End of ACP illustrates need for omnibus reform

Alphabet (Google’s parent) alone has a market cap of nearly $2 trillion – roughly twice that of the top 10 companies contributing roughly 77% of all universal service funding combined. Yet Google and others in the Big Tech pantheon like Facebook, Netflix, and Amazon contribute not a dime. These dominant Big Tech companies that benefit financially from the connectivity that USF makes possible should contribute to our shared goals of connectivity and affordability.

Policymakers have long explored ways to hold these companies more accountable for their dominant market positions. Contributing to the nation’s effort to provide affordable and universal connectivity that is the foundation of their financial success is a great place to start. The FCC needs the legislative tools to do so, and there is growing momentum for this on Capitol Hill. Congress should give the FCC a bright green light to proceed.

https://ustelecom.org/a-permanent-solution-for-connecting-low-income-families-2/#0

Rather than trying to reform legacy subsidy mechanisms created for voice telephone service, wouldn’t public ownership of open access regional fiber to the premises (FTTP) provide a twin win of superior access and affordability? And supporting its construction and operation by making low interest long term loans available as well as technical assistance grants to help them organize?

The information technology companies mentioned in this article all pay income taxes that could help fund this. They might even be willing to pay an additional advanced telecommunications infrastructure surcharge since ubiquitous, affordable fiber connections synergistically benefits their business if not framed in adversarial terms as one industry asking another to pay for assets they would not own. Publicly owned infrastructure thus offers a neutral solution to this standoff.

This would make more sense than effectively subsidizing the shareholders of privately held telephone and cable companies through means tested end user subsidies for households that find it difficult to afford their commercial “broadband” offerings and bundled services. Publicly owned regional open access infrastructure also offers an additional source of revenue to cover operating and debt servicing costs in the form of lease fees paid by internet service providers to offer services on them.

FCC issues proposed order creating Connect America Fund

The U.S. Federal Communications Commission has released its proposed order revamping the Universal Service Fund (USF) that has for decades subsidized plain old telephone service (POTS) in high cost areas. The USF will now be directed to support Internet connectivity as the Connect America Fund (CAF). The CAF will instead subsidize telecommunications infrastructure to serve what the FCC estimates to be 18 million Americans who involuntarily remain off the Internet “grid” because it costs too much to connect them.

Whether the proposed order would achieve that and do so in a timely manner is an open question. The executive summary of the rather inscrutable 759-page document states that “[w]hile continuing to require that all eligible telecommunications carriers (ETCs) offer voice services, we now require that they also offer broadband services.” But a close reading of the order shows no indication the FCC will expand the telcos’ existing common carrier obligation to provide voice service to all (and not just some) premises in their service areas to encompass Internet. For example, paragraph 1090 on page 398 of the proposed order:

Under section 214 of the Act (the federal Communications Act of 1996), the states possess primary authority for designating ETCs and setting their “service area[s],” although the Commission may step in to the extent state commissions lack jurisdiction. Section 214(e)(1) provides that once designated, ETCs “shall be eligible to receive universal service support in accordance with section 254 and shall, throughout the service area for which the designation is received . . . offer the services that are supported by Federal universal service support mechanisms under section 254(c).” Although we require providers to offer broadband service as a condition of universal service support, under the legal framework we adopt today, the “services” referred to in section 254(e)(1) means voice service, either landline or mobile. (Emphasis added).

That sounds like POTS and not Internet. In addition, there is no reference in the proposed order to Title II Section 214(e)(3) of the Communications Act of 1996 that empowers the FCC to "determine which common carrier or carriers are best able to provide such service to the requesting unserved community or portion thereof and shall order such carrier or carriers to provide such service for that unserved community or portion thereof." So it appears that telcos could continue to not serve some areas even while accepting CAF subsidies to serve others -- thereby perpetuating the existing problem of broadband black holes.

It’s also unclear from the proposed order how unserved areas in states where the incumbent telco has relinquished its carrier of last resort status would be able to benefit since these carriers would appear to be ineligible for CAF subsidies. Or whether telcos, even if eligible for CAF subsidies, would accept them. In California, for example, telcos have generally shunned generous subsidies available through the California Public Utilities Commission to offset the cost of constructing infrastructure to provide Internet connections to premises in unserved and underserved areas of the state.

Finally and perhaps most importantly, given that many people have and continue to “cut the cord” to landline voice service, will there be enough money to be had from phone bill surcharges that have historically funded the USF to sustain the CAF?

Community networks should be eligible for CAF subsidies

U.S. Federal Communications Commission (FCC) is about to release details of its Connect America Fund (CAF) that will reform the current Universal Service Fund that subsidizes switched voice service to instead subsidize Internet connectivity in high cost areas.

The FCC faces a significant challenge in how it defines those areas eligible for CAF subsidies given that wireline Internet access is highly granular. Incumbent investor-owned cable and telephone companies parse their service areas very tightly when it comes to determining what is and what isn't a high cost area for providing Internet service. A given home or business may have access while another just down the road or street is deemed too costly to serve and is relegated to dialup or satellite. These premises can't be described as situated in remote, isolated areas since they are almost on top of areas that have wireline Internet access.

Targeting CAF subsidies to the most remote regions of the United States won't help these folks. They comprise many of the 24 million Americans that FCC Chairman Julius Genachowski noted in a February 7, 2011 speech "couldn’t get broadband today even if they wanted it. The infrastructure simply isn’t there." It's there for their neighbors -- but not for them.

Many communities have responded to this widespread problem by building their own fiber to the premises networks to fill in the gaps. These networks must necessarily overlap the footprints of the incumbent's incomplete, Swiss cheese infrastructures since telecommunications infrastructure like other utilities must cover sufficiently large geographical areas in order to be economically viable. The FCC should designate these community networks as eligible for CAF subsidies if they meet certain requirements such as providing voice and 911 emergency service at standards that meet or exceed those placed on existing wireline providers.

California legislation would expand subsidy program

As the U.S. Federal Communications Commission considers retasking the Universal Service Fund that was originally formed to subsidize voice telephone service in high cost areas to advanced telecommunications infrastructure, California is considering urgency legislation to expand and make permanent its own similar subsidy program.

The California Advanced Services Fund (CASF) was established by the California Public Utilities Commission in December 2007 to subsidize advanced telecom infrastructure in high cost unserved and underserved areas of the state. Up to $100 million was allocated from a 25 percent surcharge on intrastate long distance calls, with the CASF surcharge offset by an equal reduction in the California High Cost Fund-B surcharge created to subsidize deployment of basic voice telephone service.

SB 1040 would leave the CASF in place indefinitely and expand its budget to $250 million with up to $25 million available in any given fiscal year. The urgency measure also liberalizes the use of CASF funds. To subsidize broadband infrastructure construction, $20 million would be allocated to grants and $3 million for loans.

One of the most important elements would be a new Regional Broadband Consortia Grant Account that earmarks $2 million in technical assistance grants to fund the cost of broadband deployment activities other than actual infrastructure construction. The money would be available to a wide variety of groups including local and regional governments, schools and colleges, health care providers, libraries and community-based organizations.

This is a critical element of the bill since many such entities that were interested in applying for broadband infrastructure grants and loans appropriated in the American Recovery and Reinvestment Act of 2009 lacked adequate funding to retain experts to help them with the engineering and business planning work needed in order to prepare project proposals.

A California Senate floor analysis of SB 1040 notes the Senate Energy, Utilities and Communications Committee was told at a Feb. 16 hearing that four percent of Californians - 1.4 million people in mostly rural areas, do not have access to broadband service. Only about half of Californians have Internet access at speeds meeting the CPUC's definition of basic broadband of 3 Mbs down and 1 Mbs up.

SB 1040 is advancing without opposition and would become law immediately after being signed by the governor. The CPUC would then open a rulemaking proceeding to implement the new CASF provisions later this year.

Revamp wireless USF charge to subsidize wireline broadband, Qwest reportedly urges FCC

The Denver Post reports Colorado-based telco Qwest wants the Federal Communications Commission to change the formula for wireless phone surcharges for the Universal Service Fund (USF).

Qwest is proposing that the wireless surcharge be applied on a per household rather than per customer basis. The difference between the two methods is estimated to be around $500 million, which Qwest says should be set aside to subsidize wireline broadband deployment.

FCC chair says USF funding should subsidize broadband

CHICAGO -(Dow Jones)- Federal Communications Commission Chairman Kevin Martin on Tuesday specifically endorsed the use of money in the Universal Service Fund to subsidize broadband deployment in rural parts of the U.S.

The comments from Martin, who was speaking via a video link at the NXTcom telecommunications conference in Chicago, mark the first time he has explicitly said that the fund should be used to speed up the deployment of broadband service.