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    Your Chance to Weigh in on the Future of the Universal Service Fund

    Featured in:

    Friday, December 17, 2021

    Weekly Digest

     You’re reading the Benton Institute for Broadband & Society’s Weekly Digest, a recap of the biggest (or most overlooked) broadband stories of the week. The digest is delivered via e-mail each Friday.

    Round-Up for the Week of December 13-17, 2021

    Kevin Taglang
    Taglang

    In November 2021, President Joe Biden signed into law the largest U.S. investment ever in broadband access, affordability, and adoption. With $65 billion flowing to broadband, Congress also asked the Federal Communications Commission to determine what impact the Infrastructure Investment and Jobs Act will have in achieving universal service goals for broadband. This week, the FCC launched a proceeding seeking public comment on how to best make sure everyone in the U.S. can use broadband. Here’s what you need to know if you’d like to help the FCC figure out the future of universal service.

    I. Background

    The Infrastructure Investment and Jobs Act, as the Benton Institute for Broadband & Society has reported, includes historic investments in broadband.

    • Through the Broadband Equity, Access, and Deployment Program (BEAD Program), the National Telecommunications and Information Administration (NTIA) will allocate $42.45 billion to states for grants “to bridge the digital divide.” States will give priority to projects that will provide service to unserved locations, then to underserved locations, and next to community anchor institutions. Broadband networks funded by the BEAD Program must provide download speeds of at least 100 Mbps and upload speeds of at least 20 Mbps and “latency that is sufficiently low to allow reasonably foreseeable, real-time, interactive applications.” Grant recipients must provide service to every customer that desires broadband service in the project area and offer at least one low-cost service option for eligible subscribers.
    • Congress appropriated $14.2 billion for the FCC’s new Affordable Connectivity Program, which will extend and replace the existing Emergency Broadband Benefit Program that was created to help families and households struggling to afford internet service during the COVID-19 pandemic. The Affordable Connectivity Program offers up to $30/month to low-income households so they can better afford broadband service (up to $75/month for households on Tribal lands). The program also offers low-cost internet-enabled devices: providers may be reimbursed up to $100 for a device delivered to the household, provided that the charge to such eligible household is more than $10 but less than $50 for such connected device.
    • The NTIA is establishing the State Digital Equity Capacity Grant Program to promote state-level broadband adoption programs and appropriates $60 million for state planning grants and $1.4 billion for state capacity grants. Congress also allocated $1.25 billion for NTIA to establish the Digital Equity Competitive Grant Program within the Department of Commerce to fund eligible programs that do not otherwise receive funding from the State Digital Equity Capacity Grant Program.
    • Congress allocated $1 billion to NTIA and charged the agency with establishing a program to make grants for the construction, improvement, or acquisition of middle-mile infrastructure. Grant recipients must commit to a five-year buildout, be able to support retail broadband service, and share the location of all middle-mile infrastructure constructed with grant funds. Priority is to be given to applications that satisfy two or more of the following: (1) connecting to last-mile networks that provide or plan to provide broadband service to households in unserved areas; (2) connecting non-contiguous trust lands; or (3) offering wholesale broadband service at reasonable rates on a carrier-neutral basis.

    The Infrastructure Investment and Jobs Act also directs other federal agencies to incorporate promoting broadband deployment and sharing broadband data into their work:

    • The Appalachian Regional Commission is creating a High Speed Broadband deployment initiative.
    • The Department of Transportation will consider coordination with broadband infrastructure projects when making rural surface transportation grants.
    • The U.S. Forest Service will allow the use of funding to counties from the Secure Rural Schools program to be used to extend broadband access to schools or fund technology to access the internet outside of school.

    There are a host of pre-existing federal broadband programs to also keep in mind.

    National Telecommunications and Information Administration

    The Consolidated Appropriations Act, 2021 created three new broadband programs at the NTIA:

    • The Connecting Minority Communities Pilot Program is focused on creating a pilot program that can be used to support broadband access and adoption for Historically Black Colleges and Universities (HBCUs), Tribal colleges and universities, minority-serving institutions, and anchor communities.
    • The Broadband Infrastructure Deployment Grant Program will issue grants to covered partnerships for covered broadband projects that are competitively and technologically neutral. These “Covered Partnerships” are defined as partnerships between a state, or one or more political subdivisions of a state, and providers of fixed broadband service.
    • The Tribal Broadband Connectivity Program provides grants to entities, including Tribal governments, Tribal colleges or universities, and Tribal organizations, for the purposes of supporting broadband connectivity on Tribal lands.

    USDA

    The U.S. Department of Agriculture (USDA) has multiple programs to support broadband, mainly through the Rural Utilities Service (RUS):

    Department of the Treasury

    The Department of the Treasury has several programs created by the American Rescue Plan Act of 2021 that can be used to fund broadband projects:

    • Through the Coronavirus State and Local Fiscal Recovery Funds, funding is available to support state, local, and Tribal governments in responding to the impact of COVID-19 and efforts to contain COVID-19 in their communities, and such funding will be available for costs incurred by December 31, 2024. These funds can be used to make necessary investments in broadband, water, or sewer infrastructure.
    • The Coronavirus Capital Projects Fund is available to states, territories, and Tribal governments for funding critical capital projects that directly enable work, education, and health monitoring, including remote options, in response to the COVID-19 public health emergency.

    Department of Health and Human Services

    The Department of Health and Human Services (HHS) also has programs related to supporting broadband for telehealth purposes.

    Federal Coordination

    In December 2020, Congress included the Broadband Interagency Coordination Act in the Consolidated Appropriations Act, 2021, requiring the FCC, USDA, and NTIA to enter into an agreement within six months to provide for sharing information about existing or planned projects that have received, or will receive, funding through the FCC’s High-Cost programs and programs administered jointly by NTIA and the FCC. The interagency agreement also requires the agencies to “consider basing the distribution of funds for broadband deployment” under the referenced programs “on standardized data regarding broadband coverage.” Additionally, the law requires the FCC to seek comment and release a report on: (1) the effectiveness of the agreement in facilitating efficient use of funds for broadband deployment; (2) the availability of Tribal, State, and local data regarding broadband deployment and the inclusion of that data in interagency coordination; and (3) modifications to the agreement that would improve the efficiency of interagency coordination.

    II. Universal Service Goals for Broadband

    The Infrastructure Act defines the FCC’s universal service goals for broadband as the timely deployment of “advanced telecommunications capability” to all Americans (including, in particular, elementary and secondary schools and classrooms). As the FCC sets out to report to Congress, it is considering its broadband universal service goals to be: universal deployment, affordability, adoption, availability, and equitable access to broadband throughout the United States. 

    Congress requires from the FCC a report on the options for improving its effectiveness in achieving these goals in light of the Infrastructure Investment and Jobs Act. The FCC is to evaluate the implications of the new law on how the FCC should achieve the universal service goals for broadband. The FCC may make recommendations for Congress on further actions the FCC and Congress could take to improve the ability of the FCC to achieve the universal service goals for broadband, but the FCC may not “reduce the congressional mandate to achieve the universal service goals for broadband.”

    III. The Impact of the Infrastructure Investment and Jobs Act on Achieving Universal Service Goals

    The FCC seeks comment on ways to improve its effectiveness in achieving the universal service goals for broadband, including if it is interpreting the goals correctly.

    Evolving Level of Service

    When first established, Universal Service Fund programs supported primarily voice services. In 1996, Congress mandated that universal service is an evolving level of telecommunications services that the FCC shall establish periodically, taking into account advances in telecommunications and information technologies and services.

    Starting in 2011, the FCC recognized the importance of fixed and mobile broadband and began a transformation of the High Cost Program from supporting just voice service to supporting voice and broadband, both fixed and mobile. Similar reforms followed in the other programs: the Healthcare Connect Fund to provide support for broadband networks for rural healthcare providers; the E-Rate program to increase its emphasis on supporting high-speed broadband and Wi-Fi; and the Lifeline program to provide support for broadband for low-income consumers. 

    The FCC has also raised speed benchmarks for broadband: from 200 kbps/200 kbps in 1997 to 4/1 Mbps in 2010 and to 25/3 Mbps in 2015.

    The FCC is now asking how the Universal Service Fund programs may continue to evolve in light of the Infrastructure Investment and Jobs Act. 

    FCC’s Universal Service Fund Programs

    The FCC provides universal service support through four programs under the Universal Service Fund umbrella:

    • Connect America Fund (formally known as High-Cost Support): The universal service High-Cost program is designed to ensure that consumers in rural,
      insular, and high-cost areas have access to modern communications networks capable of providing voice and broadband service, both fixed and mobile, at rates that are reasonably comparable to those in urban areas.
    • Lifeline (for low-income consumers), including initiatives to expand phone service for residents of Tribal lands: The Lifeline program was established in 1985 to help low-income consumers afford voice service and has evolved to include support for broadband internet access service.
    • Schools and Libraries (E-rate): Eligible schools, libraries, and consortia (comprised of eligible schools and libraries) receive universal service discounts for eligible services and/or equipment (collectively, eligible services), including connections necessary to support broadband connectivity to and within eligible schools and libraries.
    • Rural Health CareThe Rural Health Care Program is made up of two programs. In 1997, the FCC established the Telecom Program to subsidize the difference between urban and rural rates for telecommunications services. In 2012, the FCC established the Healthcare Connect Fund Program to promote the use of broadband services and facilitate the formation of health care provider consortia that include both rural and urban health care providers.

    The Universal Service Fund is paid for by contributions from providers of telecommunications services. Telecommunications companies must pay a percentage of their interstate end-user revenues to the Universal Service Fund. This percentage is called the contribution factor. The contribution factor changes four times a year and is increased or decreased depending on the needs of Universal Service Fund programs. The contribution factor for the first quarter of 2022 is about 25 percent, up from 6
    percent in 2001. 

    The High-Cost program has supported both the initial construction and the ongoing operational expenses for supported networks. Support from the program goes to service providers over a term of years, and the support must be used to build and maintain voice and broadband-capable networks meeting defined minimum speed and latency obligations. The FCC will disburse billions of dollars in support in the coming years for fixed network buildout and operations in unserved and underserved areas, through the various funds within the High-Cost program. The BEAD Program will focus on deploying new broadband infrastructure to unserved and underserved locations. Even after the networks supported by these programs are constructed, providers will incur ongoing operating expenses as well as some capital expenses.

    The FCC seeks comment on the impact of the Infrastructure Investment and Jobs Act on the High-Cost program. Questions include:  

    Are there changes that should be made in light of the additional funding provided by the Infrastructure Act?

    How can the FCC best coordinate the High-Cost program with the programs created by the Infrastructure Act to achieve our universal service goals, particularly the deployment of broadband to 100% of the people in the United States? What role will the High-Cost program have in the future given the evolving level of universal service? 

    • Given that the networks deployed with funding from the BEAD program and other Infrastructure Act programs will still incur operational costs, particularly in the most difficult to serve areas, should the FCC consider modifications to the High-Cost program to further support ongoing operating and maintenance costs of recently constructed broadband facilities to ensure that rates remain reasonably comparable?
    • Should the FCC coordinate with the BEAD Program to ensure that newly constructed networks have ongoing support? 
    • In light of the BEAD Program, how should the FCC approach next steps for the Rural Digital Opportunity Fund program? 
    • In light of the 100/20 Mbps service standard in the BEAD Program, should the FCC reconsider its service requirements for future High-Cost support? 
    • What impact should the BEAD Program have on the Commission’s approach to high-cost support for mobile broadband?

    The FCC asks if some changes would require Congressional action. If the High-Cost program were to place additional emphasis on supporting operating costs in light of the influx of funding for capital expenditures, are the existing programs a sufficient vehicle to distribute that support? If not, are there statutory changes that would help the FCC shift additional support to operating and maintenance costs for deployed networks? Likewise, if the focus of the BEAD Program funding is on fixed broadband deployment, would congressional action be necessary to shift the focus of the High-Cost program, for example, to support mobile broadband? Should Congress provide additional authority regarding the use of auctions, or price models, to allocate funding for operating costs?

    The FCC seeks comment on how it can continue to ensure that the Lifeline program and Affordable Connectivity Program effectively achieve universal service goals for broadband in light of recent legislation. Presently, the Lifeline program offers a discount of $5.25 for voice and $9.25 for broadband that meets the relevant minimum standards. In Tribal lands, an additional discount of $25.00 is available. The new Affordable Connectivity Program—debuting December 31, 2021—provides a discount up to $30/month for qualified consumers for broadband service and associated equipment rentals and up to $75/month for qualified consumers on Tribal lands. It also provides a discount of up to $100 on certain internet-connected devices purchased through a participating provider if the household contributes toward the purchase price. The Affordable Connectivity Program is funded through Congressional appropriations; Lifeline is funded through Universal Service Fund contributions. 

    The FCC asks:

    • What changes, if any, should the FCC consider to the Lifeline program in light of the Infrastructure Act and other recent developments?
    • What, if any, of those changes would require changes in law in light of the Lifeline Program’s statutory origin?
    • How can the FCC best coordinate the Lifeline program and the Affordable Connectivity Program with the programs created by the Infrastructure Act to achieve the proposed universal service broadband goals, including ensuring affordable broadband to everyone?
    • What role will the Lifeline program and the Affordable Connectivity Program have in the future given the evolving level of universal service? 
    • Would further integration between the Affordable Connectivity Program and Lifeline require congressional action in order to fund the programs’ administration and disbursements?
    • What other congressional action would be necessary to allow for the integration of these programs?
    • Are there other alternative approaches that could be considered to ensure these programs work seamlessly together to meet low-income consumers’ needs?
    • Aside from efforts meant to integrate these programs, are there actions that Congress can take to improve the Lifeline program?
    • The Infrastructure Act includes language that allows the FCC to conduct outreach efforts to encourage households to enroll in the Affordable Connectivity Program and also permits the FCC to facilitate consumer research, conduct focus groups, engage in paid media, and provide grants to outreach partners to promote awareness of the Affordable Connectivity Program. To date, the Lifeline program has not expressly received comparable congressional approval to promote awareness of the Lifeline program, although ETCs are required to publicize the availability of Lifeline service. Would the Lifeline program benefit from express language regarding the FCC’s ability to promote awareness of the program?
    • Are there other legislative changes that should be considered to improve the Affordable Connectivity Program, whether or not the Affordable Connectivity Program is integrated with the Lifeline program?

    The FCC seeks comment on how it can continue to ensure that the E-Rate and the Emergency Connectivity Fund Program effectively achieve universal service goals for broadband in light of recent legislation. Since 2014, the E-Rate program has succeeded in connecting more schools and libraries to much-needed broadband. But some eligible schools remain insufficiently connected and many students do not have broadband access at home, making it very difficult to do homework online. During the COVID-19 pandemic, Congress created the Emergency Connectivity Fund (ECF) program, a $7.171 billion program that provides eligible schools and libraries with funding to purchase broadband connectivity and connected devices their communities need for remote learning. 

    The FCC asks: What changes, if any, should it consider to the E-Rate program in light of the Infrastructure Act and other recent developments? How can the FCC best coordinate the E-Rate program with the programs created by the Infrastructure Act to achieve universal service goals, including ensuring high-speed broadband in schools and libraries? What role will the E-Rate program have in the future given the evolving level of universal service? What data should be collected from recipients of the program, and how should this data collection take place? Would any changes require Congressional action?

    The FCC seeks comment on the impact of the Infrastructure Act on the Rural Health Care Program, which provides a flat 65 percent discount on an array of advanced telecommunications and information servicesThe COVID-19 pandemic has put a significant strain on rural health care providers and accelerated the adoption of telehealth systems and processes. The BEAD Program and broadband-focused provisions in the Infrastructure Act and other recent legislation create opportunities to significantly improve the quality of the broadband networks available to many rural health care providers. 

    The FCC seeks comment on the ability to improve the quality of health care available to patients in rural communities by ensuring access to telecommunications and broadband services. Specifically, the FCC asks: 

    • What changes, if any, should it consider to the Rural Health Care program in light of the Infrastructure Act and other recent developments, including the COVID-19 Telehealth Program? Are there changes that should be made in light of the additional funding provided by the Infrastructure Act?
    • How can the FCC best coordinate the Rural Health Care program with the programs created by the Infrastructure Act to achieve our universal service goals? What role will the Rural Health Care program have in the future given the evolving level of universal service?
    • Should the FCC recommend that Congress amend current communications law in a manner that would improve the ability of the FCC to achieve its universal service goals for broadband in light of the Infrastructure Act?

    Universal Service Fund Contribution Reform

    Congress provided significant support for several programs related to the FCC’s universal service goals through the appropriations process whereas the FCC’s universal service programs are supported through a system of contributions from telecommunications carriers and providers of interstate telecommunications. The FCC requests comment on proposals to improve the stability of the Universal Service Fund quarterly factor and whether it should provide recommendations to Congress on this issue. For example, the FCC seeks comment on whether changes in law are necessary or appropriate to update the system of universal service contributions.

    And, specifically, the FCC asks for comment on issues raised with respect to the proposed universal service contribution factors for the fourth quarter of 2021 and the first quarter of 2022 when a party asserted that (1) section 254 of the Communications Act unconstitutionally delegates Congress’s legislative and taxing power to the FCC, (2) the FCC has violated the Constitution by delegating Congress’s legislative and taxing power to the Universal Service Administrative Company (USAC), (3) the appointment of USAC’s board of directors by the FCC Chair violates the Constitution’s appointments clause or (in the alternative) exceeds the FCC’s statutory authority, and (4) the FCC violated the Administrative Procedure Act and the Federal Register Act by adopting a new contribution factor for each quarter without conducting a notice-and-comment rulemaking proceeding or publishing the contribution factor in the Federal Register.

    Digital Equity and Inclusion

    Since its creation in 1934, the mission of the FCC has been to ensure that communications services are available to all the people of the United States, without discrimination on the basis of race, color, religion, national origin, or sex. The FCC recognizes that its mission includes, then, digital equity for all, including people of color, persons with disabilities, persons who live in rural or Tribal areas, and others who are or have been historically underserved, marginalized, or adversely affected by persistent poverty or inequality. The FCC invites comments on equity-related considerations and benefits (if any) that may be associated with the proposals and issues discussed above. How can the FCC’s proposals promote or inhibit advances in diversity, equity, inclusion, and accessibility?

    IV. Timeline

    The FCC is asking for comments in this proceeding by January 18, 2022. Interested parties are asked to review those initial comments and offer replies by Monday, January 31, 2022 (a very quick turnaround). The FCC will issue its report and make recommendations to Congress by August 12, 2022.

    Quick Bits

    Weekend Reads (resist tl;dr)

    ICYMI from Benton

    Upcoming Events

    Dec 31—Affordable Connectivity Program Debut

    Jan 12—Infrastructure Investment and Jobs Act Broadband Programs Public Virtual Listening Session #2 (NTIA)

    Jan 25—State of the Net Conference 2022 (Internet Education Foundation)

    Jan 26—Infrastructure Investment and Jobs Act Broadband Programs Public Virtual Listening Session #3 (NTIA)

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