TR Daily FCC Defends Universal Service Support Orders for P.R., USVI
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Friday, June 5, 2020

FCC Defends Universal Service Support Orders for P.R., USVI

A telecom and cable system operator in Wyoming and Montana lacks standing to challenge an FCC order that authorized emergency universal service support for Puerto Rico and the U.S. Virgin Islands (USVI) in the wake of communications networks damage caused by Hurricanes Irma and Maria in 2017 and that it fails to demonstrate arbitrary and capricious action by the FCC in a subsequent order authorizing support to deploy storm-hardened, broadband capable networks in Puerto Rico and USVI, the FCC has told the U.S. Court of Appeals for the District of Columbia Circuit.

In 2018 the FCC established the Uniendo a Puerto Rico Fund (Bringing Puerto Rico Together Fund) and the Connect USVI Fund and authorized $64.2 million in “Stage I” emergency funding, with 60% available for fixed network operators and 40% for mobile network operators (TR Daily, May 8 and 29, 2018). The following year, it allocated $950 million in combined Stage II support for fixed and mobile network operators to restore, expand, and improve the resiliency of broadband networks (TR Daily, Sept. 26, 2019).

In a brief filed with the court yesterday in “Tri-County Telephone Association, Inc. v. FCC” (case 20-1003), the FCC said that the court should not reach Tri-County’s claims related to the Stage I order authorizing emergency support for Puerto Rico and USVI because it has not established that it was harmed by the order.

Tri-County’s “theory of injury is that, by creating new subsidy streams, the Orders under review incrementally increased its required contributions to the Universal Service Fund. But that is not so as to the Stage I Order. Because the Commission financed all Stage I subsidies using the high-cost program’s preexisting cash reserves, those subsidies did not affect Tri-County’s contribution obligation. The Court therefore lacks jurisdiction to review the Stage I Order,” the FCC said.

Even if the court does find it has jurisdiction to review the Stage I order, Tri-County’s claims would still fail, the FCC said.

“The Commission had good cause to create the Stage I fund without notice and comment. Months after Hurricanes Irma and Maria, communications networks in the Territories were not yet fully repaired. On the brink of a new hurricane season, residents of the Territories still depended on damaged networks and lacked reliable access to first responders. As Tri-County concedes (Br. 23), a notice-and-comment proceeding to authorize new subsidies would likely have taken months. The Commission thus had good cause to authorize the Stage I interim subsidies without notice and comment,” the FCC said.

“The Commission adequately justified the size of the Stage I subsidy fund. The agency could not know with precision how much it would cost to repair the remaining network damage from Hurricanes Irma and Maria. But considering the state of restoration work at the time of the Stage I Order—which reflected carriers’ considerable, but incomplete, progress using earlier emergency subsidies—the Commission reasonably predicted that a second round of interim relief, roughly equal to the first, would ensure similar gains over the course of the coming year, sufficient to restore pre-hurricane service levels,” it continued.

“The apportionment of Stage I subsidies between Puerto Rico and the U.S. Virgin Islands (as distinct from the broader designation of Universal Service funds for these Territories) caused Tri-County no possible harm. Tri-County thus lacks standing to dispute that apportionment, even if the Court concludes it has jurisdiction to review other aspects of the Stage I Order. In any event, the Commission justified its chosen approach as better reflecting geographical differences, population size, historical subsidy streams, and other relevant factors,” the FCC said.

It also said that Tri-Country is wrong in arguing that the FCC did not adequately consider its statutory obligation to ensure rates reasonably comparable to the mainland. “Tri-County does not dispute that communications services in the Territories were not reasonably comparable to those in mainland urban areas. The agency did not need evidence of disparate rates to address the undisputed problem of disparate services,” the FCC said.

“Finally, even if the Court were to conclude that the Commission should have conducted notice and comment, or that the agency did not adequately explain some aspect of the Stage I Order, remand (not vacatur) is the appropriate remedy. The Stage I subsidies have all been disbursed, and carriers have relied on them to complete vital network repairs. Vacating the Stage I Order would be disruptive, and remand would not prejudice Tri-County,” it said.

Regarding the Stage II order authorizing support for storm-hardened, broadband capable networks, the FCC said, “Hurricanes Irma and Maria devastated communications networks in the Territories. … Under these circumstances, the Commission reasonably concluded that subsidizing storm-hardened, broadband-capable networks in the Territories is faithful to the objectives set forth in Section 254(b)” of the 1996 Telecommunications Act, which authorizes the FCC’s insular and high-cost universal service support programs. “Doing so advances ‘the principle that “[a]ccess to advanced telecommunications and information services should be provided in all regions of the Nation,’”’ the FCC added, quoting from section 254(b).

The FCC said that its decision to use the Universal Service Fund “to subsidize storm-hardened, broadband-capable networks was lawful. Even after pre-hurricane service in the Territories was restored, some regions lacked access to broadband, and networks remained vulnerable to future storms. Services in the Territories were thus not comparable to modern, reliable services in mainland urban areas—contrary to Section 254 of the Act, 47 U.S.C. [section] 254. The Commission’s response to this problem is consistent with FCC precedent and lies well within the agency’s broad discretion in this arena.” —Lynn Stanton, [email protected]

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