Kept in the Dark on USF Revamp, States Seek Better Relationship With FCC

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.

State-federal rapport has been wanting “for the past several administrations,” said Kjellander, stepping down as Telecom Committee chairman (see 1811130001). In his new role, Kjellander wants to work with the next Telecom Committee chair on improving that relationship. States are well-represented on the North American Numbering Council, but that wasn’t true for the Broadband Deployment Advisory Committee, and states have found it difficult to get the FCC to convene joint board meetings, said Kjellander, an Idaho state public utilities commissioner. “We know we’re not going to get everything we want, but we at least want to be part of the dialogue.”

The FCC told states “absolutely nothing” about plans to revamp USF contribution, said Joint Board on Universal Service State Chair Chris Nelson in an interview. FCC Wireline Bureau Chief Kris Monteith last month said staff is examining USF contribution and could act soon (see 1810250062). “We have not been consulted at all,” nor has the commission given any feedback on state members’ recommendations filed Jan. 30, not “even an acknowledgement it was received,” Nelson said. “If you don’t like what we proposed, fine, tell us what you’d like to do so we can then have a meaningful discussion.” Nelson isn't sure how soon an overhaul can happen, saying sustaining the fund isn’t getting easier.

Nelson hasn’t seen much change in the relationship between states and the FCC over the years. Net neutrality is currently the big-ticket fight, but there’s always something, he said.

FCC Chairman Ajit Pai "is committed to working closely" with Commissioner Mike O’Rielly, who chairs the USF joint board, and "with partners in state and local government," said an FCC spokesperson. He said Pai wants "to ensure that American consumers, no matter where they live, have access to robust, modern and affordable communications services.” O'Rielly didn't comment.

New Law Sought

Everyone’s waiting for the FCC to decide if interconnected VoIP is a telecom or information service, a long-festering question that spurred big debate at last week’s meeting, Nelson said.

If courts rule against Minnesota in its case against Charter Communications at the 8th U.S. Circuit Court of Appeals, “consumers are going to be left without any protections,” the GOP commissioner said. VoIP is functionally the same as traditional telecom service, and all phone service is becoming IP, he said. South Dakota once had a bill to deregulate VoIP, but it was pulled by the sponsor after the PUC “strenuously opposed.”

“It’s time for Congress to step up to the plate” and write a new Telecom Act, which would include addressing internet classification issues, said Kjellander, a Republican. “I may not like that certainty, but at least I’ll have it.” Regulators call balls and strikes, but they don’t set the strike zone, he said. Letting courts decide policy is costly and “a huge wild card” since they lack specific telecom expertise, he said.

This year’s Connect America Fund II auction appeared to be a success, said Nelson. South Dakota, where he's a public utilities commissioner, got winning bidders in several large unserved areas of the east, he said. “That’s going to be a huge help in closing the gap.” Another auction and a possible $600 million RUS pilot (see 1810120041) could be used to reach more rural western parts of the state, he said. Disappointments in 2018 included FCC inaction on USF revisions and fully funding high-cost mechanisms, the subject of a 2017 NARUC resolution (see 1707180007). Nelson hopes for action in 2019 and looks forward to the Mobility Fund II auction for improving rural wireless coverage.

States show increasing interest in pole attachments, driven by emerging 5G technologies, Kjellander said. Idaho has authority in that area but the commissioner said he’s never had to arbitrate a dispute. “With all the activity we’re likely to see” and pre-emption of municipal authority across the country, “it’s going to be a bigger issue.” That may be driving Pennsylvania’s interest in becoming the first state in about a decade to reverse pre-empt the FCC, he said.

State USF funds are in a “death spiral,” said Kjellander, predicting states are likely to follow the lead of Utah and others to switch to connections-based contributions. The Idaho PUC is holding initial talks to develop recommendations for the legislature, he said.

NASUCA

State consumer advocates had a “good year in the sense that we were active,” including on Lifeline, IP transition and net neutrality, said Swanson Katz, re-elected NASUCA president. “There are a lot of really, really serious issues that are concerning to a lot of our members.”

NASUCA has “a lot of questions about the tech transition,” including how to protect consumers as carriers withdraw traditional copper networks, Swanson Katz said. She fought against a deregulation bill in her state, Connecticut, “but every year’s a new battle,” she said. Traditional landlines are going away, and “I don’t think we’re adequately protecting consumers and making sure they have an acceptable substitute” that’s reliable and affordable, she said.

Title II protections may be an “imperfect fit” for broadband, but it’s the best option if the only other choice is Title I, the NASUCA president said. “We really need a wholesale rethinking of the communications framework at the federal level.” Finding agreement on controversial issues like net neutrality is difficult, she acknowledged. “Unfortunately, I think it may take something really tragic happening before people understand the full magnitude of what the FCC’s doing with its full-scale deregulation.”

Swanson Katz ​​​​​​​supports a new national broadband plan (see 1811080026): “All plans need updating.” There’s reason to hope the next Congress will try to tackle rural broadband challenges because both sides of the aisle have constituents who want access, she said.