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Fifth Circuit to Rehear Petition Challenging FCC Jurisdiction on Universal Service Fund

A rehearing of the case means that the full court will reconsider the case and the previous ruling is vacated.

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Photo of Fifth Circuit Appeals Court

WASHINGTON, July 3, 2023 – The Fifth Circuit Court of Appeals agreed to a full panel rehearing on the constitutionality of the Federal Communications Commission’s funding mechanisms for the Universal Service Fund, which supports various broadband expansion programs, on Thursday. 

Early last year, nonprofit research house Consumers’ Research and communication service provider Cause Based Commerce asked the U.S. Court of Appeals for the Fifth Circuit to find that Congress gave the FCC unfettered delegated authority to raise revenues akin to taxation under Section 254 of the Telecommunications Act of 1996.  

Consumers’ Research claimed that the FCC has illegally delegated the taxation authority to a private entity, the Universal Service Administration Company. It asked the fifth circuit to take action against the FCC’s “unfettered power” to “define the scope of universal service.” 

The appeals court ruled in March that Congress provided sufficient guidance to the agency when administering the fund, put in place guardrails to guide that administration, and that the FCC has sufficient oversight of USAC to allow for the subordination. 

A rehearing of the case means that the full court will reconsider the case and the previous ruling is vacated. A majority of the circuit judges in “regular active service” voted in favor of rehearing the case with a full panel of judges instead of the three who heard it the first time after parties filed a petition for rehearing. 

Oral argument has not been scheduled, according to the short order. 

William Hild, executive director of petitioner Consumers’ Research, told Broadband Breakfast in a statement in March that “with the acknowledgement that our case is ripe and that we have standing, we will look forward to continuing the legal fight to defend consumers from the unconstitutional USF tax on their phone bills set by unelected bureaucrats.” 

Consumers’ Research has also taken the issue to the Sixth Circuit, which sided with the FCC, and the Eleventh Circuit, which heard oral arguments this month and has yet to reveal where it stands. 

“In its subordinate role, USAC provides the FCC with fact-gathering, ministerial, and administrative support,” the Sixth Circuit decision said. “It submits for approval to the FCC the underlying data and projections that the FCC then uses to calculate the contribution factor.” 

“Critically, the FCC is not bound by USAC’s projections,” the decision added, noting the FCC may approve or deny the contribution recommended by USAC. 

The more appellate courts that rule on the matter, the greater the chance of disagreement between them, making it easier for Consumers’ Research to appeal to the U.S. Supreme Court. 

Industry leaders have come out in support of the Fifth Circuit’s original decision, claiming that it recognizes the importance of the USF to connect Americans to broadband services. Greg Guice, director of government affairs at advocacy group Public Knowledge, said in March that “the Fifth Circuit has once again affirmed the importance of our nation’s universal service mission and the FCC’s obligation to ensure it is achieved by placing the program on a sound financial footing.” 

Contributing Reporter Teralyn Whipple, who joined Broadband Breakfast in 2022, studied marketing at Brigham Young University. She has reported extensively on broadband infrastructure, investments and deployment. She has also headed marketing campaigns for several small companies.

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Broadband Mapping & Data

Robocalls, Rip and Replace, Pole Attachments: More Notes From the FCC Oversight Hearing

Commissioners and House lawmakers discussed key topics at a contentious hearing.

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Screenshot of commissioners at the hearing Thursday.

WASHINGTON, December 1, 2023 – All five Federal Communications Commissioners took part in a lengthy and at times contentious House oversight hearing on Thursday.

Commissioners urged Congress to restore the FCC’s authority to action spectrum, which expired in March and left the nation’s airwaves in limbo, and to fund the Affordable Connectivity Program, the low-income internet subsidy set to dry up in April of next year. 

GOP lawmakers FCC Republicans also took the chance to slam efforts by the commission’s Democratic majority.

The discussion touched on other issues including robocall prevention, rip and replace funding, and pole attachments.

Robocalls

The commission has been taking action on preventing robocalls this year, kicking off an inquiry into using artificial intelligence to detect fraud, blocking call traffic from 20 providers for lax enforcement policies and issuing hundreds of millions in fines. In August the commission also expanded the STIR/SHAKEN regime – a set of measures to confirm caller identities – to all providers who handle call traffic.

FCC Chairwoman Jessica Rosenworcel asked multiple times for three Congressional actions she said would help the commission crack down on scam calls: a new definition for “autodialer,” the ability to collect fines, and access to Bank Secrecy Act information.

The Supreme Court limited the definition of autodialers in 2021 to devices that store or produce phone numbers with random or sequential number generators. That leaves the scope of the Telephone Consumer Protection Act, which guides the FCC’s authority, “stuck in the nineties,” according to Rosenworcel.

“A lot of scam artists are using technologies no longer covered” by the act, she said. “We can’t go after them.”

On collecting robocall fines, that authority currently rests with the Department of Justice, and Rosenworcel is not the first to tell Congress the agency’s enforcement has been lax. Industry groups at an October Senate hearing cited slow DOJ action as a major reason FCC fines on the issue often go uncollected.

The Bank Secrecy Act requires financial institutions to keep records on certain transactions to help law enforcement agencies track money laundering and other criminal activity. The FCC cannot access information governed by the act, which Rosenworcel said would help the commission go after repeat scammers.

“These scam artists set up one company, we shut them down, they go and set another one up,” she said.

Rip and replace

Commissioners urged Congress to fund the rip and replace program. Congress allocated $1.9 billion to reimburse broadband companies for replacing network equipment from Chinese companies deemed to be national security threats, mainly Huawei and ZTE.

The FCC was tasked with overseeing the program and found in 2022 that another $3 billion would be needed to get the work done. The Biden administration joined a chorus of lawmakers and broadband companies in calling for Congress to fill the gap, but legislation on the issue has yet to be passed.

“We’re providing 40 cents on the dollar to a lot of small and rural carriers,” said Rosenworcel. “They need more funds to get the job done.”

The commission has been granting extensions to providers unable to get the work done on time. In addition to supply chain issues, some small providers cite a lack of funding as the reason they’re unable to replace insecure equipment.

Pole attachments

Commissioners expressed a willingness to shift some of the burden of utility pole replacements off of broadband providers as they attach new equipment.

“If a pole is getting replaced,” Commissioner Brendan Carr said, “there’s probably a role for the FCC to say that the pole owner should bear somewhere north of the cost of $0.”

The commission has authority in 26 states over most pole attachment deals between utility pole owners and telecommunications companies looking to expand their networks. The issue of who pays for poles that need to be replaced to accommodate more communications equipment is contentious, with telecoms arguing utilities force them to pay for replacing already junk poles. 

After spending years sifting through thousands of comments, commissioners have apparently been persuaded. Rules up for a vote at the commission’s December meeting would limit the scenarios in which utilities could pass full replacement costs on to attachers.

Broadband funding map

Rosenworcel repeatedly asked lawmakers to work with the commission on ensuring its broadband funding map is kept up to date.

The FCC launched its funding map in May to keep track of the myriad federal broadband subsidy efforts and avoid funding the same areas multiple times. The Department of Agriculture, the FCC, and the Treasury Department each oversee separate broadband funding programs, in addition to the Commerce Department’s upcoming $42.5 billion broadband expansion effort.

The commission has signed memoranda of understanding with those agencies on providing data for the funding map, but Rosenworcel asked the subcommittee for help ensuring the agencies follow through and respond to FCC requests for their funding data. 

“If you could help us make sure those other agencies respond to us with data, you’ll see where there are problems, duplication, areas we haven’t reached,” she said.

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Broadband's Impact

House GOP Uses Oversight Hearing to Criticize FCC Actions

Partisan disputes return to FCC policies after years of a 2-2 split on the commission.

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Screenshot of Rep. Cathy McMorris Rodgers at the hearing Thursday.

WASHINGTON, December 1, 2023 – GOP lawmakers took the opportunity to slam recent Federal Communications Commission efforts at a House oversight hearing on Thursday.

That did not come as a surprise, with the communications and technology subcommittee branding the hearing as overseeing “President Biden’s broadband takeover.” Partisan disputes have resumed around FCC policies since the appointment of commissioner Anna Gomez, who gave Democrats a 3-2 majority on the commission.

The hearing also touched on spectrum policy and the Affordable Connectivity Program, which is still set to dry up in April 2024 despite months of calls for its renewal.

Digital discrimination

The FCC voted along party lines on November 15 to instate rules addressing gaps in broadband access along racial and class lines. Those rules are taking an approach industry groups opposed and allow the commission to take enforcement action against companies for practices that do not intentionally withhold broadband from protected groups.

Technology and Communications Subcommittee members and Republican commissioner Brendan Carr echoed talking points from an industry lobbying push that characterized the rules as a “micromanagement” effort to scrutinize routine business practices. 

Rep. Cathy McMorris Rodgers, R-Washington, said “burdensome requirements like these will discourage deployment and harm our efforts to close the digital divide.”

Rodgers sparred with FCC Chairwoman Jessica Rosenworcel on the issue, interrupting her answers to questions to reclaim time.

Rosenworcel, for her part, stuck to her argument that the rules are in line with the Infrastructure Act, which mandates the commission take action “preventing discrimination of access based on income level, race, ethnicity, color, religion, or national origin.” 

“The language in this statute is exceptionally broad,” she said.

The act also directs the commission to take into account technical and economic feasibility of deploying networks in poor and rural areas, but Rosenworcel’s assurances that the FCC will do so have not convinced industry or Republicans.

Net neutrality

The commission also moved forward on plans to reinstate net neutrality rules in October. The rules would classify broadband internet as a telecommunications service under Title II of the Communications Act of 1934, opening the industry up to more expansive regulatory oversight from the FCC. 

Similar rules were in place for two years before being repealed by the Trump FCC in 2017.

Republican committee members grilled the commission on Democratic warnings that the repeal would result in widespread traffic throttling, which did not materialize at scale in Title II’s absence.

Subcommittee Chairman Rep. Bob Latta, R-Ohio, asked Rosenworcel “when the so-called net neutrality rules were repealed, did it end the internet as we know it today, yes or no?”

The commission chairwoman answered a string of similar questions by saying the anticlimactic end to Title II broadband rules was “a result of more than about a dozen states stepping in and developing their own net neutrality laws.”

Commissioner Carr also argued with Rosenworcel on Title II’s impact on national security, talking over each other at points. Carr said there had been “one briefing” in his six year tenure in which he was told about a security issue the government could not address without Title II oversight over broadband. 

Rosenworcel said she has told national security authorities “over and over again” that without Title II authority, she cannot take requested actions to stop bad actors from hijacking traffic.

The commission is taking public comments on the proposed net neutrality rules until January 2024.

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Broadband's Impact

FCC Pushes Congress on Spectrum Auction Authority, ACP Funding at Oversight Hearing

Commissioners from both parties emphasized the issues to the House Communications and Technology Subcommittee.

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Screenshot of FCC Chairwoman Jessica Rosenworcel at the hearing Thursday.

WASHINGTON, November 30, 2023 – The Federal Communications Commission asked Congress to move on renewing the agency’s auction authority and funding the Affordable Connectivity Program at a House oversight hearing on Thursday.

“We badly need Congress to restore the agency’s spectrum auction authority,” said FCC Chairwoman Jessica Rosenworcel at the hearing. “I have a bunch of bands that are sitting in the closet at the FCC.”

Rosenworcel pointed to 550 megahertz in the 12.7-13.25 GHz band. The commission would “be able to proceed to auction on that relatively quickly” if given the go ahead, she said.

The commission’s authority to auction spectrum expired for the first time in March after Congress failed to extend it. Auction authority lets the commission auction off and issue licenses allowing the use of certain electromagnetic frequency bands for wireless communication.

Repeated pushes to restore the ability, first handed to the commission in 1996, have stalled in the face of gridlock on Capitol Hill.

Opening up spectrum is becoming more necessary as emerging technologies and expanding networks compete for finite airwaves. The Joe Biden administration unveiled a plan this month to begin two-year studies of almost 2,800 MHz of government spectrum for potential commercial use.

FCC Commissioner Brendan Carr said that’s not fast enough. “I would have had the spectrum plan actually free up more than zero megahertz of spectrum,” he said.

Rosenworcel said the FCC was in talks with the National Telecommunications and Information Administration, the agency that wrote up the plan, during the drafting process. When asked if the NTIA followed her recommendations, she said she would “like everyone to move faster and have a bigger pipeline in general.”

Commissioners expressed support for a House bill that would give the FCC temporary authority to issue the licenses it already auctioned off for 5G networks in the 2.5 GHz band. An identical bill passed the Senate in September.

T-Mobile took home more than 85 percent of the 8,000 total licenses in the band for $304 million, but the company and other winners cannot legally use their spectrum until the FCC issues the licenses.

Affordable Connectivity Program

Also at the top of commissioners’ minds was the Affordable Connectivity Program. Set up with $14 billion from the Infrastructure Act, the program provides a monthly internet subsidy for 22 million low-income households.

The program is expected to run out of money in April 2024.

“We have come so far, we can’t go back,” Rosenworcel said. “We need Congress to continue to fund this program. If it does not, in April of next year we’ll have to unplug households.”

The Biden administration asked Congress in October for $6 billion in the upcoming appropriations bill to keep the ACP afloat through December 2024. The government has been funded since September by stop-gap measures, with House Republicans ousting former Speaker Kevin McCarthy, R-CA, over his unwillingness to cut spending and making similar demands of his replacement. 

A coalition of 26 governors joined the chorus of calls to extend the program on November 16. Lawmakers, activists, and broadband companies have been sounding the alarm on the program’s expiration for months as the $42.5 billion Broadband Equity, Access and Deployment effort gets underway. Without the subsidy, experts have said, households could be unable to access the new infrastructure built by BEAD.

Representative Yvette Clarke, D-NY, said of the ACP shortfall that she is “looking forward to introducing legislation on that very subject before Congress concludes its work for the year.”

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