Tag Archives: USAC

Supreme Court Upholds the Universal Service Fund

On Friday, the Supreme Court ruled that the FCC has the authority to operate and fund the Universal Service Fund.

The case that prompted the Supreme Court Decision was FCC v. Consumers’ Research.  Consumers’ Research is a nonprofit activist group that originally filed cases in multiple courts alleging that the method used to fund the USF is an illegal tax since it did not arise from specific direction or approval from Congress. Consumers’ Research also argued that Congress neglected its legislative responsibility allowing the FCC to establish the size of the Universal Service Fund and to decide the method for collecting revenues to fund it.

The case made it the Supreme Court when the U.S. Court of Appeals for the Fifth Circuit agreed with Consumers’ Research and said that the USF is unconstitutional. That ruling conflicted with rulings from the Sixth and Eleventh Circuits that largely blessed the FCC and the USF.

Consumers’ Research had argued that fees to fund the Universal Service Fund are a tax, and, as such, must fit a special nondelegation rule such that Congress must set a numeric fixed cap, a tax rate, or the equivalent. The Court rejected this argument. The Court points out that Section 254 directs the FCC to collect contributions that are “sufficient” to support universal service programs. The Court said the word “sufficient” acts as a cap on the amount of revenue that the FCC can collect since it can only collect money for purposes to benefit those “in rural areas and other high-cost areas (with a special nod to rural hospitals), low-income consumers, and schools and libraries.”

Consumers’ Research had argued that the Act gives the FCC boundless authority, but the Court disagreed and said that the FCC is free to periodically redefine its programs as long as those programs are aimed at accomplishing universal service goals.

Consumers’ Research also took exception to the FCC’s delegation of the USF to USAC (Universal Service Administrative Company). The Court rejected this assertion because USAC is broadly subordinate to the FCC. The FCC appoints the Board of Directors, approves the budget, and requires USAC to act consistently with FCC rules and directives.

Finally, the Court rejected the argument that the combination of Congress’s grant of authority to the FCC and the FCC’s reliance on USAC together violate the Constitution, although neither one does so alone.

Overall, the Supreme Court ruling is a total repudiation of the ruling of the Fifth Circuit. This ought to put attacks on the existence of the Universal Service Fund to rest for a while. Just as an aside, if you’ve never read a Supreme Court ruling, they are not easy reading, but worthwhile for those interested in the topic.

However, this doesn’t take the Universal Service Fund out of the news or off the hot seat. The funding mechanism for the USF is clearly broken and the fund can’t continue with fees assessed only on interstate telecom services. There are bills pending in both the House and Senate that would spread funding to broadband customers and to the biggest companies that use the web (referred as edge providers in the legislation).

USF and the New Administration

Today’s blog considers some of the changes that might be made to the Universal Service Fund (USF) by a new administration. This fund was created by the FCC to support broadband access and affordability in rural and low-income communities. The fund supports four major programs: Connect America Fund, Lifeline, E-Rate, and Rural Health Care. The fund is roughly $9 billion per year. The fund is currently paying for the rest of the RDOF subsidy to build rural broadband infrastructure. The fund will also be covering the EACAM subsidy paid for faster infrastructure for rural telcos and cooperatives. The FCC recently announced it would be using the USF funds to cover the $9 billion 5G Fund for Rural America.

Interestingly, the FCC shut Starlink out of the RDOF program in 2022. It seems too late to revisit the RDOF funding since a lot of the networks funding by that program have been funded. However, there have been some significant defaults of RDOF funding from companies like Mercury Wireless, and it’s conceivable those funds could be redirected to satellite broadband. I’m not sure what mechanism could be used to do that, but it’s possible.

The Programs. If any investigation into USF is opened, it would be natural to take a look at the programs supported by the USF to see if any should be trimmed or modified. The USF programs are generally well-regarded by Congress, but there has been criticism against some of the details of each of the programs.

Funding. The most immediate issue to address is the current USF funding framework. Telecommunications service providers are assessed a fee for interstate and international telecom, and the base of revenues has been steadily shrinking. FCC Commissioner Brandon Carr has lobbied to spread the assessment base to include tech companies like Google and Facebook. Senator Ted Cruz, who will likely be the Chairman of the Senate Commerce Committee, has suggested that the USF should be funded with general tax revenues so that Congress can have a more direct say in how the money is spent.

Adding to the likelihood that USF might be changed is that the Supreme Court has agreed to hear conflicting lower court rulings on the topic. While two courts said the FCC has the authority to operate the USF, the Fifth Circuit Court of Appeals ruled in July that the current method of funding is unconstitutional. That court referred to the fee on telecom services as a “misbegotten tax”. Another issue identified by the court is how the FCC has outsourced the operation of the USF to the Universal Service Administrative Company (USAC), a non-profit company formed for this sole purpose. A Supreme Court approval of the FCC might mean no changes, while a rejection would mandate a whole new approach.

Low-Income Broadband Subsidies. The USF currently supports the Lifeline program which provides a $9.25 subsidy for qualifying households for telephone or broadband service. There was a lot of discussion in 2024 about somehow moving the now-dead ACP plan into USF. The ACP plan provided a $30 monthly subsidy for broadband bills for qualifying households. There was a lot of bipartisan support in Congress for somehow funding ACP, and the consensus was that the issue would have passed had the issue made it to a vote.

There has been a lot of recent speculation that a lot of the $42.5 billion BEAD grants will go to satellite service. One of the original parameters from the BEAD legislation was that any ISP taking the funds is supposed to have a program to support low-income subscribers. That might be the impetus for revamping ACP to make satellite service more affordable. And that could mean renewing ACP or increasing the size of the USF.

Obviously, this is all speculation, and USF is not likely on anybody’s front burner, unless the Supreme Court puts it there. However, it seems highly likely that Congress and the FCC will revisit the USF sometime in 2025.

GAO Gives Passing Marks to USAC

USAC (the Universal Service Administration Company) was recently in the news when the U.S. Court of Appeals for the Fifth Circuit ruled that the FCC’s administration of the Universal Service Fund (USF), and particularly the use of USAC to be unconstitutional.

USAC is a non-profit corporation formed by the FCC when the Telecommunications Act of 1996 created the USF. The FCC decided to create USAC to administer the fund in order to shield the day-to-day operations of the USF process from politics and the changes that always with a change in administration. USAC has a single purpose, which is to operate the Universal Service Fund under guidelines established by the FCC.

The relationship between USAC and the FCC has been under fire many times over the years. In May 2023, Senator Ted Cruz asked the General Accountability Office (GAO) to examine if USAC is properly administering the $8 billion annual USF. The GAO recently issued a report that gave high grades to USAC.

The Universal Service Fund has been somewhat controversial since its formation. However, most of the controversy comes from the directions that the FCC gives to USAC. For example, USF is funded by fees levied against interstate revenues for voice services. Over the years, as the amount of voice services has dropped, the percentage of the fee levied against voice has increased. But this can’t be blamed on USAC since the FCC determines who should pay into the fund. There are many critics who don’t like the programs funded by the USF. In this blog I have leveled a lot of criticism against some aspects of the CAF II and RDOF programs that have provided subsidies to improve rural broadband. But again, these programs were established by the FCC and not by USAC.

One controversy that had legs for many years was that the Lifeline program, which provides a $9.25 monthly subsidy to low-income households to help cover telephone or broadband bills, was paying out a lot of fraudulent claims. USAC instituted a system that verifies each month if somebody is eligible for the discount, and the controversy largely melted away. There have been complaints that ISPs have jacked up the cost of broadband or equipment being provided to schools and libraries that is paid from the USF E-Rate subsidy.

GAO undertook a broadband audit of USAC. They looked to see if USAC was operating within the guidelines established by statutes or by FCC directives. GAO looked at USAC’s budgetary process that included looking at day-to-day operations of a wide range of processes like how USAC sets fees and how it operates the many different programs funded by the USF.

The GAO gave USAC a clean bill of health. The report says that the processes at USAC align with the directives and requirements imposed by the FCC and to external auditors who routinely audit USAC. The GAO approved the process for setting goals and for reporting the use of funds to the FCC. GAO found that USAC’s budgetary process and tracking expenditure followed FCC guidelines. GEO also said that USAC was following its ethics policies.

This should quiet criticism against USAC for a while. There will always be critics of some of the aspects of the Universal Service Fund – and that includes me from time to time. But that criticism shouldn’t spill over to attacks on USAC, which seems to be doing a good job of the daily work of making USF work.

The Courts Tackle USF

The U.S. Court of Appeals for the Fifth Circuit in New Orleans ruled, in a 9-7 vote, that the FCC’s Universal Service Fund structure is unconstitutional. The ruling comes in response to a lawsuit brought by Consumers’ Research, a conservative non-profit corporation.

The Fifth Circuit opined: In the Telecommunications Act of 1996, Congress delegated its taxing power to the FCC. FCC then subdelegated the taxing power to a private corporation. That private corporation, in turn, relied on for-profit telecommunications companies to determine how much American citizens would be forced to pay for the ‘universal service’ tax that appears on cell phone bills across the Nation. We hold this misbegotten tax violates Article I, § 1 of the Constitution. That constitutional article vested taxing power in Congress. . . Our court today holds that the delegation of Congress’s taxing power, first to a federal agency, and then to a private entity, violates the Vesting Clause of Article I of the Constitution.

Two other appeal courts have recently ruled in favor of the FCC on two similar complaints. The Supreme Court refused to take an appeal of one of those rulings.

It’s an interesting legal ruling because Congress clearly gave the FCC the authority to establish the Universal Service Fund and to create public fees to fund it. Attacks on the USF have often centered around the FCC’s decision to establish the non-profit corporation USAC (Universal Service Administration Company) to operate the USF. My recollection is that USAC was created so that a wide variety of industry players and the public would have input into operating the USF rather than letting it be done by the politically appointed FCC Commissioners. The FCC wisely didn’t want FCC politics to interfere with the day-to-day operation of the USF.

For those of you not familiar with USAC, the company has an operating statement that the entity “does not make policy or interpret statutes or rules or the intent of Congress, the FCC, or any state or federal agency. The Board is comprised of members that represent a wide range of the telecom industry from telcos, long-distance companies, cellular carriers, cable companies, schools, libraries, Tribal communities, rural health care organizations, state regulators, consumer advocates, and the public.

The other long-term argument against the Universal Service Fund is that the fee assessed against telephone services and other related products is a tax and not a fee. Congress clearly had the intention when it created the USF that fees would be used to fund and operate the missions of the USF. The argument in this lawsuit is that FCC has granted tremendous power to a private company to establish a tax that people pay on their phone bills. I suspect that if the FCC had decided to directly administer the fund the argument would be that it is unconstitutional for the FCC to impose a tax on people.

The judges that ruled against the USF clearly don’t like what Congress ordered in 1996. They are hiding behind the argument that delegating the operations of the USF to USAC somehow makes the process unconstitutional. It’s odd that a ruling like this can be made 28 years after Congress directed the FCC to create the Universal Service Fund. It’s an issue that courts have heard for years, and they always sided with the FCC and USAC.

This is all part of the bigger political battle over who has the power to make decisions – the White House, Congress, or the Courts. This ruling, which used the term ‘misbegotten tax’ to describe USF fees, is clearly not coming from the neutral arbiter we expect from the court system. Unless some semblance of normalcy between the branches of government is reestablished at the federal level, we’re likely going to see more court decisions that overturn issues and practices that we assumed were settled long ago.

Universal Service Fund Under Fire

There have been several lawsuits over the last few years that challenge the legitimacy of the FCC’s Universal Service Fund (USF). A suit from a non-profit group called Consumers’ Research argues that USF fees are actually taxes and that the original creation of the USF was unconstitutional since it gave the FCC the power to levy taxes.

Several lawsuits have already been decided in favor of the FCC in the 5th and 6th U.S. Circuit Courts of Appeals. But in June, the 5th Circuit, based in New Orleans, agreed to rehear the case before the full court. That hearing was held last week and press reports say that the questions at the hearing seemed to be in favor of the petitioners who want to shut down the USF.

There is also an appeal of the other rulings that are pending before the U.S. Supreme Court. There is also a case from Consumers’ Research that is pending at the 11th Circuit and the D.C. Circuit Courts.

The Universal Service Fund has been popular with the public and many politicians because the FCC has been using the USF to tackle issues that are broadly referred to these days as the digital divide. The E-Rate program provides subsidized broadband to make sure there is connectivity in the poorest schools in the country. The Rural Health Care program subsidizes broadband connections for rural healthcare clinics.

A few of the USF programs have been more controversial. The Lifeline Program was originally used to provide a discount for telephone bills for low-income homes but has been repurposed to provide broadband discounts. Critics have charged for years that the program was rife with fraud, but the FCC finally instituted a portal that does a better job of verifying eligibility. The High Cost program has provided subsidies and grants to extend rural broadband. Among the programs have been a few that are controversial such as the CAF II program that gave subsidies to the biggest rural telcos to increase DSL speeds to 10/1 Mbps, and the more recent RDOF program that allocated subsidies to unserved parts of the country through a reverse auction. The FCC is considering using this fund to expand rural cellular towers.

The biggest issue facing the USF is that the funding mechanism is inadequate. The fees that fund the USF are assessed on Interstate telephone services and traditional Interstate regulated data circuits – revenue streams that continue to shrink. The USF fee on these items has continued to creep upward to make up for the shrinking and has grown to become a 30% fee on the services.

One of the obvious fixes to the funding would be to spread the USF fee over the huge number of broadband subscriptions in the country. This makes a lot of sense since the Universal Fund is used almost entirely these days to tackle broadband gaps. But the big ISPs have lobbied heavily against the idea and have instead been pushing for the fee to be assessed to big tech companies like Amazon, Google, Meta, and Apple. The big ISPs say it would be unfair for them to subsidize the web giants, It’s an argument I’ve never fully understood since the ISPs wouldn’t be paying the fees and would pass the fees on to consumers. The big web companies have an equally powerful lobby these days and have fought against this idea. This is an argument that has been going on for several decades but has been heating up over the last year as it’s becoming obvious that the Universal Service Fund cannot remain viable with the existing funding mechanism.

The USF seems to be popular with federal legislators, but there has been no noticeable movement in Congress to fix the USF funding mechanism. The original funding mechanism was established by the FCC from authority granted by the Telecommunications Act of 1996, which is badly out of date with the modern broadband industry. Congress could fix the funding mechanism at any time, but it doesn’t seem like legislators want to choose between the big ISPs and tech companies.

All of this could be made mute if a Court rules that the way that the FCC funds the USF is unconstitutional. The USF could theoretically be shut down quickly if the funding mechanism is turned off. That would mean the end of Lifeline discounts, of broadband payments to schools, libraries, and health care clinics, and a cessation of funding for RDOF and ACAM. Congress could fix the issue by creating an actual tax instead of a fee set by the FCC – and perhaps it will take a drastic court action to get Congress to act.

Small ISPs and the ACP

I’ve recently talked to several small ISPs who are having trouble navigating the FCC’s Affordable Care Program (ACP). These ISPs are wondering if they should drop their participation. This is the program that gives a $30 monthly discount to customers who enroll in the plan through their ISP. The program is administered by USAC which also administers the various Universal Service Fund programs.

The stories I’ve heard from these ISPs show that the program is challenging to use and slow to reimburse ISPs. There is no one major specific complaint about the administration of the program but a string of problems. Consider some of the following (and the list of complaints is much longer):

  • The rules are overly complex. As an example, an ISP must have different staff assigned to four functions – an Administrator, Operations, Analyst, and Agent. It turns out that various tasks can only be performed by one of these positions – something not explained in the rules.
  • There doesn’t seem to be any training available to ISPs joining the program. Instead, ISPs have to wade through the 166-page FCC rulemaking that created the ACP program. The FCC says there have been over 700 training sessions for people on how to enroll new end-user customers, but the ISPs I talked to couldn’t find any online resources for explaining the program from the ISP perspective – no videos or no frequently asked questions helping ISPs figuring out how to get reimbursed from the program. .
  • The ACP system returns unhelpful error messages when something doesn’t work. A common error message is “Your user name doesn’t seem to exist” which is returned for a variety of online problems encountered by people who are logged into the system and clearly have valid user IDs. Error messages for any online system ought to be worded to tell a user what they did wrong. For example, an error message that says, “This function can only be done by an Analyst” would help an ISP figure out the problem.
  • There is a hotline for ISPs, but unfortunately, the folks manning the hotline can’t answer even basic questions about the online system and refer a caller to the written rules. It’s obvious that the people answering the calls have never navigated through the system.
  • One ISP had been in the system for a while and found out it wouldn’t be paid for the discounts given to customers since the ISP hadn’t submitted a customer’s last four digits of a social security number. This doesn’t make sense since the FCC had ruled that the SSN is not needed to enroll a customer – the ACP rules allow for numerous other forms of identification. Customers didn’t need to input an SSN number to join the ACP, and the ISP never asked for them. They are now wondering if they will ever get reimbursed for these claims.
  • There is a disconnect between customer approval and the ISP portal. Customers are told through the customer portal that they are successfully enrolled in the ACP program, but when an ISP asks for reimbursement, it is often told that it must provide more identification to get reimbursed. In this situation, the customer is already getting the discount while the ISP is not yet eligible for reimbursement and will end up eating the customer discount.

Overall, these ISPs told me that navigating the system and the rules is a major disincentive for them to participate in the ACP.

Why are these kinds of issues problematic for smaller ISPs? Bigger ISPs can assign a team to a program like this and give them enough time to figure out the nuances. Small ISPs have tiny staffs, particularly in the backoffice. Small ISPs can’t devote the many hours and days needed to solve the ACP puzzle. The small ISPs I’ve heard from are wondering why they are even bothering with ACP. The program is not bringing new customers but mostly is giving discounts to existing customers. There is no reimbursement for the hours the ISPs spend learning the system or navigating it each month. After all of the hassle, the ISPs are not receiving full reimbursement in every case, and even when they do, the payments are slow. ISPs have also heard through the grapevine that they will eventually be audited to make sure there is no fraud – anybody who has been through this kind of audit shudders at the idea.

Everything I read says that most of the discounts for ACP are being claimed by cellular resellers and not facility-based ISPs. I don’t know if that is finally changing, but if this isn’t made easier for ISPs, it’s likely that many ISPs will drop out or stop accepting additional ACP customers. The final issue ISPs worry about is that the program is only funded for perhaps two more years. They worry about the impact on their business if the program ends abruptly.

To be fair, any new online system has bugs. But ACP was launched in January and replaced the similar EBB program. We are now far past the initial launch window, and nobody seems to be working to make the system usable. The FCC wants to brag about how well ACP is doing, but they need to put some effort into making this worth the effort for ISPs.

AT&T Withdraws from Lifeline Program

In March the Public Utility Commission of Ohio allowed AT&T to withdraw from the federal Lifeline program. This is a program that let’s qualified low-income homes get a monthly discount of $9.25 from either their landline telephone or their broadband connection – only one discount per home. AT&T successfully withdrew from Lifeline in Illinois in 2018 and in twelve other states in 2017.

AT&T apparently hasn’t been advertising or pushing the potential discount since they only had 7,300 homes in the state on the Lifeline program. The Communications Workers of America say there are almost 1.6 million households in Ohio that qualify for the discount – although not all of them are served by AT&T.

You might think that AT&T supports Lifeline by looking at their web site. However, clicking through to Ohio notifies customers that the discount will end in June and provides customers a list of other companies that might offer them the discount.

The Lifeline program started in 1985, and at the time the amount of discount was a significant savings for customers. Because of inflation the $9.25 discount represents a far smaller portion of a today’s monthly telecommunications bill.

Participation in the Lifeline program has dropped significantly in the past few years, as has the way the fund is being used. The following revenue numbers come from the 2018 annual report from USAC – the entity that operates the Lifeline Fund. I extraopolated out the number of participants at $9.25 per month.

2016 2018
Telephone $1,477,548,000 $312,300,000
Bundle $25,554,000 $293,707,000
Broadband $18,610,000 $536,424,000
Total $1,521,712,000 $1,142,431,000
Participants        13,700,000        10,250,000

Since 2016 there are 2.5 million fewer participants in the plan – many certainly due to carriers like AT&T withdrawing from the plan. The USAC numbers show a big shift since 2016 of participants applying the discount to their broadband bill rather than to landline telephone or cellphone bill.

The Lifeline Program was in the news recently when the FCC Inspector General issued a fraud advisory that says there are a lot of duplicate names requesting Lifeline and a number of deceased people still getting the discount. Chairman Ajit Pai immediately issued a statement saying that the program needs to be cleaned up.

Fraud has always been a concern in the program. However, it’s a little odd for the FCC to be complaining about fraud today since they are in the process of taking over validation of Lifeline subscribers. Eligibility to participate in Lifeline was previously the responsibility of the states, but in June, 2018 USAC launched the National Verifier, a database that lists everybody eligible to receive a Lifeline credit. As of the end of last year, the federal verifier was active in 18 states, with the remaining states and territories joining the program this year. It seems odd to be yelling about problems of the older state programs when the FCC has already implemented a solution that they believe will solve most of the fraud issues.

I published a blog several days ago saying how regulators are letting the public down. It’s mystifying to me why the Ohio PUC and so many other states are letting AT&T out of the Lifeline program. The Lifeline Fund reimburses AT&T for every discount given to customers, so there is zero net cost to AT&T to participate in the plan. With the new National Verifier, AT&T takes no role in enrolling customers, who must enter through the national Verifier portal. I don’t know why regulators don’t insist that AT&T and every other company that sells residential telephone and broadband be required to participate in the program.

AT&T Phasing out Lifeline?

A lot of homes still rely on the FCC’s Lifeline program to get a discount on their telecom bills. The program is funded through the Universal Service Fund and administered through USAC. The lifeline program provides a $9.25 discount per household that can be applied to landline telephone, cellular telephone or landline data – assuming customers use a provider that participates in the Lifeline program.

AT&T still touts that they participate in the Lifeline program, but numerous customers around the country received notifications this year notifying them that they were no longer eligible for the Lifeline program. This particular notification was from a customer in Houston, Texas. If you visit the USAC website and look for Lifeline providers in Houston, AT&T is the only company that is listed for landline service. There are numerous cellular providers listed in Houston, but AT&T is not among them.

People might wonder why landline Lifeline is still important. Landline penetration rates are reported each year by the Center for Disease Control. (CDC). They track landline and cellular penetration rates through a huge annual survey that studies the topic to understand how the medical community can communicate best with the public during a medical emergency. They reported last year that the nationwide landline penetration rate was at 45% of households – a number far greater than many people would guess.

I hadn’t looked at residential phone rates in a while and just looked at AT&T’s residential rates. In case you haven’t looked at landline rates, they are not cheap. AT&T has three packages: Complete Choice comes with Caller ID and 9 other features (not including Voice Mail) for $40 per month. Complete Choice Basic is a basic line plus Caller ID and Call Waiting for $36. A basic phone line with no features is $28 per month. None of these prices include taxes and fees that add at least another $10 per month. None of these packages includes long distance. AT&T offers lower rates for those that bundle telephone with Internet or cable TV (although they are actively knocking people off their TV product).

In Texas, AT&T mitigated the Lifeline discontinuation notices somewhat by offering discounts of between $8 and $12 per month for qualifying customers who will sign a term contract, and who know to ask for the discount. But since this wasn’t widely advertised there is a good chance that few people asked for the discount. Discount plans like this also come and go and there is no guarantee of this discount surviving into the future.

I can’t see that there are any penalties for AT&T no longer offering Lifeline. There was a time when the big telcos had to participate in the program, but as state Commissions have deregulated telephone service any such requirement probably no longer applies.

What’s shameful about this is that I am sure that any AT&T executive will say that the company supports the Lifeline program. It certainly says so on their website. Both the AT&T and the USAC website imply that customers in Texas can still enroll in Lifeline, but numerous reports on complaint sites show this not to be the case. Perhaps a really persistent customer can still fight through the customer service gauntlet to get the Lifeline discount, but many customers report they’ve lost the discount.

What’s also disturbing about this is that AT&T doesn’t even have to go through the process of qualifying customers for Lifeline eligibility. In Texas customers must certify eligibility by going through the Public Utility Commission. The big telcos complained in the past that certifying customers was expensive and exposed them to liability if they granted eligibility to unqualified households. But Texas and a number of other states took over the certification process, meaning the telcos have little cost or liability for participating in the program, since USAC reimburses them for discount granted to customers. Why would a big telco stop giving the discounts when it costs them so little?

Libraries in the Digital Age

LibraryToday’s blog was inspired by reading Libraries: Broadband Leaders of the 21st Century by Craig Settles, a well-known broadband advocate. As someone who hasn’t been to a library for many years his paper surprised me with the number of different ways that libraries are engaged in broadband today.

Probably the best known role of libraries is as a source of broadband for those who don’t have access anywhere else. Libraries today offer broadband at computers as well as WiFi for patrons to use on their own devices. A recent FCC report noted that in most cities anywhere from 15% to 25% of citizens don’t have broadband at home, and for many of them the library is a place they can get access to the web.  This access lets kids do homework, provides job training for those looking to change careers and gives access to government web sites that are increasingly moving input to social systems on-line.

But many libraries go a lot farther. For instance, there are libraries today that are lending mobile hot spots to enable people to have internet access outside the library for a few hours at a time. Many libraries are at the center of efforts to improve digital literacy and they have programs to train people in computer skills and to help them accomplish needed tasks on the web. Many library systems also have training programs in advanced computer skills like coding.

Libraries everywhere want larger faster broadband connections. In many communities the libraries get the same speeds of broadband that are available at homes. And while having a 100 Mbps connection sounds fast, when that much bandwidth is divvied up among a hundred patrons it slows to a crawl. And sadly, there are still a lot of libraries across the country that are served by only T1s or slow DSL connections.

The White House announced a goal in 2013 in the ConnectED initiative to get at least 100 Mbps connection to schools and libraries within five years, with the ultimate goal being gigabit bandwidth. And there has been a lot of progress, but the most recent FCC Broadband Progress Report says that 41% of schools and libraries still don’t have 100 Mbps connections.

Libraries can get assistance to build broadband facilities using the Schools and Libraries portion of the Universal Service Fund, and which is generally referred to as the E-rate program. This fund can be used to subsidize the monthly broadband bills, but can also be used for physical parts of the network like fiber to connect library branches or WiFi systems within a library.

Some communities have been able to really leverage E-rate funding by tying their schools and libraries together into an integrated network and by using libraries to meet educational goals of the schools. It’s generally easier to get funding for schools compared to libraries, but by networking them together you can bring some of that funding in to help improve the libraries and to make them an integral part of the education complex. This leverage can be expanded to be even stronger by linking networks to hospitals and leveraging funding available to improve broadband for healthcare.

Settles makes a case for allowing libraries to participate in the upcoming Lifeline program that will provide $10 monthly subsidies for broadband for qualifying low-income homes. Since libraries are the source of broadband for many low-income people an argument can be made that spending that subsidy at a library can benefit more people than spending it at one home. It’s an interesting concept and would take action by the FCC or USAC, the entity that administers the Universal Service Fund.

Since most cities are still far away from a time when there will be affordable broadband available to everybody, the libraries are likely to continue to be an important part of the broadband solution for most communities. It’s important for library administrators to understand the options available to them to maximize the funding they can get to provide public broadband. Papers like the one written by Settles are an important step in that process.

Regulatory Shorts for April 2016

FCC_New_LogoHere are a few things of interest happening in the regulatory world:

Copper Retirement. The FCC’s new copper retirement rules went into effect on March 24. The rules require that any telco tearing down copper must give residential customers 90 days notice and business customers 180 days notice.

While this rule very well might be aimed at Verizon who has been retiring copper with short customer notices, it applies to everybody. This is something that anybody replacing a copper network with a fiber network needs to be aware of. Verizon has been forcing customers to abandon the copper, and that act requires this same notice.

Appeals of USAC Rulings. The FCC recently decided that anybody who wants to appeal a ruling from USAC must formally first appeal the process at USAC and can then only bring the issue to the FCC after losing that appeal.

This is an interesting ruling and probably speaks to the volume of complaints the FCC has been getting about USAC. As telephone landlines have been falling the revenues that feed the Universal Service Fund have been decreasing. USAC has made up shortfalls by constantly raising the USF surcharge, which is now up to an 18.2% surcharge on interstate revenues, and back in 2010 was only 12%.

But USAC has also been getting more aggressive in defining the items to which the surcharges apply and have made retroactive rulings against a number of carriers on various issues. With this new process a carrier will have to go through the USAC formal process before starting any complaint at the FCC, which will greatly increase the time during they might be liable for disputed retroactive surcharges.

Broadband Labels. The FCC has unveiled their suggested labels where carriers can report facts about broadband such as cost, price, speeds, latency, etc. The labels look surprisingly like food labels. It’s often been impossible for customers to find a lot of the information that the FCC wants reported to customers.

No company is required to use the suggested FCC format, although a number of large companies like Verizon, Google and CenturyLink had input into creating the format. For now only large carriers with more than 100,000 broadband customers are required to report this information to customers. But small companies that have a superior broadband product compared to your competition ought to strongly consider doing this anyway. I also strongly recommend you look closely at the labels issued in your areas by large competitors to make sure they are being truthful.

Cancelling Service On-line. There is currently a bill in the California legislature that requires any company that sells services on-line to also allow customers to disconnect services on-line. There are companies like Comcast who are notorious for making it difficult to disconnect without going through a long spiel from a service rep.

The process of making it hard to disconnect started with AOL who was infamous in the day for making it extremely hard to drop their dial-up service. But many other ISPs have started win-back programs that make customers tell the company why they want to disconnect while also listening to a host of special offers trying to get the customer to stay.

While currently this is only proposed in California, we’ve often seen that ideas from California, New York and Illinois often make their way to many other states within a few years.