Federal Universal Service Fund

The federal government appeared Friday evening to be on the verge of a partial shutdown due to disagreement between the Senate and president and a supportive House majority over the inclusion of $5 billion in border wall funding in a continuing resolution to temporarily fund government through Feb. 8. A CR set to expire at midnight Friday covers funding for the FCC, FTC and the departments of Commerce and Homeland Security and others.

The FCC will investigate if top wireless carriers submitted incorrect coverage maps in violation of Mobility Fund Phase II rules, Chairman Ajit Pai said Friday. The commission suspended the window for responding to MF-II challenges until the probe’s conclusion. Carriers said they'll cooperate. FCC Commissioner Jessica Rosenworcel, state commissioners and rural competitive carriers welcomed investigation, saying more work is needed.

Parties disagreed on the FY 2019 National Defense Authorization Act's fallout for an FCC's rulemaking to protect the communications supply chain from national security threats. The Telecommunications Industry Association said NDAA Section 889 requires the commission to bar certain suppliers from participating in its funding programs. Huawei -- one of the targeted suppliers -- and others said the recently enacted provisions give the FCC no mandate to impose supplier restrictions on USF support. NCTA suggested the commission defer action and consult with other agencies. Comments were posted through Monday on a public notice (see 1810260044).

ORLANDO -- State regulators’ relationship with the FCC “needs some work,” said NARUC Second Vice President Paul Kjellander in an interview at the association’s annual conference this month. Federal USF contribution modification could raise tension next year if the FCC continues to exclude states from the process, he said. The National Association of State Utility Consumer Advocates, holding its annual event concurrently with NARUC, remains concerned about deregulation and consumers losing protection as telecom technology moves to the IP world, NASUCA President Elin Swanson Katz told us.

ORLANDO -- The FCC should extend the Mobility Fund II challenge process by more than three months to fix a deficient process, said a NARUC resolution cleared Monday by the Telecom Committee and Tuesday by the board. At NARUC's annual meeting (see 1811130035), the committee voted unanimously for the resolution after tweaking some language to address other commissioners’ concerns. Idaho Commissioner Paul Kjellander will step down as Telecom Committee chairman to join NARUC leadership, he said Monday.

The National Tribal Telecommunications Association recommended changes to USF support mechanisms for carriers serving predominantly rural tribal areas, in a report filed Thursday at the FCC in docket 10-90. NTTA "proposes a Tribal Area Solution to revise current federal universal service programs for [rate-of-return] carriers. These revisions, proposed for the High Cost Loop Support, Connect America Fund Broadband Loop Support, and Alternative Connect America Cost Model support programs, recognize the unique challenges faced by carriers serving rural Tribal areas of the lower 48 states in the country.” Efforts to help tribal areas appear on paper to be “fairly substantial,” the group said: “However, the facts are clear -- Tribal areas, especially rural Tribal areas in the lower 48 states, lag significantly behind the rest of the country in regards to broadband availability.”

Wireless carriers rejected legislative changes to Idaho USF, while rural LECs supported action but asked for more data on possible costs. The Idaho Public Utilities Commission asked in docket GNR-T-17-05 for recommendations for a possible legislative fix for state USF to present to the legislature next year (see 1808240017). Carriers disagree "with the premise that there is any need for changes to the funding mechanism for the IUSF in order to maintain the solvency,” said CTIA Director-State Regulatory Affairs Benjamin Aron in a Thursday letter: "Given the modest levels of the current surcharges there is considerable room to increase surcharge levels to offset the diminishing IUSF contribution base.” If the PUC must recommend legislative changes, it should either follow Washington state and support USF exclusively through general revenue using taxpayer funds, or Montana's “model of trusting the sufficiency of federal universal service support and declining to provide additional state funding,” Aron said. The Idaho Telecom Alliance wants legislative changes but said the state should first convene workshops and PUC staff should estimate costs of implementing various models used by neighboring states. Any device or service that connects to the public switched telephone network should be assessed a USF charge, and any carrier of last resort should be supported, the RLEC group said.

Senate Indian Affairs Committee members focused on what they see as deficiencies in FCC practices for determining broadband coverage on tribal lands, during a Wednesday hearing. The hearing examined a September GAO report that said the FCC overstates broadband availability on tribal lands because it considers service available in a census block if a provider can serve at least one location (see 1809100041). A Thursday Senate Commerce Committee hearing on progress in rural broadband deployments is likely to also touch on tribal governments' concerns. But the panel will largely be an overview of the chamber's work in this Congress on encouraging broadband projects in rural areas and is likely to frame Senate Commerce's approach to that issue in 2019, lawmakers and lobbyists told us.

The FCC proposed a USF contribution factor of 20.1 percent for Q4, up from Q3's 17.9 percent, of U.S. interstate and international telecom end-user revenue, said an Office of Managing Director public notice Wednesday in docket 96-45. The proposal will take effect if the commission takes no further action within 14 days. It's the first time the factor will exceed 20 percent (see 1808310047). USF demand has trended up and the industry long-distance revenue base has trended down, producing a rising contribution factor over time, though variables cause some quarterly fluctuations. Commissioner Mike O'Rielly, who chairs a federal-state joint board, opposes any USF assessment of growing broadband revenue, which he says state joint board members favor (see 1802060028). “As accessible telecommunication revenues continue to decline the universal service fee necessarily increases," emailed State Joint Board Chair Chris Nelson of South Dakota. "In 2014 the FCC referred the question of Universal Service Fund contribution methodology to the Universal Service Joint Board for a solution to this unsustainable increase in the fee percentage. At that time the percentage was 16%, now it tops 20%. This is no surprise. The State Members of the Joint Board have a proposal to solve this and other issues with the contribution methodology. Failure to act will only see the fee continue to rise.” An FCC spokesperson and O'Rielly's office didn't comment.

Nebraska commissioners voted 4-1 for a hybrid state USF contribution mechanism with a $1.75 per connection surcharge for residential wireline, postpaid wireless and interconnected VoIP services and a 6.95 percent revenue-based surcharge for business and other services. CenturyLink and small rural carriers Wednesday applauded the Public Service Commission’s Tuesday rate design order in docket NUSF-111, which followed last year’s decision to move to a connections-based contribution mechanism. Cox and CTIA raised red flags. Other state commissions are working toward USF updates, including Alaska, New Mexico and Oklahoma.