Clyburn Pushes Broadband USF Contributions, Slams FCC Lifeline Plan NARUC Seeks to Change

FCC Commissioner Mignon Clyburn said USF contributions should assess broadband because subsidies target broadband and the current long-distance voice revenue base is unsustainable. The current approach is much like a game of Jenga, she said at NARUC Wednesday, tracking written remarks: "We keep removing pieces from the base, and keep adding more to the top. Eventually, that tower will come tumbling down." She hopes a federal-state joint board will propose changes, but if not, it could invite new, outside experts to analyze the situation and provide fresh ideas.

Clyburn also said recent FCC proposals "would effectively kill Lifeline," and welcomed state regulatory efforts to support continued wireless reseller participation. NARUC's board passed a resolution later Wednesday urging the FCC to continue to allow resellers to receive Lifeline support, as expected (see 1802130025). Clyburn suggested states and localities leverage a federal Connect America Fund Phase II auction to further boost fixed broadband-oriented services.

Legacy voice revenue is "propping up" USF programs that now mostly fund broadband, Clyburn said. "With calls for fresh funding on all fronts, and a contribution factor that keeps climbing," action is needed, she said. She proposed: "The infrastructure that is supported by the fund should be the infrastructure that is assessed by the fund. It makes no sense to me for grandma’s dial-tone service, and only grandma’s dial-tone service, to be undergirding the buildout of next-generation infrastructure."

The joint board's state members offered a "comprehensive, sensible" plan for revamping USF contributions that's a "workable start," Clyburn said. She disputed certain objections to assessing broadband connections, including that the Internet Tax Freedom Act prevents such assessments. "That statute places absolutely no bar on addressing universal service reform. ... [T]he language of the statute itself explicitly carves out universal service contributions and 911 fees." She disputed that adding broadband connections would increase connectivity costs, lower the contribution factor, or increase USF expenditures. "A hybrid connections/revenues approach would significantly reduce the per-connection fee that consumers pay, and would also significantly reduce the contribution factor," she said. Commissioner Mike O'Rielly, joint board chairman, recently raised such objections in vowing that broadband USF assessments won't happen on his watch (see 1801060028).

Clyburn suggested the joint board organize a "pitch competition" of experts from other fields to present new ideas, not ones that have "been hashed, rehashed or rehashed again" at the FCC. "I'm not looking for perfection. I'm looking for a fix," she told us afterward. Joint Board State Chair Chris Nelson, a South Dakota commissioner, liked Clyburn's focus and her Jenga analogy: "We can't keep kicking the can down the street. We'll simply build that tower higher" and "it's unsustainable," he told us. He said his colleagues would agree with what she said substantively about USF. Neither O'Rielly's office nor an FCC spokesman commented.

Clyburn blasted the FCC majority's Lifeline actions and NPRM proposals, which she said would gut the program. "Be it drastically lower budget caps, a requirement to pay for the service, or telling 70 percent of consumers they cannot use their preferred mobile carrier, the impact of their proposal would make it more difficult, for the economically disadvantaged to access the internet," she said. She's "heartened that NARUC’s proposed resolution recognizes the value of Lifeline" and hopeful a national verifier of consumer eligibility will resolve many concerns so the program isn't harmed.

NARUC Resolutions

NARUC's board passed resolutions, adhering to expectations.

A pro-reseller Lifeline resolution passed after Clyburn spoke. It was modified by the telecom committee Tuesday. It "urges the FCC to continue to allow non-facilities based carriers to receive" program funds, given their "crucial" role in helping low-income households with telecom connectivity. It also urges the FCC, in any Lifeline budget, to ensure "qualified households that are current subscribers do not lose their eligible Lifeline benefit" and "there is reasonable and rational growth in the Lifeline fund to serve subscribers in an amount that does not exceed the current soft budget notification" of $2.25 billion. The National Lifeline Association applauded the "bi-partisan action to defend states' rights and very low-income consumers" by opposing the FCC proposal to end program participation by wireless resellers serving 7-8 million Lifeline customers.

The board also passed a nationwide number portability resolution urging the FCC to "carefully consider issues" raised in a 2016 North American Numbering Council report, "to avoid known concerns," and to "disclose for public comment: (1) the costs to consumers to implement NNP; (2) the cost recovery options for NNP implementation; (3) the timeline options for implementing NNP; and (4) the impact of NNP implementation on the IP transition."

Clyburn invited states and localities to be creative in the CAF II reverse auction scheduled to start July 24, though it's doubtful at this point any could replicate New York's FCC-backed state broadband auction (see 1801310030 and 1701260047). She said a state could provide a one-to-one match of state and CAF II funds to encourage potential bidders and lower their costs, ensuring more federal money goes their way. Depending on its goals, a state could limit matching funds to the highest-speed tier or, to encourage satellite service, "buy down" the FCC's "latency weight."

VoIP Disputes Debated

VoIP classification disputes will continue to play out at the state level for quite some time unless there's an FCC decision, panelists said at an FCBA-sponsored discussion at NARUC Tuesday evening that addressed recent Minnesota and Vermont developments (see 1802090009).

States are "in a bind" because the FCC is "playing games" with VoIP definitions, refusing to decide whether VoIP is a Title II telecom service or Title I information service under the Communications Act, said Harold Feld, Public Knowledge senior vice president. He said state regulators have to "carry on as best they can" since the FCC "has taken itself out of the game," including by saying it has virtually no authority to regulate broadband under its recent Title I reclassification ruling, except to require ISP disclosure and pre-empt state and local regulations.

Free State Foundation President Randolph May said Congress needs to pass a new law to clarify matters, but meantime, the Title I approach is best for VoIP since there's "enough competition" to discipline the market: "the answer is to deregulate down and not regulate up." He said a Vermont Public Utility Commission ruling that interconnected VoIP is a telecom service didn't focus on consumers. Vermont PUC General Counsel George Young said his commission decided VoIP was a telecom service under state law but was asked by the state's supreme court to decide what it was under federal law. He said it will focus on potential regulation in the next phase, but the PUC is first likely to receive a petition to reconsider classification.

Minnesota Public Utilities Commissioner Dan Lipschultz said oral argument is expected in May or June in the 8th U.S. Circuit Court of Appeals on a dispute with Charter Communications over the state's finding its interconnected VoIP offering is a telecom service. A decision isn't likely before late this year, said NARUC General Counsel Brad Ramsay.

Feld said the FCC's ability to regulate VoIP as an information service was undermined by a 2010 D.C. Circuit Comcast ruling that found the agency hadn't justified broadband net neutrality actions under Title I ancillary jurisdiction. Wilkinson Barker attorney Russell Hanser wasn't as pessimistic about the FCC's potential to use Title I ancillary jurisdiction over VoIP, given Supreme Court decisions allowing early cable regulation. The potential regulation of VoIP to preserve "ancillary" traditional telecom service mandates would be similar to the initial regulation of cable that was justified on preserving "ancillary" broadcast mandates, he said.

NARUC Notebook

The Office of Management and Budget OK'd for three years information collection for the FCC CAF, with related tweaks effective Thursday, when the commission announces the OK in the Federal Register. OMB Feb. 1 approved data collection on reporting requirements for recipients of Phase II support awarded in partnership with New York’s New NY Broadband Program, it said. Commissioners had voted on it Jan. 27, 2017, with a partial Mike O'Rielly dissent. The state's USF-for-broadband auction was discussed at NARUC Tuesday.

NARUC praised the Energy Department creating an office on Cybersecurity, Energy Security, and Emergency Response. "The issues under CESER’s purview are critical to the operation of a safe, reliable and resilient grid needed to support the nation’s energy infrastructure," said its statement.