October 2, 2019

Commentary

Now comes the hard part.  We’ve noted that the FCC has been setting the table for changes to all of its beneficiary programs, while contributions reform looms.  But now, the FCC needs to start deciding the direction of its USF programs.  We’ll highlight the High Cost Fund here for a moment.  September saw the FCC collecting comments on the Rural Digital Opportunity Fund and the Digital Opportunity Data Collection NRPM, two proceedings critical to the future of the High Cost Fund.  Both open proceedings ask, in different ways, whether current USF support is doing the most good for rural areas.  Both comment periods will shortly be complete, and the ex parte portion of the inquiries will take over. The Commission appears to have delayed the Mobility Fund II auction to beyond 2020 in order to address these proceedings first.  Hopefully, by the end of the year, the direction the Commission intends to take will be clearer.  For those affected by the programs, it would be wise to follow the ex partes closely through the end of the year to gauge the FCC’s direction on rural and high cost support.
   

Recent News

  • The FCC is seeking nominations to the USAC Board of Directors for representing the following: e-rate eligible libraries; cable operators; e-rate eligible schools; state consumer advocates; and ILECs.  Nominations must be submitted by October 18, 2019.

Contributions
  • On September 17, the FCC issued a Public Notice noting that the Department of Labor, Bureau of Labor Statistics (BLS) is seeking access to certain 2017 revenue information from wireline carriers that was reported on their Form 499-A.  Specifically, BLS seeks data reported in blocks 3 (Carrier’s Carrier Revenue Information) and 4 (End-User and Non-Telecommunications Revenue Information, and Total Revenue and Uncollectible Revenue Information).
  • On September 12, the FCC’s Office of Managing Director announced the proposed universal service contribution factor for the fourth quarter of 2019 will increase from 24.4% to 25.0%.  This contribution factor represents the second straight record high.

Schools and Libraries (E-Rate)
  • Consistent with his previously expressed concerns about network overbuild with E-Rate funds, Commissioner O’Rielly sent a letter on August 26 to Cochise County Schools alleging wasteful and duplicative USF spending and seeking additional information. He asserted that the County is seeking E-rate funding to cover the cost of a proposal to deploy fiber to county schools and libraries even though fiber-based Internet is already available from local providers. The Letter seeks information regarding the County’s decision to seek proposals on a countywide network, rather than in smaller piece-parts that may have enabled existing fiber-based providers to bid, and also questions certain decisions, such as the decision to seek fiber facilities connecting to the Superintendent’s residence.   The Letter requested a response by September 21.
  • On August 28, the Wireline Competition Bureau (WCB) issued an Order that resolved five requests for review of USAC decisions denying requests for funding under the E-Rate program. WCB granted two of the requests for review, granted two requests for waiver of the document retention rules, and denied one request for review that argued that the document retention rules prevented it from being able to appeal properly.
  • WCB granted a waiver of the E-Rate program invoicing rules to Byte Networking LLC after the Company missed the FY 2016 deadline to submit the Company’s funding request invoices due to the death of the Company’s owner. WCB concluded “the sudden death of the service provider’s owner combined with the small size of the business and the absence of a successor involved in the daily operations of the company were extraordinary circumstances” that justified a waiver. 
  • WCB also granted a waiver of the invoicing deadline rule for Sunesys LLC after the Company informed the Bureau that one of Sunesys’ E-Rate accounts for FY 2015 funding was misclassified in its billing system and not integrated into a new system following acquisition by Crown Castle.


Lifeline

  • On September 24, the FCC announced that an Oregon Public Utility Commission investigation apparently found that Sprint violated the rules by claiming Lifeline reimbursement for 885,000 subscribers that were not using the service. In response, Chairman Pai has directed the Enforcement Bureau to investigate the full extent of the problem and propose an appropriate remedy. 
  • On September 19, USAC and the FCC announced plans to test the use of APIs that enable carriers to interface directly with the National Verifier. The APIs will be used by service providers to conduct eligibility checks and receive eligibility result responses. Service providers can now test the following APIs: 1) “Eligibility Check API,” enables service providers to initiate an application for Lifeline in the National Verifier; and 2) the “Status Check API,” enables service providers to retrieve the current status of a consumer’s application, using a unique identifier or token created during the eligibility check.
  • On September 18, the FCC announced the establishment of a nationwide automated connection between the Medicaid program and the National Verifier.  This will result in automated verification of the eligibility of subscribers that identify this program in their application.
  • The National Verifier will soft launch in Alabama, Louisiana, Maryland, Massachusetts, New Jersey, Oklahoma, Puerto Rico, South Carolina, and Washington on October 11; and will fully launch in Arizona, Connecticut, Georgia, Iowa, Kansas, Nebraska, Nevada, New York, Vermont, Virginia, and West Virginia on October 23. With the new full launch states, the National Verifier will be fully operational in 38 states.


High Cost/Connect America Fund (CAF)

  • At its September Open Meeting, the FCC approved a Report and Order to provide $950 million in funding for the deployment of broadband networks in Puerto Rico and the U.S. Virgin Islands. The Order would allow service providers to compete for an award of up to $691.2 million over a 10-year period for fixed voice and up to 1 GB broadband service as well as $258.8 million over three years in high-cost support for mobile voice and broadband. 
  • This month, Chairman Pai touted his efforts to eliminate the digital divide for rural communities while he spoke to attendees at a Tribal broadband conference and a technology summit at the University of Mississippi. Pai addressed the FCC’s plan to create the Rural Digital Opportunity Fund and Connected Care Pilot Program to promote greater availability of fixed broadband networks and meet connectivity needs of rural hospitals and clinics.
  • During a speech to the Western Telecommunications Association, Commissioner Starks discussed the challenges the FCC has faced with mapping broadband availability and expressed concern about distributing USF funds using inaccurate information. He also asserted that buildout obligations and reporting requirements should be tied to USF funding grants to maintain the integrity of the high cost program initiatives.
  • On September 12, Wireline Competition Bureau, the Wireless Telecommunications Bureau, and Office of Engineering and Technology issued a Reconsideration Order that refines the standard used by the Commission to assess whether carriers relying on high-latency technologies, such as satellite, provide quality, reliable voice service under the CAF Phase II support rules.
  • On September 12, WCB issued a Public Notice announcing it had authorized $112,183,454.30 in CAF Phase II auction support for an additional set of winning bidders identified in the attachment to that notice.
  • On August 30, WCB issued a Public Notice seeking comment on the National Exchange Carrier Association, Inc.’s (NECA) 2020 Modification of the Average Schedule Universal Service High Cost Loop Support Formula. Comments werere due by September 30; and replies are due by October 15.


Rural Health Care

  • In accordance with the Healthcare Connect Fund (HCF) program rules, consortia that receive Rural Healthcare funding were required to submit an annual report covering FY 2018 to USAC by September 30, 2019.
 

E-Rate Streamlined Dispositions

Given the large volume of E-rate appeals, in 2014 the Wireline Competition Bureau (WCB) established a streamlined procedure for addressing E-rate appeals.  Under this procedure, the Bureau issues a Public Notice each month, entitled Streamlined Resolution of Requests Related to Actions by the Universal Service Administrative Company. As its title suggests, the document announces summary dispositions of pending appeals, requests for review, requests for waiver, and petitions for reconsideration stemming from the actions of the Universal Service Administrative Company (USAC).  The Public Notice groups appeals by subject matter and/or controlling authority, and announces the Bureau’s disposition of each.
 
For this month's USF tracker, we are initiating a new chart which summarizes the dispositions by type.  Specifically, we are reporting the total number of dispositions by type, showing the number of filings granted, denied or dismissed.  Categories are ours, compiled from the FCC’s summaries, sometimes combining similar descriptions provided by the Bureau.  Data is compiled by quarter, and for year-to-date in calendar year 2019.  The result is a high-level look at the dispositions the FCC has made in E-Rate appeals dealing with competitive bidding rules, funding amount, and missed deadlines.
 
To view a PDF of the charts, click here.