Universal Service Fund

In this two-part edition of Full Spectrum’s recurring series on FCC enforcement, Partner Steve Augustino and Senior Associate Brad Currier highlight a recent trend and cover some of the most interesting late-summer enforcement items.

Part one of this episode focuses on the significance and implications of Commissioner-led investigations, such as Commissioner O’Rielly regarding E-Rate overbuilding

On August 12, the FCC officially launched the Fraud Division of its Enforcement Bureau with the publication of an Order adopted earlier this year. The new division will be tasked with taking enforcement actions against fraud in the Universal Service Fund (“USF”) and other funding programs that the agency oversees. While February’s brief Order

At its July Open Meeting, the FCC adopted a Notice of Proposed Rulemaking (“NPRM”) to propose a pilot program within the Universal Service Fund (“USF”) to support broadband connections for telemedicine, or “connected care” for low-income Americans and veterans. Healthcare-related items have received a great deal of attention at the FCC recently, as the agency also adopted an order, which has not yet been released, at its August Open Meeting last week to reform its Rural Health Care Program to focus on telehealth in rural areas. The Connected Care NPRM proposes a three-year pilot at a cost of $100 million to be collected from USF assessments separate from the other USF programs. The NPRM was championed by Commissioner Carr and supported by all five FCC commissioners, although Commissioner O’Rielly expressed some reservations with the fact that the pilot would assess another $100 million on USF ratepayers outside of the individual program caps or budgets. His concerns likely relate to the fact that, at the same time, he is trying to advance a proposal to place an overall cap on the USF, which has received significant opposition. Last week, the Connected Care NPRM was published in the Federal Register, triggering a comment deadline of August 29th and a reply deadline of September 30th.

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Even with the dog days of summer upon us, the FCC shows no signs of slowing down on its policymaking priorities in a jam-packed agenda for its next open meeting on August 1, 2019. Headlining the agenda is a proposal to establish a Rural Digital Opportunity Fund (“RDOF”) offering $20.4 billion over a decade to support high-speed broadband deployment to unserved areas. The RDOF would eventually replace the FCC’s Connect America Fund (“CAF”) as the agency’s primary universal service program for high-cost areas. The areas receiving RDOF support would be determined by a new agency-led information collection, requiring more granular service data from broadband providers. As with the CAF, the RDOF proceeding is sure to engender debate in the broadband industry about the appropriate performance benchmarks, auction bidding rules, and data collection mechanisms. In addition to the RDOF, the FCC also plans to adopt items at the August meeting to reform how it allocates Rural Health Care Program funding; streamline licensing procedures for small satellite systems (otherwise known as “smallsats”); establish procedures for the auction of new toll free numbers; implement 911 direct dial and location information requirements on multi-line telephone systems (“MLTS”) often found in offices, hotels, and college campuses; expand the agency’s anti-spoofing rules; and limit the franchise fees placed on cable operators.

The August agenda items impact all corners of the telecommunications industry. You will find more details on some of the most significant August meeting items after the break:


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Continuing its push to free up spectrum to support next-generation 5G services, the FCC plans to move forward on auctions of both mid- and high-band spectrum for commercial mobile use at its next open meeting scheduled for July 10, 2019. First, the FCC would establish new licensing rules for the 2.496-2.690 GHz band (“2.5 GHz Band”) currently used for educational television services to facilitate the auction of the spectrum next year. The FCC contends that the 2.5 GHz Band, which represents the largest contiguous block of mid-band spectrum considered for auction to date, has largely gone unused and should be opened up for commercial use. Second, the FCC would adopt application and bidding procedures for the auction of spectrum at 37.6-38.6 GHz (“Upper 37 GHz Band”), 38.6 GHz-40.0 GHz (“39 GHz Band”), and 47.2-48.2 GHz (“47 GHz Band”). This auction would be the FCC’s third auction of high-band spectrum, following the recent auctions of 24 GHz band and 28 GHz band spectrum. As we previously noted, this auction is complicated by the presence of incumbent licensees in the 39 GHz Band, who would be offered incentive payments to accept modified licenses or leave the Band under the FCC’s plan. Rounding out the major July actions, the FCC expects to seek comment on establishing a three-year, $100 million universal service pilot program to support telehealth services as well as eliminate pricing regulation and other restrictions on certain legacy data transport services offered by price cap carriers.

You will find more details on the most significant July meeting items after the break:


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The FCC’s proposed rulemaking to establish an overall budget cap on the Universal Service Fund (“USF”) was published in the Federal Register on June 13, 2019, which sets the comment deadline on July 15, 2019, and the reply comment deadline on August 12, 2019.  As we previously highlighted, the notice of proposed

On Friday, May 31, 2019, the FCC released a much-anticipated notice of proposed rulemaking (“NPRM”) to consider the adoption of an overall budget cap on the Universal Service Fund (“USF”), separate from any individual budgets for each of the four USF programs. The NPRM is in response to years-long advocacy on the part of Commissioner O’Rielly to impose budgets on USF spending, and it comes over dissent of the two Democratic Commissioners. While Commissioner O’Rielly justified the proposal as responsible stewardship of public money and said it would not limit funding in the near future, Commissioners Rosenworcel and Starks criticized the proposal as undermining the goals of Universal Service and, at worst, creating a “universal service hunger games” among the support programs.

The release of the NPRM was our first look at the specifics of a proposal that broke a month ago. The NPRM does not propose a specific budget, primarily raises questions about how to proceed, and does not contain any proposed rules. Nevertheless, opponents of the proposal have been most vocal since word of the NPRM came out, and we expect those USF stakeholders to continue in opposition to the approach. Meanwhile, proposals to reform USF contributions remain stalled (and lacking any consensus), while the contribution factor hovers around 20% of assessable revenues.


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The FCC plans to adopt an order eliminating the controversial rural “rate floor” that restricts the amount of Universal Service Fund (“USF”) support received by some carriers to build and maintain networks in underserved areas at its next meeting scheduled for April 12, 2019. The rural rate floor, which requires carriers receiving Connect America Fund (“CAF”) support to charge a minimum monthly rate or risk losing subsidies, has been a longstanding target of criticism by Chairman Pai as well as consumer groups, Tribal authorities, and rural carriers. The proposed order follows a nearly two-year freeze in the rate floor implemented soon after Chairman Pai assumed leadership and would avoid an almost 50% increase in the rate floor scheduled to take effect in July 2019. Rate floor elimination would provide significant regulatory relief to rural carriers by increasing flexibility over service rates, while reducing associated reporting and customer notification requirements.

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It’s once again full speed ahead on spectrum and 5G deployment at the FCC, as the agency plans to take action at its next open meeting scheduled for April 12, 2019 on a slew of measures aimed at making additional millimeter wave (“mmW”) frequencies available to support 5G wireless technologies, the Internet of Things, and other advanced services. Topping the agenda, the agency expects to propose procedures for the simultaneous auction of spectrum for commercial wireless services in three mmW bands encompassing 3400 megahertz. As we previously reported, the proposal would clear the way for the FCC’s second-ever incentive auction (the first being the March 2017 broadcast spectrum incentive auction) designed to clear out incumbent licensees by offering payments in exchange for relinquishing current spectrum holdings. The agency also anticipates reforming access to mmW bands to facilitate the auction and extending long-standing protections for over-the-air reception devices (“OTARD”) to hub and relay antennas essential to 5G network deployment. Rounding out the major actions on the April agenda, the FCC plans to forbear from certain legacy long-distance regulations in the face of increased competition and eliminate the controversial rural “rate floor” for high cost universal service support.

You will find more details on the significant April meeting items after the break:


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Back for its 10th year, our most popular webinar offers an in-depth discussion on the federal Universal Service Fund for participants in USF programs and for contributors to the Fund. This webinar will address major developments in the four support funds and discuss the pressures on the USF contribution system in an era of 20% contribution rates. In addition, as usual, we will offer tips and insights into managing audits and investigations in these highly scrutinized programs.

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