February 27, 2020

Commentary

We were tempted to title this edition “RDOF Takes Off,” as this is the biggest USF news of the month.  The Rural Digital Opportunity Fund is the latest in the FCC’s attempts to revamp the High Cost program to target rural broadband deployment more effectively.  This incarnation promises up to $20.4 billion over 10 years to bring gigabit broadband speeds to rural communities through a reverse auction.  But in truth there are a number of prerequisites to getting the RDOF going.  The RDOF was met with unanimous support for the purpose but skepticism (to varying degrees) from both Republican and Democratic commissioners.  Despite this, the Fund will go forward, with the hard work of planning the $16 billion Phase I auction yet to come.  The Commission targets this auction for later this year, which doesn’t leave much time to make it a reality.  Potential service providers should carefully review the rules; they present new opportunities for entities new to the Fund.
 
Finally, we are pleased to be presenting our 11th Annual Webinar on the Universal Service Fund.  This program is, to our knowledge, the only event offering a comprehensive overview of the FUSF and its trends.  This year, in addition to discussing the RDOF and other major program developments, we will discuss the new suspension and debarment rules under consideration and what you can do now to prepare for those rules.  For anyone participating in the Fund’s four programs, for others thinking of expanding into the programs, and for those contributing to the Fund, this is a must-attend event.  Please register here and share the event with your colleagues.  Registration is free.


Contributions

  • The Wireline Competition Bureau (WCB) released the 2020 annual Form 499-A and quarterly Form 499-Q and accompanying instructions.  There were few changes but two have significance for filers: 
    • providers are no longer required to file quarterly traffic studies relied on to report interstate revenues on the FCC Form 499-Q; and
    • all amounts that filers receive as universal service support (including E-rate support) should be reported on line 308.
 

Lifeline

  • On January 30, the FCC issued a Public Notice (PN) seeking comment on three petitions for reconsideration of parts of its November 2019 multi-part Lifeline program item, which adopted rules to amend parts of the Lifeline program’s enrollment, recertification, and reimbursement rules. Oppositions to the petitions are due by March 2 and replies are due by March 10.
 
  • On January 28, the FCC’s Office of the Inspector General (OIG) issued an advisory memorandum about eligible telecommunications carriers’ (ETC) non-compliance with the Lifeline usage rule. The OIG highlighted the FCC’s recent finding that one ETC allegedly collected tens of millions of dollars in subsidies for subscribers who were not actually using the Lifeline service.  OIG stated investigations of other ETCs were ongoing and claimed other ETCs have engaged in similar improper conduct.  The advisory provided examples of activity that does not qualify as usage under the rules and encouraged ETCs to review carefully their usage monitoring policies to ensure there are no violations.
 
  • In January, the Department of Health and Human Services released the 2020 Federal Poverty Guidelines (FPG), which can be used to determine if a consumer is eligible for Lifeline.  Lifeline service providers have until March 31 to update their forms and systems to reflect 135% of the 2020 FPG as the new income-based eligibility standard.
 
  • The Lifeline National Verifier will fully launch on March 24 for all new subscribers in Florida, Illinois, Minnesota, Ohio, and Wisconsin.
 

High Cost/Connect America Fund (CAF)

  • On January 30, the FCC adopted a Report and Order (R&O) establishing the Rural Digital Opportunity Fund, which is a new funding mechanism that allocates $20.4 billion in high cost universal service support over a 10 year period for winners of a reverse auction to bring gigabit broadband to areas without access to 25/3 Mbps broadband. 
 
  • On February 12, the Rural Broadband Auctions Task Force proposed to release carrier-specific 4G LTE coverage map data provided to the FCC as part of the 2017 Mobility Fund II (MF-II) Challenge Process Order.  The goal is to allow greater public understanding of the issues the FCC faced in the MF-II proceeding and to better inform the FCC’s efforts towards improving the data collection.  Affected entities may file an objection to the release of their own data by February 27, 2020.  The FCC will publicly release the coverage data on March 2, 2020 if it receives no objections.
 
  • WCB released a Public Notice, on February 5, with the procedures for participation in the Uniendo a Puerto Rico Fund and the Connect USVI Fund Stage 2 Competition. The competition will make available up to $691.2 million over a 10-year period for providers that commit to providing voice and gigabit broadband service to all fixed locations in those territories. Upon approval by the Office of Management and Budget, WCB will release a PN with an application form and announce the application deadline.
 
  • On February 3, WCB issued an Order granting waiver of the random sample requirements for speed and latency and timing for pre-testing for CAF Phase II model-based support recipients. This will allow CAF Phase II carriers to extend the period to conduct first-quarter pre-testing until April 30, 2020.
 
  • On January 27, WCB released an Order to establish uniform deployment and reporting obligation deadlines for authorized CAF Phase II auction support recipients. As a result, service milestone deadlines will be at the end of the calendar year, and the annual location filing and certification deadlines will be March 1.
 
  • The FCC authorized more than $240 million in CAF Phase II funding to support rural broadband deployment over ten years in AK, IL, KS, MA, MO, NY, OK, and WY.  The FCC has now authorized approximately $1.4 billion in total funding from the $1.488 billion allocated in 2018.


Schools and Libraries (E-Rate)
  • The FCC, on January 27, released an R&O that permanently eliminates the amortization rule, which required schools and libraries to recover upfront, non-recurring charges of $500,000 or more for a three-year period. The FCC initially suspended the rule from 2014 through funding year 2018 and then waived the rule for 2019 and 2020 while it considered the rulemaking proceeding.  Waiver of the rule will continue until the Order becomes effective (30 days after Federal Register publication).
 
  • On February 20, WCB issued an Order granting a waiver of the rules governing the special construction service implementation deadline to Grand Canyon Unified School District.  Grand Canyon had estimated that it would take at least two years to complete construction of its leased lit fiber network due to the topography and permitting obstacles.  However, USAC denied Grand Canyon’s request for an extension of the deadline, finding the delay to be avoidable.  WCB, however, found that the extension was warranted and remanded the matter to USAC for implementation.



Rural Health Care

  • The FCC entered into a settlement with TeleQuality Communications for allegedly violating the RHC competitive bidding and rate rules and overbilling the program. Under the agreement, TeleQuality will reimburse $31 million in support to the Universal Service Fund.
 
  • On February 19, WCB granted a limited waiver to Maniilaq Association in response to its request to review a USAC denial of RHC Telecommunications program funding.  USAC denied funding because Maniilaq did not provide copies of all bids and responses it received.  WCB found that good cause exists for a limited waiver of rules because the missing documents related to a response that did not qualify as a bid and Maniilaq’s failure to provide copies of all documents did not compromise the bidding process.
 
  • In remarks at the February 11  National Rural Health Association policy event, Chairman Carr noted that the FCC has been coordinating with other agencies such as the Department of Health and Human Services and the Department of Veterans Affairs related to Carr’s proposal for the FCC to establish a new $100 million Connected Care Pilot program.  He reported that the FCC “will soon move to a final order” on the pilot program.
 
  • On January 15, WCB issued an Order denying Tanana Chiefs Conference’s (TCC’s) request for waiver of 1) the USAC’s denial of TCC’s request to file FCC Forms 466 for three clinics after the RHC Program application filing deadline; and 2) the proration rules to allow it to receive full RHC support for all the clinics in its consortium for funding year (FY) 2016. TCC maintained that the late filings occurred because those clinics were transitioning from satellite connections to terrestrial microwave, and the TCC official responsible for those filings delayed until after the transition while being unaware of the filing deadline. TCC argued that without the waiver, TCC would have to cut critical telecommunications services for its clinics and Alaska Natives’ healthcare would be negatively impacted. The FCC concluded that TCC had not presented evidence of special circumstances warranting either waiver.
 
  • The FY 2020 funding request forms (Forms 462 or 466) filing window opened on February 1 and will close at 11:59 p.m. ET on April 30.
 

USAC Board Meeting Materials

With this February update, Kelley Drye introduces a new feature to our revolving supplements.  Joining our contribution appeals tracker and our summary disposition of E-rate appeals tracker is this USAC Board Meeting Materials Update.  We have selected portions of the briefing materials provided to the USAC Board and its various committees at the Quarterly Business Meeting.  The selected materials provide high-level information about USAC’s activities, its audit results and summaries of individual audits released at the meeting.  The attached materials are from the January 2020 quarterly meeting held January 27-28, 2020.  Click HERE to view the selected materials from the meeting.  If you have any questions about the materials, please contact us.