FCC Seeks Comment on the Future of USF

Clients Encouraged to Provide Input and/or File Company-Specific Comments

The FCC is inviting public comment on the future of federal Universal Service Fund (USF) programs. The FCC plans to use these comments for a report it must submit to Congress by August 12, 2022, on its options “for improving its effectiveness in achieving the universal service goals for broadband” as part of the broadband provisions in the Infrastructure Investment and Jobs Act (IIJA). Last week’s Notice of Inquiry (NOI) set deadlines of January 18, 2022, for comments and January 31, 2022, for reply comments.

JSI plans to file comments in response to the NOI, with particular focus on the High-Cost program (Legacy Rate-of-Return, A-CAM I and II, and reverse auction support including the Rural Digital Opportunities Fund (RDOF) Phase II support). We seek client input on the topics outlined below, as well as any others specified in the NOI. For example, the NOI seeks comments on how best to integrate USF with ReConnect and the new funding programs established by the IIJA. We would like to hear from clients with multiple funding sources whether streamlining and aligning reporting and other compliance requirements with these programs and USF could be beneficial or whether such alignment could add additional burdens and requirements to some funding mechanisms.

We also encourage clients to file company-specific comments in which they can provide the FCC with their own proposals for the future of USF. Given that the NOI seeks data on potential changes to all programs, clients should consider filing comments not only on potential changes to the High-Cost program, but also changes to other USF programs. For example, several clients have expressed frustration with the requirements imposed by Lifeline’s Representative Accountability Database (RAD) process. Others are concerned with overbuilding that takes place through the E-rate program. Because the NOI seeks comment on potential comprehensive reform to all of these programs, now is the time to raise any concerns along with viable alternatives. JSI’s seasoned advocacy experts are ready to provide strategic advice and assist in drafting company-specific comments. Due to the FCC’s tight deadlines for commenting in this proceeding, we ask that clients interested in JSI’s help contact us no later than January 7, 2022.

High-Cost USF
A major concern among our ILEC Rate-of-Return clients is the continuation of USF to support both the deployment and maintenance of fiber networks in rural America. The NOI highlights the billions of dollars that will be available in coming years to deploy broadband in unserved and underserved locations through the programs initiated by the IIJA. Here, the NOI seeks comment more broadly on what changes should be made to the High-Cost program considering the influx of newly authorized federal funding. The NOI asks for comment on the role the High-Cost program should have in the future given the evolving level of universal service, the type of data to collect from program recipients, and how to collect that data.

Next, the NOI discusses the newly authorized Broadband Equity, Access, and Deployment (BEAD) program to be run by the National Telecommunications & Information Administration that will allocate $42.45 billion to states for broadband infrastructure grants and asks the following questions:

• Should the FCC modify the High-Cost program to further support ongoing operating and maintenance costs of recently constructed broadband facilities funded by BEAD to ensure that rates remain reasonably comparable?
• Should the Commission coordinate with the BEAD program to ensure that newly constructed networks have ongoing support?
• At what point would USF support be necessary, if at all?
• How should the FCC approach next steps for the RDOF program or any successor program?
• In light of the 100/20 Mbps service standard required in BEAD, should the FCC reconsider its service requirements for future High-Cost support?

The NOI also asks for input regarding the best way to allocate funding in the future, including the potential use of reverse auctions, and whether there are “other incentive-based, competitive methods for allocating funding that would be effective and efficient.”

Additionally, the NOI asks what other congressional action could help the FCC accomplish its universal service goals. Specifically, the NOI asks:

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 Commission 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?

These questions certainly raise the possibility that the FCC will not maintain the status quo for High-Cost USF. Accordingly, it is up to each rural broadband provider – and us collectively – to engage in a robust advocacy effort to ensure that any changes made to the USF continue to allow for sufficient and predicable funding for the provision, maintenance, and expansion of fiber-based networks in the rural communities in which these companies serve.

Other Programs and Contribution Factor
For Lifeline, the NOI seeks comment on whether any changes in the program should be made to best coordinate it with the Affordable Connectivity Program (ACP), including any data that should be collected. Similar questions are raised regarding E-rate and Rural Health Care programs.

The NOI also observes the up and down nature of the quarterly USF contribution factor and seeks comment on ways to increase the stability of the factor. It also requests “general comment” as to the FCC’s USF priorities.

If you would like assistance in filing individual comments, or if you have any questions about the NO, please contact a member of our team by clicking the button below.

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