In 3-2 Vote, FCC Asks About USF Budget Cap; Item Issued 2 Weeks Post-OK

By a party-line FCC member vote, the regulator began asking about starting an overall USF budget cap, as expected (see 1905240064). "Mindful of our obligation to safeguard the USF funds ultimately paid by ratepayers," and to ensure the money is "spent prudently" and consistently, the NPRM asks a number of questions.

Its release Friday came after the rulemaking was approved May 15, triggering some stakeholder skepticism about the gap. Another controversial report also issued last week, on broadband deployment, also came after a similar lag time (see 1905290017). Another commonality of the two documents is both were approved over no votes from the two Democratic FCC members.

In recent days, agency officials had said the delay in releasing the proposals had to do with commissioners' statements not being fully ready. An FCC representative told us Friday the lag was because of the minority-party members. "The reason that the item was not released until 16 days after adoption is because the Democratic members of the commission didn’t submit their statements until today," a spokesperson emailed. He noted the item was released at around 3:40 p.m. EDT, when we asked about the time.

The NPRM noted that "while each of the constituent USF programs are capped or operating under a targeted budget, the Commission has not examined the programs holistically to determine the most efficient and responsible use of these federal funds. A cap could promote meaningful consideration of spending decisions by the Commission, limit the contribution burden borne by ratepayers, provide regulatory and financial certainty, and promote efficiency, fairness, accountability, and sustainability of the USF programs." The document asked about methods of implementing such a cap and about issuing forecasts for such spending beyond one year.

How to reduce spending should any new thresholds be exceeded was another line of questioning. "Should these reductions take place when commitments are expected to exceed the caps or should they only take place when disbursements are projected to exceed the caps?" said the NPRM. "What criteria should be used in prioritizing reductions of one program against reduction in another?" Another query was whether to limit any automatic inflation increases in USF programs. Yet another was on prioritizing funding among the four programs. They are E-rate, high-cost funds, rural healthcare and Lifeline.

"We also seek comment on combining the E-Rate and RHC program caps," the item said. "Combining the program caps may be justifiable given that both programs promote the use of advanced services to anchor institutions that have similar needs for high-quality broadband services." Such a combination among other changes worries proponents of those and other USF programs (see 1904030026).

Commissioner Mike O'Rielly, who has helped spearhead the item, defended it in his statement. It was the only GOP commissioner statement Friday.

O'Rielly listed three facts about the proposals. "This NPRM initiates a dialogue and does NOT constitute a final order," he noted. This "proposed budget would NOT cut funding" to universal service and it's "NOT a backdoor way to establish a budget on Lifeline."

O'Rielly and Commissioner Jessica Rosenworcel differed on whether the item is like the Hunger Games. Rosenworcel doesn't "support an approach that fosters the universal service hunger games," she wrote. It's "at odds with our most basic statutory duty to promote and advance universal service," she said. O'Rielly said there's "no 'Hunger Games' scenario to be played among potential USF recipients and it is disingenuous to suggest otherwise."

Commissioner Geoffrey Starks doesn't want to have USF programs compete for money. The NPRM "would pit deserving beneficiaries anchor institutions, students, patients, and Americans who lack broadband -- against one another in a fight for Universal Service funds," he wrote. "The cap is arbitrary because it has no relation to the actual nature of the internet inequality problem."

It's a "classic 'take out the trash day,' move," emailed Benton Foundation Executive Editor, Communications-related Headlines Kevin Taglang in response to our questions. "Obviously, the majority doesn’t want press which means that don’t want discussion of the item." On the overall item, he said the majority commissioners are "ignoring Congressional mandates." He also called the proposal "pure garbage."