December 10, 2014

FCC Has a Full Plate at Tomorrow’s Meeting

On Thursday morning, the FCC will meet to consider and discuss several subjects. Most notably, the agenda will include:

  • Modernizing the E-rate program for schools and libraries;
  • Connect America Fund report and order; and
  • Broadcast incentive auction public notice.

These items affect millions of Americans and will require billions of dollars to implement.

E-rate Proposal Fails to Modernize Program and Eliminate Inefficiencies

E-rate, the federal government’s initiative to connect schools and libraries to broadband, represents the nation’s largest education technology program. Congress established the program under section 254 of the Telecommunications Act of 1996, as part of the Universal Services Fund. E-rate aimed to “enhance ... access to advanced telecommunications and information services” for schools and libraries. To help accomplish this goal, the law ordered telecommunications providers to supply their services to schools and libraries at discounted rates, set by the FCC. The goals of the program are legitimate, but the program has suffered from poor administration and significant waste, fraud, and abuse.

Under a proposal by FCC Chairman Wheeler, the annual E-rate spending cap would rise from $2.4 billion to $3.9 billion. The budget increase would bolster Wheeler’s plan to spend an extra $5 billion on Wi-Fi in schools and libraries. Instead of making meaningful reforms to the program, the proposal builds on the already complex bureaucracy.  

“Chairman Wheeler should focus the FCC’s reforms on protecting the program’s core mission of connectivity, realizing honest savings, and deploying real dollars, rather than promising future spending that could undermine E-Rate’s effectiveness or increase the economic burden on American ratepayers.” – Sen. John Thune, 7/9/2014

There is also a discrepancy in E-rate dollars that go to urban schools over their rural counterparts. In an op-ed in the Wichita Eagle on July 4, 2014, Senator Moran and FCC Commissioner Ajit Pai wrote: “E-Rate distributes to students in Washington, D.C., roughly three times the amount that Kansas students receive – even though our nation’s capital has a much larger tax base and broadband is cheaper to deploy there than in rural Kansas.”

Pai has advanced thoughtful reform ideas that the commission could adopt to maximize resources. He suggests giving schools more certainty on how much funding they will receive, prioritizing funding for next-generation services, simplifying the application process to no more than one page, and adding transparency and accountability to the program.

In the past, Congress has required the FCC to implement and execute the E-rate program, but provided very little direction to the commission. So the commission has significant flexibility in implementing the program. Congress should revisit the program as part of its discussions over communications law reform.

Finalizing Phase II of the Connect America Fund

In October 2011, the FCC voted to start shifting subsidies for traditional telephone service, in its Universal Service Fund, to the broadband-oriented Connect America Fund. The goal of CAF is to help provide advanced communications to millions of Americans in rural and underserved regions who currently lack access to robust broadband infrastructure. In phase one of the program, the FCC spent $438 million to provide broadband to 1.6 million people.

On April 23, 2014, the commission agreed to shift $9 billion, from rural subsidies in the Universal Service Fund to CAF, during the next five years as phase two of the fund (CAF II). The effort would increase the deployment of broadband in rural and unserved areas. The funding works out to $1.8 billion annually, a 70 percent increase starting in 2015. U.S. telecommunications carriers would have the option of accepting the subsidy and building out broadband service, or rejecting the money.

At Thursday’s meeting, the FCC will consider a report and order to proceed to CAF II.

“[A]dopting a 10 Mbps download speed for CAF II support should be accompanied with a 10 year funding period to allow adequate time for construction. Moreover, the FCC needs to allow flexibility in final build out plans to account for specific situations that may not be amenable to a one-size-fits-all approach.” – Sen. Roy Blunt, 9/3/2014

Broadcast Incentive Auction in Motion for Public Comment

In February 2012, Congress authorized and directed the FCC to conduct an “incentive auction” of broadcast television spectrum. Incentive auctions are a voluntary way of repurposing spectrum by encouraging licensees to voluntarily relinquish spectrum usage rights. In exchange, the licensees get a share of the auction proceeds. In May 2014, the FCC approved a framework for the auction of 600 MHz broadcast TV spectrum, to be given up by broadcasters and bid on by wireless carriers, and which is considered valuable for wireless devices. The FCC is now seeking additional public input on the final procedures.

On Thursday, the commission will discuss a public notice that asks for comment on “specific proposals on auction design issues such as determination of the initial clearing target, opening bid prices, and the final television channel assignment process.” If the commission approves the proposal, the rules will be open to public comment before being finalized. The FCC expects to accept applications for the incentive auction in the fall of 2015 and to start the auction at some point in early 2016.

Issue Tag: Technology