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Experts Suggest Measures to Protect Affordable Connectivity Program at Senate Hearing

Under consideration: Opening the Universal Service Fund to contributions from broadband and Big Tech companies.

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WASHINGTON, September 28, 2023 – A broadband association asked Congress last week to open the Universal Service Fund to contributions from broadband and Big Tech revenues to allow the umbrella fund to absorb and support the Affordable Connectivity Program.

The industry is concerned that the $14-billion ACP program, which discounts monthly services for low-income Americans and those on tribal lands, is going to run out of money by early next year. Meanwhile, it is universally agreed that the Universal Service Fund, which includes four high-cost broadband programs, is struggling to maintain its roughly $8-billion annual pace without a diversification of its revenue sources.

Jonathan Spalter, president and CEO of USTelecom, told the Communications and Technology subcommittee studying the future of rural broadband on September 21 that Congress could both support the sustainability of the USF and the ACP by forcing contributions from broadband and Big Tech revenues.

The idea is that the extra revenue would solve the USF sustainability question by allowing the fund to continue to support the existing four programs under its purview, while also allowing it to adopt the ACP program, hence removing that program from reliance on Congress for money.

“We can have Congress give the FCC the authorities that it requires to be able to expand the contribution base, integrating the ACP within USF program, and thereby allowing the potentially out of control contribution factor that will potentially bog down the viability and longevity of the Universal Service Fund mechanisms to go down,” Spalter said.

“And in so doing it can expand the contribution base sufficiently to allow not only broadband but importantly the dominant Big Tech companies to participate so that we would effectively fuse the Affordable Connectivity Program with [high-cost program] Lifeline and do so in a way that would actually not require appropriated dollars from Congress.”

The ACP currently has around 21 million Americans signed up, but the FCC says many more are eligible. The commission has been allocating money to outreach groups to market the subsidy program.

While some have argued that the Federal Communications Commission could unilaterally expand the contribution base of the USF, the commission has elected to wait for Congress to make the requisite legislative reforms to give it that authority.

Forcing Big Tech companies, which rely on the internet to deliver their products, has been an idea tossed around by experts and promoted by Federal Communications Commissioner Brendan Carr. Meanwhile, forcing broadband revenues to contribute to the fund has also received good support.

The concern for the ACP program is that the internet service providers rely on the $14 billion to continue to offer discounts.

“With funding set to be depleted early next year, initial notices of service termination could be out during the height of the holiday season in December – that’s a present none of our constituents deserve to receive,” said Congresswoman Doris Matsui, D-Calif.  

“Poverty is everywhere, but higher in rural America, in our region the reason most people can’t adopt service is due to lack of affordability, this impacts more households than lack of infrastructure alone,” said Sara Nichols, senior planner of the Land of Sky Regional Council of Government.

“It’s a program we simply can’t afford to lose,” added Nichols.

Reporter Hanna Agro studied journalism at Columbia University focused on news reporting and video production. For Broadband Breakfast, she has covered broadband deployment, rural area investment and artificial intelligence. She has also done culture reporting and documentary production.

Rural Utilities Service

White House Nominates Basil Gooden as Rural Development Chief at USDA

Gooden would be responsible for overseeing the activities of the Rural Utilities Services, an important broadband funding agency.

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Photo of Basil Gooden from Virginia Tech's web site.

WASHINGTON, September 11, 2023 – The White House on Monday announced the nomination of Basil Gooden for Under Secretary of Agriculture for Rural Development in the U.S. Department of Agriculture.

Agriculture Secretary Tom Vilsack touted the nomination in a statement, saying that Gooden “is a widely-respected, accomplished champion for affordable housing, community advancement, and economic development. His public service career is informed by a lifelong commitment to agriculture and rural development.”

Gooden is the current director of state operations for rural development at USDA.

If confirmed for the position, Gooden would be responsible for overseeing the activities of the Rural Utilities Services, which encompasses the Water and Environment Programs, the Electric Program, and the Telecommunications Program, which is dedicated to improving the quality of life for rural Americans through providing funds to deploy rural telecommunications infrastructure.

The administration may seek additional funding for broadband through the department. RUS Administrator Andy Berke, the former mayor of Chatanooga, Tenn., who also served as a Commerce Department official with the title, “special representative for broadband.”

Running USDA’s Rural Utilities Service Isn’t Andy Berke’s First Act in Broadband

If selected for the position, Gooden would fill the void left behind by Xochitl Torres Small, who resigned from the role and was later confirmed by the Senate as deputy secretary of agriculture this past July.

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Digital Inclusion

CES 2023: Congressional Oversight, Digital Equity Priorities for New Mexico Senator

Sen. Lujan once again voiced concern that the FCC’s national broadband map contains major inaccuracies.

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Photo of Sen. Ben Ray Lujan, D-N.M., in February 2018 by Keith Mellnick used with permission

LAS VEGAS, January 6, 2023 – Sen. Ben Ray Lujan on Friday endorsed “oversight at every level” of executive agencies’ broadband policies and decried service providers that perpetuate digital inequities.

Lujan appeared before an audience at the Consumer Electronics Show with Sen. Mark Warner, D-Va., and Sen. Jacky Rosen, D-Nev., to preview the tech-policy priorities of the 118th Congress.

Among Washington legislators, Senators had CES 2023 to themselves: Representatives from the House of Representatives were stuck in Washington participating on Friday in the 12th, 13th and 14th votes for House Speaker.

Congress allocated $65 billion to broadband projects in the Infrastructure Investment and Jobs Act of 2021, the bulk of which, housed in the $42.45 billion Broadband Equity, Access, and Deployment program, is yet to be disbursed. The IIJA funds are primarily for infrastructure, but billions are also available for digital equity and affordability projects.

Several federal legislators, including Sen. John Thune, R-S.D., have called for close supervision of Washington’s multitude of broadband-related programs. At CES on Friday, Warner argued that previous tranches of broadband funding have been poorly administered, and Lujan once again voiced concern that the Federal Communications Commission’s national broadband map, whose data will be used to allocate BEAD funds, contains major inaccuracies.

Affordable, high-speed broadband is now a necessity, stated Warner. Lujan argued that policy must crafted to ensure all communities have access to connectivity.

“The [Federal Communications Commission] is working on some of the digital equity definitions right now…. I don’t want to see definitions that create loopholes that people can hide behind to not connect communities,” the New Mexico senator said, emphasizing the importance of “the digital literacy to be able take advantage of what this new connection means, so that people can take advantage of what I saw today [at CES].”

At a Senate hearing in December, Lujan grilled executives from industry trade associations over allegations of digital discrimination.

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Infrastructure

Regulatory Barriers Could Hinder Broadband Deployment, Senate Hearing Panelists Say

Panelists sought streamlined permitting processes on federal lands and in local communities, and reasonably priced pole access.

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Screenshot of Michael Powell, president and CEO of NCTA – The Internet & Television Association

WASHINGTON, December 13, 2022 – Onerous permitting regimes and other regulatory barriers could significantly hamper broadband deployment projects, executives from leading trade groups told the Senate Subcommittee on Communications, Media, and Broadband on Tuesday.

Preparing to monitor the administrative state’s distribution of the largest American broadband investment to date, the subcommittee’s members asked the witness panel how government can facilitate the effective deployment of funds. The largest slice is the $42.5 Broadband Equity, Access, and Deployment program, managed by the National Telecommunications and Information Administration.

Michael Powell, president and CEO of NCTA – The Internet & Television Association and former chairman of the Federal Communications Commission, advocated streamlining permitting processes on federal lands and in local communities as well as ensuring reasonably priced pole access for broadband providers. Powell argued that entities exempt from federal pole-attachment rate regulations – which include cooperatives and municipalities – are incentivized to raise prices to ward off potential competitors in the broadband market.

Often, on federal lands, multiple agencies will claim the permitting authority, Powell said. Federal permitting fees are often exorbitant, he continued, and navigating these processes can “add years and years to a (company’s) commitment to build.

“These kinds of programs always have a tendency to attract layered-on regulatory requirements that are tangential to the mission of the program,” Powell said. “The consequence of that is it creates more complexity, additional burden, and raises the cost of an already fragile cost model.”

Congress should make broadband grants non-taxable, said Jonathan Spalter, president and CEO of US Telecom. The Broadband Grant Tax Treatment Act would do so for Infrastructure, Investment and Jobs Act and American Rescue Plan Act grants. According to some on Capitol Hill, Congress may pass the bill by year’s end.

Powell and Spalter argued that poor communication between the myriad agencies that oversee federal broadband initiatives obscures which eligible areas have already received federal funding – to the detriment of industry players. “One of the challenges for regulators is to ruthlessly attempt to harmonize criteria…across these programs and make sure all take cognizance of the other[s] as they make their decisions,” Powell said.

Spalter suggested a certification process through which agencies would be required to confirm that new grants are not issued to already-funded locations. Panelists and senators voiced concerns about redundantly allocated federal funds at several points in the hearing.

Lujan on Build America, Buy America and workforce issues

The NTIA’s guidelines for the BEAD program mandate compliance with the Build America, Buy America Act, which favors domestic manufacturing and, according to many experts, raises prices on goods necessary for broadband deployment. In response to economic pressures, the NTIA proposed waiving this requirement for the Middle Mile grant program, and many have urged the agency to institute a waiver for the BEAD program.

“We should always strive to encourage more manufacturing here in the United States with both onshoring and near-shoring,” subcommittee Chairman Ben Ray Lujan, D-N.M., told Broadband Breakfast after the hearing. “Democratic and Republican members have pushed for and have fought for the inclusion of equipment made in America,” he added.

Some have also criticized the NTIA’s worker-related policies, which, they say, will artificially drive up the cost of labor and network deployments. “The rules that are being applied by NTIA reflect the importance of having people…work in a way that they’re able to take care of themselves as well,” Lujan said. He further called on Congress to address potential workforce shortages – a concern of many industry players.

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