband goals,” AT&T added, “in particular, enterprise services offered by legacy telecommunications companies, companies which historically and today are the largest contributors to the Fund.”
The FCC is looking at a dichotomy of recommendations, according to an analysis of the submissions to the FCC: either derive funding for the USF from general taxation or broaden the base of revenue support to broadband revenues generally and/or include other companies that benefit from broadband, including big technology companies.
More support for congressional budget item
Among those organizations supporting a move to shift the burden on general taxation for the USF are the Internet Innovation Alliance, the Cellular Telecommunications Industry Association, the U.S. Chamber of Commerce, and TechFreedom, a non-profit technology think tank.
“Adopting a general appropriations process for broadband programs will help “future proof” these programs to account for new technologies to provide communications services for consumers and businesses,” said the Chamber of Commerce. “The appropriations process allows Congress to better tailor broadband programs on a regular basis to account for changes in the marketplace and new communications technologies. It will also avoid the challenges currently facing the USF.”
But while TechFreedom argued against expanding contribution to big technology companies because the FCC “cannot unilaterally” do that, others in the group supporting a congressional line item said big tech companies should be a target if support cannot come from taxation.
“Short of general revenues,” the CTIA said, “significant elements of the economy, such as digital advertisers, online marketplaces, and streaming services, rely heavily on broadband networks and leverage the availability of broadband service to generate enormous amounts of revenue.”
Added the IIA: “If adding an $8 billion line item to the annual Congressional budget is deemed unworkable, an alternative approach that should be considered is expanding the USF contribution base to include revenues from large internet companies.”
Big Tech must pay
AT&T said if its general tax proposal cannot be adopted, it should look to expand the base to include big technology platforms, whose business models it said “depend on, and now dominate, the internet ecosystem.”
Verizon recommended the commission broaden the base to online platforms with a “specified number of active users or meet certain sales or market capitalization thresholds,” a recommendation made by FCC Commissioner Brendan Carr in a Newsweek op-ed last year that FCC Chairwoman Jessica Rosenworcel called “intriguing” and that received some Republican support. FCC Commissioner Nathan Simington also raised the idea in an interview in September.
The NCTA Rural Broadband Association is similarly recommending that the FCC move toward requiring contributions from large firms “whose video streaming and other “Internet-based businesses depend substantially on the availability and affordability of robust broadband services throughout the country.”
The Coalition of Rural Wireless Carriers, the non-profit Free State Foundation, and a coalition of academics and policy scholars have also called for the opening of the fund to big technology platforms. The academics and policy scholars argued that it’s not fair that consumers or certain telecom companies are burdened by the weight of the USF and instead should be put onto the “half a dozen tech companies…responsible for as much as 80 percent of network traffic at peak time.”
Bring in broadband revenues
As calls for a possible Big Tech tax were emerging, Carol Mattey, a former deputy chief of the Federal Communications Commission, released a report in September calling for the FCC to broaden the base to include broadband revenues. The report was followed up by calls for Congress to stabilize the fund and for the FCC to take immediate unilateral action because, proponents said, the agency had the jurisdiction to do so.
Advocacy group Public Knowledge, trade associations INCOMPAS and USTelecom, the Rural Wireless Association, the Coalition of Rural Wireless Carriers, and non-profit broadband advocate Benton Institute also proposed that the FCC bring in broadband revenues, which some said can be implemented quickly.
Benton, however, went further to caution against general taxation, calling it “ill advised and, indeed, extremely dangerous.
“Even with multiyear appropriations (something which is very difficult to accomplish legislatively for both political and technical reasons), leaving USF to the vagaries of the appropriations process would unquestionably conflict with the established – and essential – objective of maintaining a specific and predictable funding mechanism, and would likely endanger the need to provide sufficient funding as well.”
It was a position supported by Chris Nelson, vice chairman of the South Dakota Public Utilities Commission, who said in a debate about USF reform last year that a general appropriations item would mean the fund’s makeup could swing from year-to-year with lawmaker turnover.
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.
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.
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.
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.
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.
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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