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Thursday, February 26, 2015

Major Change in the Neighborhood

The big Net Neutrality Order is out!  Well, not really out, but approved.  We can't see the Order yet, but we do have a press release and statements from the Democratic Commissioners.  (Why no statements from the Republicans?  Maybe they didn't get to see the order until right before the meeting?)

E-Rate's not mentioned, but I spotted a couple of things that affect our little patch of heaven.

First, it looks like the Lifeline program will be growing.  This may be the mission creep I feared back in 2013.  The press release is vague: "Bolsters universal service fund support for broadband service in the future through partial application of Section 254" could mean just about anything.  But Commission Clyburn's statement gets a bit more specific: "The Order enables the FCC to support broadband as a separate service...."  So it seems like instead of getting a subsidy on phone or broadband, Lifeline participants will be able to get subsidies on both.  Look for those companies currently providing cheap cell phone service to add a data plan.

Why do I care?  Because when the size of the Lifeline program grows, the size of the USF grows, which increases phone bills, which raises hackles in some circles.  I've said since the start of the Obama administration that the main threat to the E-Rate is USF overreach.

Which brings us to the second change that touches the E-Rate.  Those opposed to regulating ISPs under Title II pointed out that it would mean that ISPs would have to contribute to the USF.  That could have meant a 15% jump in everyone's Internet bill.  But the press release says, "the Order DOES NOT require broadband providers to contribute to the Universal Service Fund under Section 254."

Hmm.  How will the FCC pay for the increased Lifeline costs and the $1.5 billion jump in the E-Rate cap?  "The question of how best to fund the nation’s universal service programs is being considered in a separate, unrelated proceeding that was already underway."  I have a sinking feeling that in the meantime, the Chairman is planning to further leverage the fund to make up the $1.5 billion instead of increasing fund revenues.  That would mean no rollovers.  Dang, I've been hoping for $3.9 billion plus $1 billion in rollover.


  1. Well, now you can read the statements from Commissioners Pai ( and O'Riely ( And in case 6 pages is too long for you, Commissioner Pai has a one-page summary with bullet points (

    They're both good reads. Pai has great sound bites ("So why is the FCC turning its back on Internet freedom?"), and O'Rielly coins the term "fauxbearance."

    But to cut to what matters: did they give us any info on how the E-Rate might be affected? While the official summary of the order says, "the Order DOES NOT require broadband providers to contribute to the Universal Service Fund," Pai points out that it doesn't say broadband providers won't pay into the fund, only that the decision will be made later. He says that the later decision will be to have broadband providers contribute. I think he's a pessimist, but that doesn't mean he's wrong. Pai says we'll see a decision in April.

  2. The order is out:

    Will ISPs have to pay into the fund? Not yet, but paragraph 490 says: "...we
    limit our action only to forbearing from applying the first sentence of section 254(d) and our implementing rules insofar as they would immediately require new universal service contributions for broadband Internet access services sold to end users but not insofar as they authorize the Commission to require such contributions in a rulemaking in the future. Thus, while broadband Internet access services will not be subject to new universal service contributions at this time, our action today is not intended to prejudge or limit how the Commission may proceed in the future"