Federal Communications Commission (FCC)

NARUC and 12 states said an FCC Lifeline order improperly bypassed state authority to designate USF-eligible telecom carriers (ETCs) under the federal Communications Act. NARUC said the commission's Lifeline broadband provider designation process order "displays a purposeful disregard of the Congressional scheme and lack of reasoned decision making" and deserved no judicial deference under the Chevron precedent. "Congress specified that State commissions, in the first instance, designate all ETCs," said the state regulators' association brief (in Pacer) Monday to the U.S. Court of Appeals for the D.C. Circuit in NARUC v. FCC, No. 16-1170. The order "claims to 'preempt' that §214(e)(2) State procedure based on the facially illogical claim that this Congressional mandate 'thwart[s] federal universal service goals.' Instead, the Order permits only the FCC to designate a new category of the federal Lifeline carriers -- Lifeline broadband internet access service providers," a process that also "undermines State universal service programs, service quality to the end-user, and increases the chances for ETC fraud and abuse," NARUC said. It asked the court to vacate the designation process and other aspects of the order, including FCC decisions giving federal ETCs the initial say over low-income consumer access to state Lifeline subsidies and using forbearance authority to eliminate state service mandates. Twelve states led by Wisconsin's attorney general filed another brief (in Pacer) saying the order "attempted to amend federal law by regulatory fiat to increase its own authority, while taking away the States' statutory rights." Joining were officials from Arkansas, Connecticut, Idaho, Indiana, Michigan, Mississippi, Montana, Nebraska, South Dakota, Utah and Vermont. An intervenor brief from the National Association of State Utility Consumer Advocates is due Monday. The FCC brief is due March 16.

New Chairman Ajit Pai is likely to restructure the FCC to create an economics bureau, or something similar, industry officials said. The focus on economics comports with the long-standing Republican focus on cost-benefit analysis of orders and other agency actions. Pai, in his first news conference on his new job, said Tuesday he hasn’t made any decisions on process reform or agency restructuring (see 1701310056).

State commissioners stressed the importance of federalism and state oversight in three telecom resolutions set for consideration this month at NARUC's winter meeting. NARUC released the proposed resolutions Tuesday. The Feb. 12-15 meeting in Washington will be the group's first since President Donald Trump took office and Ajit Pai became FCC chairman. The meeting will include a keynote by House Commerce Committee Chairman Greg Walden, R-Ore., and a congressional staff panel, said a recent agenda.

FCC Commissioner Mike O'Rielly cited blog posts criticizing the Public Safety Bureau's recent cybersecurity white paper, in a pair of tweets Thursday, saying the posts were “helpful” in highlighting issues with the commission's “authority & involvement in cybersecurity issues.” Tech Knowledge Director Fred Campbell and Shane Tews, visiting fellow at the American Enterprise Institute's Center for Internet, Communications and Technology Policy, separately criticized the white paper for exceeding its authority by proposing that the federal government needs to assert “appropriate” regulatory oversight over ISPs’ cybersecurity practices in the absence of clear market incentives to drive improvements (see 1701260020). Multiple industry lawyers said they believe the white paper is unlikely to influence FCC cybersecurity policies under new Chairman Ajit Pai (see 1701250077).

The FCC imposed conditions on a waiver it gave New York to use $170.4 million in Connect America Fund auction money for the state's own auction of rural broadband subsidies, but Commissioner Mike O'Rielly still partially dissented due to concerns (see 1701260047). The commission will maintain control over the CAF Phase II subsidy funds at all times, including by specifying where they can be awarded, limiting the amounts, and ensuring recipients comply with CAF oversight, said the order issued Thursday in docket 10-90. It conditioned the waiver on New York ensuring any state auction rule modifications are consistent with federal communications law, allow for the provision of CAF funds only to eligible entities, and don't conflict with other FCC requirements. The order said a core FCC objective is to ensure support doesn't go to areas where unsubsidized competitors already are providing qualifying broadband/voice services, and it ordered the Wireline Bureau to publish an updated list of such unserved census blocks in New York to determine which would be eligible for the CAF support. The FCC said it would condition its funding on New York committing to provide at least the same amount of support in subsidized areas, noting the state intends to make at least $200 million available. The commission also set reserve price restrictions on the federal distributions; and it waived CAF II auction broadband performance tier requirements but clarified that New York recipients of federal funding would face FCC public service obligations to ensure the rural services are reasonably comparable to urban services. In a statement, O'Rielly said he appreciated the FCC oversight and commended Chairman Ajit Pai "for his willingness to commit to pull the plug on this whole effort if it is not consistent with our universal service objectives." But O'Rielly said he was concerned the funding wouldn't be used efficiently, and said New York is a state that diverts 911 fees to unrelated purposes: "We should have received assurances that New York would cease this disgraceful practice." Without New York assurances of a "multi-round reverse auction or scarcity to drive down bids," he said the program could overpay for deployment in some areas. He voiced concern the waiver would also reduce competitive pressures in the FCC's nationwide CAF II auction.

Municipal broadband tensions flared in state legislatures as sessions got underway this month. Lawmakers in multiple states have introduced or said they will propose bills -- either to restrict or promote local networks. Community broadband supporters said in interviews this week they expect more. One bill in Virginia to reign in local governments peaked tensions between communities and tech heavyweights. Also this month, a Missouri lawmaker proposed increased state restrictions, and Colorado legislators introduced a repeal of an existing ban. Community broadband supporters predict legislative activity this year in North Carolina and Tennessee, states affected by the FCC loss at the U.S. Court of Appeals for the 6th Circuit.

The FCC should allow the Department of Homeland Security to be the lead agency on cybersecurity, said Shane Tews, visiting fellow at the American Enterprise Institute’s Center for Internet, Communications and Technology Policy, in a Thursday blog post. The FCC Public Safety Bureau issued a white paper last week, before former Chairman Tom Wheeler's resignation, saying the commission can’t rely on organic market incentives alone to reduce cyber risk within the communications sector. The federal government needs to assert “appropriate” regulatory oversight over ISPs’ cybersecurity practices in the absence of clear market incentives to drive improvements, the white paper said (see 1701180082). Tews and others said they don't believe new FCC Chairman Ajit Pai will consider making the paper's proposals commission policy (see 1701250077). Congress would do well to instead consider House Homeland Security Committee Chairman Michael McCaul's, R-Texas, planned DHS Reform and Improvement Act as the “best way for the government to facilitate information sharing in this way,” Tews said. McCaul said this month he planned to soon reintroduce the bill, which would reorganize DHS' National Protection and Programs Directorate as the Cybersecurity and Infrastructure Protection Agency in a bid to elevate DHS' cybersecurity focus (see 1701050073). Pai has said other agencies have better legal standing and expertise to handle cybersecurity issues than the FCC, and the commission should only be a consulting agency, Tews said. “Establishing a systematic, reliable reporting process and a trusted repository for information-sharing across industries and the government would be a step in the right direction,” she said. “Now is the time to embrace the importance of the internet for our digital economy and to acknowledge the risks that come with the rewards.”

The FCC Public Safety Bureau’s white paper on communications sector cybersecurity regulation is highly unlikely to influence the commission’s cybersecurity policies under new Chairman Ajit Pai, said industry lawyers and lobbyists in interviews. The white paper, which the FCC issued two days before former Chairman Tom Wheeler resigned, said the commission can’t rely on organic market incentives alone to reduce cyber risk. The federal government needs to assert “appropriate” regulatory oversight over ISPs’ cybersecurity practices in the absence of clear market incentives to drive improvements, said now-former Public Safety Bureau Chief David Simpson in the white paper (see 1701180082). The agency issued various other actions in the final days of Wheeler's tenure (see 1701240020).

Republican FTC Commissioner Maureen Ohlhausen stopped short Monday of confirming speculation that President Donald Trump will appoint her as the commission's acting or permanent chairwoman, as many expect. She laid out her vision during the State of the Net conference for a majority GOP FTC, which she said should shift its focus to investigating “real” instead of “speculative” harms to consumers. Trump is expected to at the least appoint an acting FTC chair when outgoing Chairwoman Edith Ramirez resigns Feb. 10 (see 1701200002). Ramirez's planned resignation will leave the FTC with three vacancies and a 1-1 Democratic-Republican split. Experts say the agency can continue to function effectively under those circumstances (see 1701130030).

Industry lobbyists and officials told us Friday that Commissioner Ajit Pai, the FCC's senior Republican, is being tapped to lead the agency as chairman on a permanent basis. Spokespeople for President Donald Trump didn’t confirm the reports. The FCC was reduced to three commissioners Friday, as expected, with Tom Wheeler stepping down as chairman and no longer listed on the FCC website among commissioners. Pai has been seen as nearly certain to become chairman on at least an interim basis, and personally met with Trump in New York City less than a week before Friday's inauguration.