Commentary
Are we seeing a once in a generation shift in our approach to Universal Service? For years, the FCC has administered the USF, overseeing four programs designed to bring connectivity to rural areas, to target institutions like schools, libraries and healthcare facilities and to low-income consumers. During the COVID pandemic, these programs received a shot in the arm, with supplementary programs such as the Emergency Broadband Benefit and the Emergency Connectivity Fund. These programs, while funded outside the USF, nevertheless remained under the administration of the FCC. Now, we must ask whether, with the bipartisan Infrastructure Bill, this approach will change.
For nearly seven decades prior to 1996, the FCC pursued a goal of “universal telephone service” through a complex system of subsidies across the monopoly Bell Telephone System. With the advent of telecommunications competition, such subsidies had to become explicit, competitively neutral, technology neutral, and “sufficient.” The FCC has administered these obligations under the USF, with the expenditures funded through contributions from telecom carriers based on their interstate end user revenues. The USF has seen approximately $9 billion per year in funding, to support a variety of initiatives in rural and high cost areas, for schools and libraries, for low-income consumers and for healthcare broadband networks. To be sure, there were other programs from time to time, such as the Rural Utilities Service’s loan programs or the 2008 Broadband Technologies Opportunities Program (BTOP), but by-and-large, broadband support was the province of the FCC and the USF.
On the funding side, at least, this approach has been under strain for many years. A declining contribution base has caused the factor to rise, even when USF program expenditures remained relatively constant, reaching a high of 33.4% in 2021. While this trend preceded COVID, the rise in the use of Zoom, Teams, WebEx and other remote collaboration tools has further strained USF contributions. In response, three trade associations have released a detailed study of USF contributions and proposed that end user broadband revenues be added to the base. Others have argued that “big tech” should pay a share. Several states are experimenting with assessments on “connections” to the network instead of end user revenues. Whatever the method, it is increasingly likely that we will see an overhaul of how the USF is supported fairly soon.
But that overhaul may turn out to be the side story in the future of universal service. Another thing happened during the COVID emergency that may have the most profound effect on the goal of universal broadband service. In the two COVID stimulus packages, Congress directly appropriated money to increase broadband availability and broadband adoption. Over $13 billion was appropriated for three “USF-like” programs administered by the FCC: the Emergency Broadband Benefit for low income consumers, the Emergency Connectivity Fund for remote learning and library services and the COVID Telehealth program to fund telehealth equipment and services. These temporary programs served purposes similar to the USF, but did not rely on USF funding to do so.
What they appear to have presaged, however, was a shift from the FCC defining universal service programs to Congress appropriating funding and directing the future of universal service, all the while shifting the primary administrator of the funding. We see it in the bipartisan Infrastructure Bill. This could represent a sea-change in how universal broadband is funded. First, the legislation moves oversight from the FCC to the Department of Commerce’s NTIA, an Executive Branch agency more easily influenced by the President. It also gives a significant role to the states to disburse funding for specific local projects. Second, the legislation implicitly rejects an “if you build it, they will come” approach to broadband, supplementing infrastructure funding with adoption funding to lower the digital divide. This funding will support programs aimed at the users of broadband services rather than broadband service providers. Finally, the legislation provides several targeted programs, like a Tribal Broadband fund and a fund for broadband to Historically Black Colleges and Universities (HBCUs) and similar institutions.
It is not clear whether these funds represent one-time universal service boosts or will become more permanent supplements to, or perhaps even replacements for, the USF. But the signs of change are present nonetheless.
Recent News
General (Including Non-USF Programs)
- On November 26, the FCC’s Wireline Competition Bureau (WCB) released an Order (DA 21-1477) waiving sections of the FCC’s rules governing the enrollment freeze and notice requirements for the end of the Emergency Broadband Benefit Program (EBB Program), which will cease no later than December 31, 2021 as a result of the text in the Infrastructure Investment and Jobs Act (Infrastructure Act). In addition to waiving the rules, the Order also provides preliminary guidance to help consumers, service providers, outreach partners and other stakeholders prepare for the transition from the EBB Program to the Affordable Connectivity Program.
- On November 23, the FCC announced $169,297,501.79 million in its latest wave of Emergency Connectivity Fund program support, which will connect over 500,000 students in 47 states, Puerto Rico, and the District of Columbia. These additional commitments bring the current total commitments to over $3.2 billion, supporting students, school staff, and library patrons in all 50 states, Guam, Puerto Rico, the U.S. Virgin Islands, and the District of Columbia. The funding can be used to support off-campus learning, such as nightly homework and virtual learning, as schools and libraries continue to respond to the ongoing COVID-19 pandemic.
- On November 18, the WCB issued a Public Notice (DA 21-1453) seeking comment on the implementation of the Affordable Connectivity Program. Comments are due on December 8, 2021 and reply comments are due December 28, 2021.
- On November 22, the WCB issued a Public Notice (DA 21-1464) announcing that it is implementing additional measures to strengthen program integrity surrounding the enrollment of households in the EBB Program based on the U.S. Department of Agriculture Community Eligibility Provision (CEP) for certain schools. On the same day, the FCC’s Office of Managing Director (OMD) issued a Public Notice (DA 21-1465) announcing mitigation measures for EBB Program enrollments based on the CEP.
Lifeline
- On November 22, the WCB issued a Public Notice (DA 21-1467) approving the amended compliance plan of TracFone Wireless, Inc. filed pursuant to the requirements for the continued provision of Lifeline service. The amendments modify TracFone’s compliance plan as a result of its merger with Verizon Communications, Inc., which the FCC approved on November 22 as well.
- On November 5, the WCB released an Order (DA 21-1389) pausing both the Lifeline program phase-out in support for voice-only services and the increase in minimum service standards for mobile broadband data capacity, in light of the EBB Program, the ongoing COVID-19 pandemic, and new data collected as part of the WCB’s State of the Lifeline Marketplace Report. This pause will last for one year, until December 1, 2022.
High Cost/Connect America Fund (CAF)
- On November 23, the WCB issued a Public Notice (DA 21-1471) seeking comment on a petition by E Fiber San Juan, LLC for designation as an Eligible Telecommunications Carrier (ETC). The petitioner is an assignee of support awarded through the Rural Digital Opportunity Fund (RDOF) auction and seeks designation in certain Tribal Lands over which the Utah Public Service Commission has declined to exercise its ETC designation authority. Comments are due December 9, 2021 and reply comments are due December 24, 2021.
- On November 12, the WCB, Rural Broadband Auctions Task Force (RBATF) and the Office of Economics and Analytics (OEA), issued a Public Notice (DA 21-1420) authorizing RDOF support for 311 winning bids. The winning bids are identified in Attachment A of the Public Notice.
- On November 10, the WCB, RBATF, and OEA announced via Public Notice (DA 21-1402) that they are ready to authorize RDOF support for 2,081 winning bids identified in Attachment A of the Public Notice. To be authorized to receive the total 10-year support amounts listed in Attachment A, the long-form applicants are required to submit acceptable irrevocable stand-by letter(s) of credit and Bankruptcy Code opinion letter(s) from their legal counsel for each state where they have winning bids that are ready to be authorized in accordance with the instructions provided below by 6:00 p.m. ET on November 30, 2021.
- On November 1, the WCB released an Order (DA 21-1369) denying a petition filed by the CAF Phase II Coalition (Coalition), a group of 14 carriers authorized to receive support through the CAF Phase II auction program. In its petition, the Coalition sought relief from certain evidentiary burdens associated with the FCC’s challenge process for facilitating adjustments to the defined deployment obligations of Phase II auction support recipients in situations where the number of funded locations is greater than the number of locations qualifying for support.
Schools and Libraries (E-Rate)
- On November 23, the FCC released a discussion draft of a Notice of Proposed Rulemaking (FCC-CIRC2112-03) it will consider at its December Open Meeting. The discussion draft would seek comment on a proposal to implement a central document repository, or bidding portal, through which service providers would be required to submit their bids to the E-Rate program administrator, the Universal Service Administrative Company (USAC), instead of directly to applicants. The FCC placed the item on its tentative agenda for the December 14 Open Meeting.
Rural Health Care
- On November 18, FCC Commissioner Brendan Carr announced that he will host a virtual roundtable on Monday, December 6, 2021, starting at 10:00 a.m. EST that will focus on the FCC’s telehealth initiatives and the benefits they can bring to communities across the country.
- On November 9, the WCB issued a Public Notice (DA 21-1403) approving the fourth group of funding commitments under Round 2 of the COVID-19 Telehealth Program and commits $42,163,705 in funding to 75 health care providers. On the same day, the WCB released an Order (DA 21-1404) clarifying that, for the second round of the COVID-19 Telehealth Program, applicants will receive points on their applications for being located in a hotspot or a sustained hotspot based on the relevant dataset as of either May 6, 2021, the date when the application filing window closed, or November 19, 2021, the date when the ten-day resubmission period closes.
USAC Board Meeting Materials
Each quarter, we provide selected highlights from the business updates presented at USAC’s quarterly board and committee meetings. This quarter, the USAC Board received an update on the Connected Care pilot programs, while the Audit Committee and the Rural Health Care Committee received updates on USAC audits in progress and pending appeals. Click HERE to view the selected materials from the meetings. If you have any questions about the materials, please contact us.
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