Br Broa oadband Pol olicy Update The The Quilt Quilt Je Jeff Mitch chell Fletcher, Heald & Fl & Hildreth, PLC mi mitch chell@fhhlaw.com (7 (703) ) 812-0450 0450 Fe February 6, 2019
Ag Agenda • 2018 Activities • Prospects for infrastructure legislation • Federal universal service programs (E-rate, RHC) • FCC highlights • Net neutrality update
2018 2018 Act ctivity 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 Program Ø USDA authority to design program Ø Legislative language suggested focus on 10/1 to the last mile. Ø The Quilt goes to Washington Ø (April 2018) Met with RUS, House & Senate Committee Staff and FCC Ø Educated about R&E role; positioned as potential resource Ø Asked that funding be available on a competitive basis to non-commercial providers Ø 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).
US USDA ReConnect ct Pr Program Ø $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
In Infr fras astructure e Legi gisl slation Ø Potential area of agreement between Democratic House and President Trump Ø No sooner than May 2019 Ø Much uncertainty: More shutdowns? Other distractions? Ø Recently introduced bills Ø 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 broadband Ø 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. Ø SHLB infrastructure bill Ø 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
SH SHLB Draft Infrastruct cture Bill Ø Broadband Network Grant Program Ø $3 billion/year for five years Ø Rewards states that provide 1/3 match Ø Open access/must serve anchors Ø Broadband Adoption Grants Ø $500 million/year for five years Ø Universal Service Reforms Ø Breakdown silos Ø Codify Lifeline Ø $1 billion cap for RHC funding Ø Broaden contribution base Ø Broadband mapping Ø $50 million/year for five years Ø Map anchors; verification of industry data; crowd sourcing Ø Research into benefits of broadband Ø $100,000/year for five years
Un Univ iver ersal al Ser ervic vice Ø “Universal service” is a principle that has been recognized for over 100 years: all Americans should have access to communications services. Ø Congress 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)
Intrastate, Assessable (Interstate + Int’l) and Non- Telecommunications Revenues 2004-2016 (in billions) $500 $450 $400 $350 $300 $250 $200 $150 $100 $50 $0 2017 Authorized Support 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 • High Cost (Connect America) = $4.67 billion Intrastate Revenues Interstate + Internat'l Revenues Non-Telecom Revenues • Low Income = $1.26 billion • Schools & Libraries (E-rate) = $2.65 billion • Rural Health Care = $0.26 billion • TOTAL = $8.85 billion
E-rate Update Graphic courtesy Funds For Learning, 2018 E-rate Trends Report https://ecfsapi.fcc.gov/file/10713255555242/2018_E-rate_Trends_ReportSml.pdf
E-rate Update Graphic courtesy Funds For Learning, 2018 E-rate Trends Report https://ecfsapi.fcc.gov/file/10713255555242/2018_E-rate_Trends_ReportSml.pdf
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 Fund Authority 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 Broadband services and equipment Customary installation charges 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 Update Ø Cap 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 Letter Ø FCC Increased and indexed cap (June 2018); retroactive Ø FY 2018 $150 million sub-cap hit; delays; cuts? Ø Intense FCC/USAC scrutiny of Telecom Program Ø Unilateral rate reductions in Alaska in FY 2017 Ø Additional comments sought on Telecom Program rural and urban rates (Dec 2018) Ø Should Telecom Program be scrapped outside of Alaska? Ø Proposed $100 million “Connected Care” Pilot Program Ø “Notice of Inquiry” completed Ø Notice of Proposed Rulemaking next up
FCC Highlights Ø Educational Broadband Service (EBS) Ø SHLB opposing auctions; supporting educational providers’ priority Ø Highlighting successful deployment in Michigan and interest in similar projects from Nebraska and Virginia. Ø Broadband Development Advisory Committee (BDAC) Ø Proposed 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. Ø TV White Spaces aka Microsoft Airband Initiative Ø $10 billion to serve 20 million residents in 17 states. Ø Microsoft projects underway in Ohio, New York, Maine, Virginia, Maryland, Michigan and Wisconsin. Ø Microsoft White Paper
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