WASHINGTON, April 19, 2022 – A petition filed last week is requesting a U.S. appeals court find unconstitutional the process by which the Universal Service Fund is funded and how its administration has been delegated.
The petitioners, including non-profit research house Consumers’ Research and communications service provider Cause Based Commerce Inc., plead to the U.S. court of Appeals for the Fifth Circuit that Congress handed the Federal Communications Commission under the Telecommunications Act of 1996 unfettered delegatory authority to raise revenues for the roughly $8-billion annual program that seeks to expand basic telecommunications services across the country – including to low-income Americans, schools and libraries and rural healthcare.
That offloading of duties with “no formula, ceiling, or other meaningful or objective restrictions” is contrary to the nondelegation doctrine, the petitioners argue, which is a Constitutional limit that does not allow Congress to delegate to other branches its own legislative authority.
“The Framers [of the Constitution] understood ‘that it would frustrate ‘the system of government ordained by the Constitution’ if Congress could merely announce vague aspirations and then assign others the responsibility of adopting legislation to realize its goals,” the petition read.
Congress has improperly given taxation powers and inappropriately delegated power to a private entity, petitioners argue
The petitioners, who name the FCC as a respondent, argue that because the money raised for the fund comes from telecommunications companies, which often pass those costs down to customer voice service bills, Congress has effectively given the FCC taxation powers – a solely legislative authority.
Additionally, they argue that the FCC itself is in violation of the nondelegation doctrine by outsourcing the administration of the USF to a private entity called the Universal Service Administrative Company, which announces the amount needed to be obtained every quarter to meet the fund’s objectives. They argue that because the process for determining the amount and the FCC’s approval of it happens “only days before the new quarter begins,” the FCC has “no option” but to approve whatever USAC says.
“This unaccountable state of affairs has unsurprisingly led to skyrocketing costs, with the contribution rate quintupling since 2002, as well as rampant waste, fraud, and abuse,” the petition said, referring to the percent of voice service revenues that must be collected to support the program.
In one quarter last year, the contribution percentage reached a record high of 33.4 percent of declining voice revenues. Advocates for the USF have been calling for a more sustainable model for the fund, including broadening the contribution base to include broadband revenues and big tech platforms, with others calling for scrapping all that and just adding the required amount from a congressional budget item.
As such, the petitioners say the USF should be floated by money from federal revenues.
“If Congress believes these programs are worthy of funding, it should have to endure the public scrutiny and beneficial debate of raising money and proposing an appropriation for them,” the petition said. “But “[b]y shifting responsibility to a less accountable branch, Congress protects itself from political censure—and deprives the people of the say the framers intended them to have.”
Some argue that general taxation revenues should fund the Universal Service Fund
Advocates of general taxation for the fund, including AT&T and former FCC Chairman Ajit Pai, have often pointed to the added benefit of having congressional oversight to minimize fraud and abuse.
The petitioners have the support of non-profit technology think tank TechFreedom, which filed a brief with the court to boost the position. TechFreedom had by then already submitted comments to the FCC on its study of the future of the USF, arguing that the money should come from general taxation and that the FCC “cannot unilaterally” expand the fund to include contributions from big technology platforms. The FCC’s consultation included a question about that jurisdiction question, with parties including affordable communications advocate Public Knowledge and Carol Mattey, who urged the expansion of the fund to include broadband revenues, arguing that the FCC has jurisdiction to expand the base because it’s in the public interest.
“This double delegation – and, worse, private delegation – has led to lax oversight, runaway budgets, wasteful spending, and outright fraud,” alleged TechFreedom in its brief.
“It was bad enough that Congress handed such broad and ill-defined regulatory power to an independent agency – a government entity not subject to direct control by democratically elected leadership,” TechFreedom said, adding for the FCC to pass that power over to USAC without Congress’s permission “means that the USF is not subject to any congressionally established procedural guardrails.”
TechFreedom furthers its complaint by arguing that USAC directors “are not properly appointed” and the FCC’s “rubber-stamping of USAC’s proposals violates the Administrative Procedure Act.”
The free markets non-profit the Competitive Enterprise Institute and the think tank the Free State Foundation also filed a joint brief with other professors and institutes arguing that the administration of the USF has effectively usurped Congress’s power to levy taxes via the ability of service providers to pass down the cost of the fund to consumers.
“The Constitution does not permit Congress to circumvent the legislative process by allowing an independent agency (guided by a private company owned by an industry trade group) to raise and to spend however much money it wants every quarter for ‘universal service’ at the expense of every American who pays a monthly phone bill,” the joint submission said.
Intervenors named in the case – who are not parties to it but can submit comments to help the court – include the Benton Institute, the National Digital Inclusion Alliance, the Center for Media Justice, the Schools, Health and Libraries Broadband Coalition, the National Telecommunications Cooperative Association, and the Competitive Carriers Association.
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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