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Sunday, February 01, 2015

Biggering broadband and the USF

A couple of changes by the FCC seem likely to affect our beloved E-Rate, so I thought I'd mention them to those who don't waste their time reading FCC news items.

First, the FCC has changed the definition of broadband.  I missed the announcement in 2010, when the FCC changed the minimum speed to qualify as "broadband" from 200 kbps to 4 Mbps. Boy, they sure took their time to increase the standard from a couple of ISDN BRIs to a few bonded T-1s.  Now they're moving from 4 Mbps to 25 Mbps.

How will that affect the program? Well, the E-Rate Modernization Order was all about focusing on broadband (the word "broadband" is used 283 times in the Order).  Now while the FCC seems reluctant to toss technologies that can't meet the broadband threshold (the Eligible Services List included some transmission technologies that couldn't reach even the old 4 Mbps threshold, like ISDN and fractional T-1s), maybe at some point maybe someone will notice that several items on the ESL don't provide broadband, and slow connection speeds will be tossed out of the program.  Of course, the E-Rate goal is 100 Mbps, so maybe this move to a 25 Mbps minimum won't really matter.  But at some point, someone's going to point out that T-1 lines, even with bonding, cannot meet the new broadband standard (and they cost over $200 per Mbps), so they shouldn't be on the ESL.  I mean, if you want applicants to move to 100 Mbps, it makes sense to stop subsidizing 1.5 Mbps connections.  If the focus is broadband, let's stop funding things that aren't broadband.

Second, the Chairman seems poised to make Internet subject to Title II regulations as a way to enforce Net Neutrality.  (Which has his former employers at the NCTA most unhappy.)

Why should we care over here in the E-Rate program?  Well, according to Commissioner Pai, "Once broadband service is classified as a telecommunications service, universal service charges will be assessed on carriers’ broadband revenues."  So it looks like as an ?unintended? consequence of Net Neutrality, ISPs will have to start kicking into the USF.  Maybe that's where the extra $1.5 billion for the E-Rate program will come from.

And since I haven't gotten to play language curmedgeon for a while:
Hey, Commissioner Pai, "broadband" is not synonymous with "Internet."  Carriers already pay USF fees on broadband circuits that are used for WANs.  The change would be in the cost of Internet access (whether broadband or not).

I've already ranted about "broadband" not really being the same as "high-speed," but I guess I have to give that one up: the original meaning of broadband seems to be lost.


  1. Anonymous10:36 PM

    I don't know anyone that pays USF of WAN circuits

  2. I see it routinely.

    From the instructions to the Form 499-A ( "Report on Lines 305 and 406 revenues from offering dedicated capacity between specified points even if the service is provided over local area switched, multi-protocol label switching (MPLS), asynchronous transfer mode (ATM), or frame relay networks."

    I'm not an expert on the contribution side of the USF, but I don't know how a provider could avoid paying into the USF for WAN charges (unless it's a dark fiber lease). Maybe they just are choosing not to show it on their bills?

  3. Anonymous10:23 PM

    I examined my clients' WAN billings from Time Warner, AT&T, & Century Link, all of which provide 100 -2000 Mbs metro Ethernet circuits and none of them impose a USF fee nor do they charge federal taxes. The only tax charged is the NC state telecommunications tax. Same for VA, GA, CA, WA, ID, & IL. I don't know anything about a Form 499-A, I just know what they put on the bill

  4. I've had the misfortune to look further into this, and it seems to be a matter of some controversy. It seems that the FCC says that unless customers certify that more than 10% of traffic on a circuit is interstate, then the circuit in intrastate. "Interstate" includes "ISP-bound" traffic, and apparently traffic that is riding an intrastate circuit (your WAN) to reach an interstate circuit (your ISP), the whole mess is interstate. So my understanding is that if 10% of the packets that hit your WAN end up on the Internet (or come from the Internet to your WAN), you have an interstate service and you need to pay into the USF.

    Apparently, some service providers have said, "Well, we don't have certifications from our customers (since we aren't required to collect them), so we can't say more than 10% is going to the Internet, so we're saying intrastate, and not paying into the USF." USAC apparently took the view that providers need to prove that less than 10% of the traffic is interstate or pay into the USF, and a squabble has broken out. Here's an example of an appeal:

    I didn't find any decision of the appeals on this, so I don't know if the FCC is really going to say that it's only interstate if the service provider chooses to collect certifications that traffic is interstate.

  5. It seems some senators are just getting around to complaining about the speed increase: