Universal Service Fund

The Federal Communications Commission has unanimously approved emergency assistance to restore connectivity in schools and libraries affected by Hurricanes Harvey, Irma, and Maria through the agency’s E-rate program.

Federal Communications Commission Chairman Ajit Pai wants to impose a budget cap on the Lifeline program that helps poor people buy broadband and phone service.

As I participate today in Silicon Harlem's annual conference, I'm reminded of the 929,000 New Yorkers, including those who live and work in the heart of Harlem, that depend on the Federal Communications Commission's Lifeline program for affordable telecommunications services. I am saddened to affirm, during a conference that seeks to find solutions to narrow technology divides and create enhanced opportunities for the disconnected, that the FCC majority has issued a so-called proposal for the Lifeline program which promises to jeopardize our efforts at ubiquitous and affordable services for the citizens of New York and the rest of the country.

If the goal of the current FCC majority is to widen existing divides, and ensure that our nation's most vulnerable are less likely to be connected, this item sets us on that path. It will harm those less fortunate, those who need to dial 911, stay in touch with their children's educators, keep a job, and stay healthy. The day we head down such a path, is a sad one indeed. I commit to doing everything in my power to ensure that the only universal service program designed to close the affordability gap, remains a shining and successful means for economically-strapped citizens to have voice and broadband services.

At our November open meeting, we'll be tackling top priorities: curtailing unlawful robocalls, unleashing 5G wireless connectivity, enabling the next generation of broadcast television, speeding infrastructure deployment, and modernizing our media ownership rules.

Lifeline: Speaking of bridging the digital divide, the Lifeline program is an important component of the Commission's efforts to bring digital opportunity to low-income Americans. But when I testified on Capitol Hill last month, I heard loud and clear from Democratic and Republican Senators alike that the program is in need of serious reform. For starters, we need to crack down on waste, fraud, and abuse. And we will. For instance, right now, Lifeline recipients in cities like Tulsa, Oklahoma, and Reno, Nevada receive an enhanced Tribal subsidy, intended for rural Tribal lands, of $34.25 a month, while those in other cities receive the standard $9.25 subsidy. Giving residents of Tulsa and Reno an extra $25 per month subsidy is a waste of money given that the cost of providing service in those cities is far lower there than it is in poorer, rural areas. Therefore, at our November meeting, the Commission will aim to close this loophole and limit the enhanced Tribal subsidy to those actually living on Tribal lands in rural areas. We'll also vote to solicit public input on how to effectively and efficiently direct Lifeline funds to the areas where they are most needed and to do so consistent with the FCC's legal authority. And we'll give Lifeline recipients better service and more choices–such as by eliminating a current prohibition on Lifeline broadband beneficiaries changing service providers for an entire year.

Media Ownership: We will be voting on modernizing our media ownership rules to reflect the marketplace of the present, not the past. President Clinton's first FCC Chairman stated, "Under current conditions, the FCC's [newspaper/broadcast cross-ownership] rule is perverse." In 2017, the FCC is poised to finally bring our media ownership rules into the digital age. If this proposed Order is adopted, the FCC would make five significant nods to reality. First, we would once and for all eliminate the newspaper/broadcast cross-ownership rule. In this day and age, if you want to buy a newspaper, you deserve a roadmap, not a roadblock. Second, we would eliminate the radio/television cross-ownership rule, which is unnecessary in today's marketplace given the Commission's separate local radio and local television ownership rules. Third, we would revise the local television ownership rule to eliminate the eight-voices test and incorporate a case-by-case review into the top-four restriction. This would better reflect the competitive conditions in local markets. Fourth, we would eliminate the attribution rule for television joint sales agreements, finding that JSAs serve the public interest by allowing broadcasters to better serve their local markets. And fifth, we would finally establish an incubator program to encourage greater diversity in and new entry into the media business and seek comment on what the details of that program should be.

Intended initially as a mechanism to reduce the cost of phone service for low-income customers, the bipartisan Lifeline program has worked in lockstep with telephone providers and consumers to increase the uptake in phone service throughout the country and has kept pace with changes in technology as the U.S. moved from a wireline world to one where the number of mobile devices and services now exceeds the population to a recognition that broadband internet is an essential communications service. Unfortunately, Chairman Pai’s proposal turns America’s back on our commitment, enshrined in law, to make sure world-class telecommunications are available and affordable for all. By nick and hack, Pai is gutting the only Universal Service Fund program that directly benefits consumers instead of carriers. His changes will mean fewer low-income households are served by fewer competitive options. At the very least, we hope that the FCC will take the time to do an economic analysis around the impact of the proposed changes. Many, many Lifeline recipients are U.S. veterans who fought for our flag. Chairman Pai appears to be waiving the white flag of surrender for their connected future. This is a sad day for anyone who believes in truly universal service.

Federal Communications Commission Chairman Ajit Pai issued the following statement on his proposal to help schools and libraries affected by hurricanes Harvey, Irma and Maria restore connectivity through the FCC’s E-rate program:

“[Oct 24], I shared with my colleagues an emergency order that would help schools and libraries recover from the devastation of hurricanes Harvey, Irma, and Maria. This order would provide targeted financial support to these institutions through the FCC’s E-rate program and give them maximum flexibility as they try to restore connectivity. It would also make available additional funds to schools that are serving a substantial number of students displaced by this season’s hurricanes. Once my fellow commissioners have had the opportunity to review this proposed order, I hope they will be able to quickly vote to support this relief.”

[Commentary] No matter how valuable the Lifeline program is in theory, it’s wasting millions of taxpayer dollars. It allows the telecommunications carriers who profit from the program to verify eligibility for their participants — and too many are turning a blind eye. Lifeline was poorly structured and badly executed from the start. The goal of providing low-income Americans help regaining their economic footing with phone and broadband service is worthwhile and admirable — but that doesn’t mean that any plan doing that is worthy of unequivocal support.

Sidestepping the problems in this terribly run program is a disservice to all participants as well as those footing the bill, and will endanger the program’s existence if we allow it to continue. I’ll remain engaged on this issue and committed to serious changes. In the meantime, I encourage my party, as well as my friends from across the aisle, to join me in pushing for oversight and accountability regardless of its political convenience.

[Commentary] Anchor institutions like schools, libraries and health care providers play an important role in bringing connectivity to their local communities. But advances in telemedicine and education will not be fully realized if rural consumers do not have adequate broadband service at home. School aged children will struggle if they cannot do their homework. Individuals with medical conditions that require active monitoring – diabetes, congestive heart failure and more – need broadband at home to transmit critical medical data in real time to medical professionals.

That is why local government officials and anchor institutions should be paying attention to the implementation of the Connect America Fund, now and in the years ahead. The FCC is working to hold an auction in 2018 to award nearly $2 billion in funding over the next decade from Phase II of the Connect America Fund to service providers to extend fixed broadband to unserved residential and small business locations, and a separate auction to award $4.53 billion in funding over a decade from Phase II of the Mobility Fund to mobile wireless providers to extend LTE service to rural America. Any entity willing to provide the requisite level of service set by the FCC and meet other requirements can bid in those auctions for the subsidy.

Local leaders should ask: is it possible to utilize funding in a more coordinated way from E-rate, the Rural Healthcare program, and the Connect America Fund to build a business case to serve the entire community? What efficiencies might be gained from building an integrated broadband network for the entire community? Are the service providers that currently participate in any of these FCC’s universal service programs planning to bid in these upcoming Connect America Fund auctions? Who else might bid?

[Carol Mattey is the principal of Mattey Consulting LLC, which provides strategic and public policy advisory services to broadband providers, governmental agencies, non-profit organizations, and other entities active in the telecommunications arena]

The Federal Communications Commission announced a settlement with Verizon for possible violations of the FCC’s competitive bidding rules for the E-rate program. Verizon agreed to pay $17.68 million to resolve parallel investigations by the FCC and the Department of Justice, $17.325 million of which will be repaid to the Universal Service Fund (USF). Verizon has further agreed to withdraw any rights it may have to hundreds of millions of dollars in requested and undisbursed E-rate support.

What is unsettling is that many of the changes we are currently making at the Federal Communications Commission have a one-sided benefit, and the impact on consumers, competition, and the public interest are mere afterthoughts. The FCC is a regulatory agency, with a charge that requires us to protect the public interest. This means we should strike and maintain the proper balance, when it comes to consumer and industry interests. Yet, when it comes to the future of our media landscape, the FCC majority is embarking on a path, toward a regulatory-free zone....

In just about every other context and every other Universal Service program, we have acted with haste, to remove existing barriers to entry. But when it comes to the Lifeline program, that provides millions the chance to maintain a dial tone or should be providing millions more the opportunity to afford broadband at home, we erect insurmountable barriers to entry for Lifeline providers wishing to do business.