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Broadband Policy Update The Quilt
Jeff MitchellFletcher, Heald & Hildreth, PLC
[email protected](703) 812-0450February 6, 2019
Agenda• 2018 Activities
• Prospects for infrastructure legislation
• Federal universal service programs (E-rate, RHC)
• FCC highlights
• Net neutrality update
2018 Activity Highlights
Ø(March 2018) Omnibus Budget Act: $600 million for rural broadband through USDA Rural Utilities Service (RUS)
Ø For RUS Distance Learning, Telemedicine, and Broadband ProgramØ USDA authority to design programØ Legislative language suggested focus on 10/1 to the last mile.
ØThe Quilt goes to WashingtonØ (April 2018) Met with RUS, House & Senate Committee Staff and FCC
Ø Educated about R&E role; positioned as potential resourceØ Asked that funding be available on a competitive basis to non-commercial
providersØ Addressed “overbuilding” concerns (importance of route diversity)
Ø (September 2018) Filed public comments in response to USDA request – urged grants, anchors, tribal, regional approach (middle mile).
USDA ReConnect ProgramØ $200 million grants; $200 million loans; $200 million 50/50 combination:
Ø Funding available to non-profit entities and state agencies, subdivisions or instrumentalities.
Ø Pure grants available in areas where 100% of households unserved by 10/1 broadband.
Ø Two-step eligible area determination process:
Ø First, USDA has identified ineligible areas https://reconnect.usda.gov/s/article/Mapping-Tool.
Ø After application filed, USDA will map and post on the USDA website. Service providers have 30 calendar days to file maps showing where they are already serving specific locations.
Ø Application points:
Ø Awarded for serving anchor institutions, specifically including farms, businesses, “educational facilities,” “healthcare centers,” and “critical community centers”.
Ø Points available based on how rural, speed/quality of the service, serving tribal lands, and whether the state has a broadband plan, allows utilities to provide broadband, and has committed to expedite rights-of-way and permitting.
Ø Points available for projects that commit to build a network supporting 100 Mbps symmetrical.
Ø Deadlines: Grant applications due April 29; loan/grant applications due May 29
Source: https://news.microsoft.com/rural-broadband/#broadband-availability
Infrastructure LegislationØPotential area of agreement between Democratic House and President Trump
Ø No sooner than May 2019Ø Much uncertainty: More shutdowns? Other distractions?
ØRecently introduced billsØ Rebuild America’s Schools Act – (Scott D-VA, Norcross D-NJ, and 152 co-sponsors) would
appropriate $100 billion for school infrastructure to include funding for broadbandØ Connect American Fund Accountability Act – (Collins R-GA) requires CAF recipients to
report how they test their services and choose a sample that is representative of their consumers.
ØSHLB infrastructure billØ Broadband for Anchor Institutions Legislative Working Group (BAILWG) drafting legislative
language to support Gigabit broadband to (and through) anchor institutions by 2024. Ø Chip Byers tapped to co-chair the group.Ø DRAFT1 just released
SHLB Draft Infrastructure BillØ Broadband Network Grant Program
Ø $3 billion/year for five yearsØ Rewards states that provide 1/3 matchØ Open access/must serve anchors
Ø Broadband Adoption GrantsØ $500 million/year for five years
Ø Universal Service ReformsØ Breakdown silosØ Codify LifelineØ $1 billion cap for RHC funding Ø Broaden contribution base
Ø Broadband mapping Ø $50 million/year for five yearsØ Map anchors; verification of industry data; crowd sourcing
Ø Research into benefits of broadbandØ $100,000/year for five years
Universal ServiceØ “Universal service” is a principle that has been recognized for over 100 years: all
Americans should have access to communications services.
ØCongress in 1996 codified and extended beyond basic telecommunications:
Ø High Cost (aka Connect America) – ensures companies serving rural areas provide affordable services
Ø Schools & Libraries (E-rate) – ensures schools and libraries have access to broadband
Ø Rural Health Care – ensures rural health care providers have access to broadband
Ø Lifeline* – ensures eligible low income Americans have access to telecommunications (*pre-dated 1996 Act)
• High Cost (Connect America) = $4.67 billion• Low Income = $1.26 billion• Schools & Libraries (E-rate) = $2.65 billion• Rural Health Care = $0.26 billion• TOTAL = $8.85 billion
$0
$50
$100
$150
$200
$250
$300
$350
$400
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2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Intrastate, Assessable (Interstate + Int’l) and Non-Telecommunications Revenues
2004-2016 (in billions)
Intrastate Revenues Interstate + Internat'l Revenues Non-Telecom Revenues
2017 Authorized Support
Graphic courtesy Funds For Learning, 2018 E-rate Trends Reporthttps://ecfsapi.fcc.gov/file/10713255555242/2018_E-rate_Trends_ReportSml.pdf
E-rate Update
Graphic courtesy Funds For Learning, 2018 E-rate Trends Reporthttps://ecfsapi.fcc.gov/file/10713255555242/2018_E-rate_Trends_ReportSml.pdf
E-rate Update
E-rate Update
Ø Amortization of Non-Recurring Charges
Ø Since 2000, upfront, non-recurring charges of $500,000 or more must be amortized over a 3-year period
Ø 2014 Modernization Order suspended requirement until 2018
Ø In January the FCC suspended requirement for one more year and proposed permanently eliminating requirement. FCC tentatively concluded that elimination:
1. decreased administrative burdens;
2. allowed faster disbursements for the full E-Rate supported portion of projects;
3. reduced uncertainty regarding the availability of funding.
Ø Category 2 Spending
Ø Five-year trial period for school budgets = $153.47 per student (pre-discount); libraries based on square footage
Ø Bureau report due before FY 2019 – Non-public? SHLB letter in the works
Ø Gift Rule confusion around product demonstrations
Ø Solix => MAXIMUS transition; USAC issues generally
RHC Update
Program Telecommunications Program Healthcare Connect FundAuthority 47 U.S.C. section 254(h)(1)(A) 47 U.S.C. section 254(h)(2)(A)
Discount Urban-rural differential (cost parity) 65% flat rate subsidy
Eligibility � Eligible rural health care providers � Eligible rural health care providers and consortia� Non-rural if part of a majority-rural consortium
Eligible services � Telecommunication� Customary installation charges
� Broadband services and equipment� Customary installation charges ($5K)� Additional options for consortia
� Multi-year funding commitments� Network services & equipment (NOCs)� Upfront costs: IRUs, Long Term Leases, Network
construction (in some situations)
Vender Eligibility � Telecommunications providers only � Any vendor that provides eligible services
2016 Spend $209 million $160 million
Funding Cap: $582 million for FY 2018; $150 million sub-cap for HCF upfront and long-term support
RHC Update
RHC UpdateØCap Headaches
Ø FY 2016: delays and funding “haircuts”; Notice of Proposed Rulemaking (Dec 2017)Ø FY 2017: delays and worse haircuts; consortium cuts of 25%!
Ø SHLB Emergency Petition (April 2018); bi-partisan Senate LetterØ FCC Increased and indexed cap (June 2018); retroactive
Ø FY 2018 $150 million sub-cap hit; delays; cuts?
ØIntense FCC/USAC scrutiny of Telecom ProgramØ Unilateral rate reductions in Alaska in FY 2017Ø Additional comments sought on Telecom Program rural and urban rates (Dec 2018)Ø Should Telecom Program be scrapped outside of Alaska?
ØProposed $100 million “Connected Care” Pilot ProgramØ “Notice of Inquiry” completedØ Notice of Proposed Rulemaking next up
FCC Highlights
ØEducational Broadband Service (EBS)Ø SHLB opposing auctions; supporting educational providers’ priority
ØHighlighting successful deployment in Michigan and interest in similar projects from Nebraska and Virginia.
ØBroadband Development Advisory Committee (BDAC)ØProposed 2-year reauthorization
Ø To focus on: Disaster recovery; high-speed broadband infrastructure and services for low-income communities; other ways to accelerate deployment of broadband infrastructure to all Americans.
ØTV White Spaces aka Microsoft Airband InitiativeØ $10 billion to serve 20 million residents in 17 states.
ØMicrosoft projects underway in Ohio, New York, Maine, Virginia, Maryland, Michigan and Wisconsin.
ØMicrosoft White Paper
Net NeutralityØCongress
Ø Democratic House likely to pass net neutrality legislation.
Ø See Rep. Khanna’s (D-CA) 10 principles for an “Internet Bill of Rights” (Congressional district covers Silicon Valley.)
ØCourtsØ Mozilla Corporation, et al. v. FCC – Challenge to the 2017 Restoring Internet Freedom Order
DC Circuit Court of Appeals. Oral arguments were Feb. 1. Higher ed. Amicus Brief.
Ø Eastern District of California – Challenge to SB 822, the California Internet Consumer Protection and Net Neutrality Act of 2018 by the Department of Justice (DOJ) and several industry groups (in a separate suit). On October 26 the court agreed to a request by all parties to stay the case after California agreed not to enforce the law pending outcome at the DC Circuit decision on the FCC’s Restoring Internet Freedom order.
Ø Vermont District Court – Challenge to Vermont’s net neutrality law and executive order by industry associations; motion for summary dismissal under consideration.
ØStatesØ National Conference of State Legislators (NCSL) features an up-to-date summary of state net
neutrality actions here.
