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Washington Report: FCC Commissioners continue to clash on contentious issues, Congress steps up oversight efforts

By Bob Deegan  

Since our last report the FCC has been quite busy dealing with contentious issues such as the set-top box proposal, Internet service provider privacy NPRM, Lifeline reform and, most importantly for our neck of the woods, USF reform for rate-of-return carriers. (See Lifeline Order sets new standards for supported broadband, strengthens verification process and FCC USF Reform Order outlines two paths for rate-of-return carriers in this issue.)

Each of these items is worthy of debate in its own right, but one thing that binds them all is the continued partisan divide at the FCC and concerns over FCC process. These issues and the press for process reform have spilled over to Capitol Hill. Congress has picked up its FCC oversight efforts over the last two months with both chambers holding oversight hearings in March at which all five FCC Commissioners testified. 

Senate hearing focuses on rural issues

During a Senate Commerce Committee hearing, RoR USF reform received some attention from Sen. Jerry Moran (R-Kan.), who asked whether rural providers will be able to pay for prior investments under the Order. Commissioner O’Rielly said he doesn’t expect there to be any dire effects based on prior business decisions and that situations of significant impact would be reviewed on a case-by-case basis.

Additionally, Sen. Amy Klobuchar (D-Minn.) asked whether the FCC expects standalone broadband support, through the Order, to drive rural broadband deployment. Chairman Wheeler said he would like to think it would go through the roof, as the Order makes sure the money is going to holes in the broadband map. The USF reform discussion also led into an exchange on the need for USF contributions reform. Additionally, Wheeler and Commissioner Pai engaged in what has been a customary back and forth of partisan fireworks regarding the Open Internet Order. Lastly, Sen. John Thune (R-S.D.) spent a considerable amount of time discussing the need to reauthorize the FCC for the first time in 25 years. To that end, he has introduced the FCC Reauthorization Act (S-2644), which will likely have gone through a mark-up by the Committee by the time you read this. 

FCC process discussed at House hearing

FCC process was what stoked the fires at the House Energy and Commerce communications subcommittee oversight hearing, particularly the FCC’s refusal to release documents prior to votes being undertaken by the full Commission. In a discussion on the ISP Privacy NPRM, Rep. Greg Walden (R-Ore.) repeatedly attacked Wheeler and said the process “flies in the face of open government … and needs to change.”

Appropriations Committee also hears from two commissioners 

Following the oversight hearings, the appropriations process also kicked off for Fiscal Year 2017. Chairman Wheeler and Commissioner Pai appeared before the Senate Appropriations Subcommittee on Financial Services and General Government in April to discuss the FCC’s 2017 budget request of $358 million plus an additional $124 million for spectrum auction purposes. 

The subcommittee covered a lot of ground during the hearing on issues such as spectrum policy, cybersecurity, Lifeline and ISP privacy. However, RLEC issues did play a major role in the hearing with Sen. John Boozman (R-Ark.), chairman of the subcommittee, focusing heavily on the USF Reform Order right out of the gate, asking about the implementation timeline and when RLECs would have support for standalone broadband. Wheeler said implementation would be this year and that he didn’t have a specific timeline on when funds would start flowing. It was here that Commissioner Pai took the opportunity to explain why he dissented to the Order in part. He explained that the Order was exceedingly complex as compared to his proposal and, going back to the issue of FCC process, raised the fact that no one was able to review the Order before its release to fix any issues. He then discussed the multi-step process for coming up with broadband loop support and expressed frustration, noting that the last time the FCC did something so complex (i.e., the 2011 USF Transformation Order), it had to reconsider it seven separate times.

When asked if the $2 billion cap for RLECs was too low, especially in light of the need for Alaska and tribal plans, Wheeler explained how the Order was a bipartisan effort, said he believed it was sufficient and the FCC was working on that assumption, and added, “but we will find out.” Boozman also raised the rate floor issue and asked why the FCC is forcing RLECs to raise rates. Pai responded that it is “crazy” that the FCC is forcing carriers to raise rates when it is obvious the rural economy has lagged behind urban areas and thus isn’t fair. Lastly, Sen. Moran asked for an update on the rural call completion issue to which Wheeler responded that there has been a 30 percent decrease in call completion complaints. 

Seven communications bills teed up in the House

In addition to all of the oversight discussed above, the House Subcommittee on Communications and Technology held a hearing on seven separate communications bills. Perhaps the most notable of these bills are: 

The subcommittee voted the bills out to the full committee on April 20.

Industry awaits Circuit Court decision on net neutrality

Some bills have also recently passed through the full House. On April 15, the House voted, largely along party lines, to pass H.R. 2666, the No Rate Regulation of Broadband Internet Access Act, which will prohibit the FCC from regulating the retail rates charged by Internet service providers for broadband Internet service access. This bill would likely face a veto threat should it also move through the Senate, but another open Internet related bill, H.R. 4596, the Small Business Broadband Deployment Act that would extend the small business Internet service providers exemption from the enhanced transparency rules and set the threshold at 250,000 subscribers or fewer, moved through the House by a vote of 411 – 0 and has more promising prospects. 

Meanwhile, as of the writing of this article, Washington continues to await the D.C. Circuit Court’s order on the Petitions for Review of the Open Internet Order and pending the outcome there is some speculation the order could spur legislative efforts on the issue.

Municipal broadband issue in the courts and Congress

In the North Carolina and Tennessee municipal broadband cases being litigated in the 6th circuit, oral arguments were held in March. With no obvious hints from the bench, the industry and state commissions are waiting to see what the court decides.

Recently, Rep. Marsha Blackburn (R-Tenn.), Vice Chair of the House Energy and Commerce Committee, spoke out against municipal broadband and cited several examples where the taxpayer was left holding the bill from a failed municipal broadband project. She said private entities should face competition, but not competition from the government. Blackburn also mentioned her bill, H.R. 1106, which would strip the FCC of its ability to tell states whether they could restrict municipal broadband efforts or not. The bill has 11 sponsors from 7 states, including North Carolina and Tennessee, the two states fighting the FCC on municipal broadband in the 6th Circuit.

Two recent papers focus on the municipal broadband issue: 

  • A State Government Leadership Foundation study, entitled The Impact of Government-Owned Broadband Networks on Private Investment and Consumer Welfare, claims, among other things, that subsidized municipal entry is prone to be predatory. Dr. George Ford, Chief Economist of the Phoenix Center for Advanced Legal and Public Policy Studies, authored the study. 

  • The Congressional Research Service issued a report that presents: arguments for and against municipal broadband; the role of the FCC; the 2015 FCC Order granting the petitions to preempt state laws in North Carolina and Tennessee that restricted the expansion of community broadband services; and recent Congressional actions.

Congress, FCC will continue their focus on telecom issues

With all this on their plates, it will be a busy year for Congress, especially for members up for re-election this November. At the FCC, while telecom issues are a major focus right now, the agency will also need to deal with procuring FY 2017 funding and a possible move to a new headquarters building. So the next edition of this report doesn’t promise to be any shorter than this one. 


Bob Deegan is senior government relations counsel. He can be reached at rdeegan@neca.org. Colin Sandy contributed to this article. Colin is senior regulatory attorney in NECA’s Washington D.C. office. He can be reached at csandy@neca.org.

 

 

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