Let's take a step back. Why should an increase in demand for broadband to schools reduce the funding available to bring broadband to rural communities? Why should the spending in one program have anything to do with the rest? As things stand, if one of the programs hits its cap, and the Commission has 2 options:
- Enforce the cap for that program.
- Increase the cap for that program and increase the Contribution Factor.
- Enforce the cap for that program.
- Increase the cap for that program, increase the overall cap for the USF, and increase the Contribution Factor.
- Increase the cap for that program, don't increase the overall cap for the USF, and start cutting other programs.
The only result of these rules is to create option 3. And option 3 sucks. The overall cap allows the FCC to cut the E-Rate by saying something like, "While we acknowledge the educational value of increasing broadband access for students, 99% of schools are already connected, so the real digital divide is at home, so we are prioritizing the Lifeline program." They will be able to create a false choice between options 1 and 3, leaving option 2 behind the curtain.
Who likes this proposal? Former U.S. Representative Joe "Bleed It Dry" Barton. Rep. Barton has left the House, but an overall cap could achieve his goal "to so underfund [the E-Rate] that it goes away."
OK, let's take a look at the report. As usual, I'll just be picking out things that strike my fancy and offering my ill-considered commentary.
"as courts and the Commission have recognized, too much subsidization could
negatively affect the affordability of telecommunications services for those consumers who ultimately
provide the support for universal service." OK, I'll bite. I'm not a lawyer, but I'll look up the cases and see what they say. OK, Alenco v FCC (2000) does say, "Because universal service is funded by a general pool subsidized by all telecommunications providers and thus indirectly by the customers excess subsidization in some cases may detract from universal service by causing rates unnecessarily to rise, thereby pricing some consumers out of the market." But Qwest v FCC (2001) says that assertion is arguable, and notes that the FCC has not made it a principle of the program to limit the burden on ratepayers. Let's study this to see if subsidization actually would hurt affordability for anyone.
" we seek to promote a robust debate on the relative effectiveness of the programs." Why? What does it matter if the Lifeline (née Low Income) program is more effective than the Connect America Fund (CAF, née High Cost Program)? If they're both incredibly effective, why does it matter if one is more effective than the other? And how are you going to compare the effectiveness of two programs that have different goals?
Oh, look at the table on page 5. The CAF/High Cost is already over cap. So there you go: the CAF will immediately start eating into the other programs, only we won't notice it right away, because the other programs have unused cap space. The boiling frog fable comes to mind.
"we also seek comment on the appropriate way to reduce expenditures
automatically." There it is: we want to cut your funding without actually having to vote to cut your funding. It's not us cutting your funding, it's "the legal
imperative to remain within the cap." Please pay no attention to the fact that we created that "legal imperative" in order to create exactly this situation, and we could remove it.
"We also seek comment on extending our projections out further than one year to better
anticipate potential spending over the cap. ...the Commission would have a better opportunity to coursecorrect if it can evaluate demand over a more extended period of time." Wait, so you're saying that if USAC projects that we might hit the cap in 3 years, you're going to start to restrict funding now? Yeah, no.
"should we prioritize based on the cost-effectiveness of each program or the estimated improper
payment rates?" What does "cost-effectiveness" mean? Here are the improper payment rates from page 81 of the FCC's 2018 financial report:
| CAF/High Cost | 0.03% |
| E-Rate | 2.59% |
| Lifeline | 18.47% |
"Should we instead consider reducing each program’s disbursements by the same amount...?" The same dollar amount? Because a reduction of $582,000,000/program would mean a 13% decrease in the CAF, but would completely obliterate Rural Healthcare.
" unexpected increases in demand in one program could affect the funding levels of other programs that have not experienced similar unexpected increases in demand." C'mon, the purpose of the overall cap is to have demand increases in one program affect the funding of the other programs. If you don't want that to happen, don't create an overall cap.
"would self-enforcing caps on each of the programs provide more predictability to universal service spending?" Yup. It's hard enough trying to read the tea leaves to determine demand within the E-Rate program. Having to guess what will happen in the other programs would make life much more unpredictable for E-Rate participants.
"Are there ways to compare effectiveness across the programs more holistically in order to measure program efficiency?" There are many ways, all of them flawed. Let's use penetration rates among residential, business, and community anchor institution locations potentially served by the program. I've mentioned that the E-Rate participation rates are dropping, but the other programs are worse. I've mentioned that Lifeline only serves 28% of those eligible, and I'll bet the CAF has very low penetration rates among potential residential customers. Side bonus: focusing on penetration would encourage the FCC to remove the barriers that are driving away E-Rate applicants.
"We also seek comment on combining the E-Rate and RHC program caps." Um, no. The caps should only be combined if the programs are combined. Why should those 2 programs have to fight over the scraps left over after CAF busts the cap and the pain gets split between Lifeline and the E-Rate/RHC? Another boiling frog budget cut.
"In other USF proceedings, some stakeholders have asked the Commission to reexamine the rules to better harmonize the USF program rules." So instead of harmonizing the rules, you're going to combine budget caps? No one asked for that.
"It is reasonable, therefore, to consider combining the caps to create additional implementation efficiencies and flexibility." No, it isn't.
On to the Commissioners statements.
Commissioner O'Rielly:
"Since the fee is generally spread among consumers on an equal and agnostic basis, low-income households pay a far greater share of their income to the USF than their high-income counterparts." Can I get a source? It certainly could be true, but I'm not aware of any study on the relative telecom spending of low-income and high-income families. If it is true, then someone at the FCC should look into why the Lifeline program is so ineffective....
"This NPRM initiates a dialogue...." Who will take place in that dialog? When is it my turn to discuss ideas with the Commission? In my experience, an NPRM does not promote dialog. The Commission has said it is considering some rules, stakeholders have 30 days to write comments (with another 60 days for reply comments), and then the Commission makes a rule. If you want to start a dialog, post a Request for Comment before posting an NPRM. An NPRM is the last step in the process before publishing an order.
"This NPRM’s proposed budget would NOT cut funding to Universal Service." If it never limits USF funding, then it serves no purpose. It makes no current cuts, just sets arbitrary limits on future growth.
"Certain special interest groups have claimed—incorrectly—that establishing an overall budget is a roundabout way to cut funding to the Lifeline program for low-income Americans." Guilty as charged. Does that make me a "special interest group"? I'm coming up in the world. Who else is saying this? Am I single-handedly "certain special interest groups"?
Commissioners Rosenworcel: "I do not support an approach that fosters the universal service hunger games." Wait, would we get to meet JLaw at USAC trainings?
Commissioner Starks: "...the FCC should be focused on mapping not capping." The Dems sure went for the sound bites, didn't they?
Me, I say the FCC should be focused on the "universal" part of Universal Service, by taking steps to increase participation. Growing, not capping.
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