TR Daily FCC Releases Network Restoration Item for Puerto Rico, USVI
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Tuesday, May 29, 2018

FCC Releases Network Restoration Item for Puerto Rico, USVI

The FCC today released an order and notice of proposed rulemaking making available tens of millions of dollars to Puerto Rico and the U.S. Virgin Islands to help them restore communications networks in the wake of hurricanes Maria and Irma last year and proposing the distribution of almost $900 million in medium- and long-term funding over the next decade.

The item in WC dockets 18-143, 10-90, and 14-58 creates the Uniendo a Puerto Rico Fund (Bringing Puerto Rico Together Fund) and the Connect USVI Fund.

Comments on the NPRM are due 21 days after “Federal Register” publication and replies are due 35 days after publication.

The item released today was adopted on May 8.

“The Commission’s action today will not only help complete the recovery from last year’s devastating storms, but seeks comment on much-needed funding for long-term improvement and expansion of broadband throughout Puerto Rico and the U.S. Virgin Islands,” FCC Chairman Ajit Pai said in a news release. “During my visits to Puerto Rico and the Virgin Islands, I saw that it was critical for the FCC to not only address today’s urgent needs, but to look ahead to support the broadband networks the islands need to thrive in the 21st Century.”

“To expedite buildout, opportunities for the first stage of funding are open to all facilities-based providers in Puerto Rico or the Virgin Islands of voice and broadband service, subject to receiving an Eligible Telecommunications Carrier (ETC) designation. To participate, providers must certify their eligibility no later than 14 days after publication of the Order in the Federal Register,” the FCC said in the news release.

“Through the Uniendo a Puerto Rico Fund, we will make available up to $750 million of funding to carriers in Puerto Rico, including an immediate infusion of $51.2 million for restoration efforts in 2018,” the FCC said in the item. “Of the remainder, we propose that about $444.5 million would be made available over a 10-year term for fixed voice and broadband (an $84 million increase over current funding levels) and that about $254 million would be made available over a 3-year term for 4G Long-Term Evolution (LTE) mobile voice and broadband (a $16.8 million increase).

“Through the Connect USVI Fund, we will make available up to $204 million of funding to carriers in the U.S. Virgin Islands, including an immediate infusion of $13 million for restoration efforts in 2018. Of the remainder, we propose that about $186.5 million would be made available over a 10-year term for fixed broadband (a $21 million increase) and that about $4.4 million would be made available over a 3-year term for 4G LTE mobile voice and broadband (a $4.2 million increase),” the FCC added.

“As a result of these Funds, as well as our decision today not to offset more than $65 million in advance payments we made to carriers last year, we will make available up to $256 million in additional high-cost support for rebuilding, improving, and expanding broadband-capable networks in Puerto Rico and the Virgin Islands,” the item continued. “We seek comment on how best to structure the second stage of these Funds to speed longer-term efforts to rebuild fixed and mobile voice and broadband networks in the territories and harden them against future natural disasters. We intend to target high-cost support over the next several years in a tailored and cost-effective manner, using competitive processes where appropriate.”

The FCC is seeking comments “on whether this budget is appropriate and whether additional support beyond current levels of high-cost support is necessary to rebuild, improve, and expand service in these areas. Does our proposed allocation of additional high-cost support between fixed and mobile providers accurately reflect the costs that each will face in restoring, improving and expanding service? We also seek comment on whether and how to incorporate any unclaimed restoration funding into our long-term plan. Commenters are requested to provide specific information to substantiate their views.”

“We propose to award fixed support through the Uniendo a Puerto Rico Fund and the Connect USVI Fund by evaluating competitive proposals submitted by carriers,” the FCC said. “This approach could be completed quickly and efficiently, thereby avoiding lengthy delays in getting critical funding to carriers. A competitive proposal process is a more streamlined approach than the typical Commission auction, yet still requires carriers to compete for support. Moreover, this option may better enable the Commission to determine how best to award support for network-hardening purposes than the auction approach.

“We propose that accepted proposals will receive support for 10 years, beginning in January 2019 and running through December 2028. We seek comment on whether to transition support, through a phase-down process, in any geographic area where the incumbent carrier, i.e., PRTC or Viya, did not win support based on its proposal,” the FCC added.

It also proposed “that only a provider that, according to June 2017 FCC Form 477 data, had an existing fixed network and provided broadband service in Puerto Rico or the U.S. Virgin Islands prior to the hurricanes would be eligible to apply to participate. We seek comment on whether participation should be limited to fixed providers who served at least some residential locations or whether providers that served only business locations should also be permitted to participate. We propose to limit participation to providers who had provided services before the hurricane because we believe they would be better equipped to rebuild and expand service as quickly as possible. Relatedly, we also believe that existing providers with established track records present a smaller risk of defaulting on their service obligations.”

For mobile providers, the FCC proposed to “carve Puerto Rico and the U.S. Virgin Islands out from the MF-II auction. Instead, we propose to supplement existing support over a three-year period by giving providers an additional $21 million to rebuild their networks after the destruction wrought by Hurricanes Irma and Maria and their aftermath. We seek comment on allocating these support amounts so that approximately 80 percent goes to the Uniendo a Puerto Rico Fund and approximately 20 percent to the Connect USVI Fund.”

Commissioner Jessica Rosenworcel approved in part and dissented in part on the item, while the other Commissioners voted for the item. That included Commissioner Mignon L. Clyburn, who recently said she plans to leave the Commission (TR Daily, April 17) but still votes on “most” items on circulation, according to her office, although she does not vote on items scheduled for consideration at monthly meetings.

In a statement on the item, Ms. Rosenworcel called the order and NPRM “a serious effort,” but she reiterated her criticism that the FCC did not hold public hearings and produce a report with recommendations after last year’s hurricanes, as it has after other major storms.

“This is a shame. Puerto Rico and the US Virgin Islands deserve the same treatment from this agency as communities on the mainland,” she said. “Moreover, this was a lost opportunity because efforts like these could have informed our approach in this rulemaking. Our failure to do even a simple assessment on par with what has been done in the past through hearings and reports is an ugly mistake. In this regard, I dissent.”

Ms. Rosenworcel also said that “it is necessary to point out that there is an ongoing FCC proceeding that could damage so much of the good we do today. More than 500,000 people in Puerto Rico rely on the FCC’s Lifeline program for communications service. Without it, they are unable to reach out in crisis, seek emergency healthcare, and rebuild what the storm rendered fragile in their lives. Nonetheless, the FCC has a pending rulemaking that would all but dismantle the Lifeline program in Puerto Rico. I hope the FCC rethinks its approach—because supporting universal service infrastructure will do little good if the agency undermines the very program that residents of these islands rely on to make use of those facilities.”

In his separate statement on the item, Mr. Pai said that “our work isn’t finished. The Commission continues to work on various measures to help the territories prepare for the hurricane season ahead. To this end, the Public Safety and Homeland Security Bureau is currently evaluating the lessons learned from the 2017 hurricane season and how we can enhance our response and recovery operations. As we typically do after any season in which there are major hurricanes, we will make that information available to the public. This will allow those who are tasked with preparing for and responding to natural disasters to benefit from all the Commission has learned from last year’s hurricane season. We will also be looking to add tools to the natural disaster toolbox we use to respond to hurricanes, particularly in the areas of engaging more efficiently with our regulatees and more widely with other stakeholders, such as local governments, other federal agencies, providers of utility services, etc. We will also consider to what extent we should enhance our collection, analysis, and provision of disaster-related information and how best to make that information available to those who need it most. We will also review the options for getting out information more quickly in languages other than English.”

“In considering this item, I’m glad my colleagues agreed to include edits to increase accountability and ensure that limited universal service funds are used for their intended purpose,” Commissioner Brendan Carr said. “By more clearly delineating what constitutes eligible short-term expenditures, as well as requiring carriers to comply with document retention and auditing requirements, we will incentivize the prudent spending of program funds while at the same time helping to restore communications services where they are most needed.”

“With respect to the near-term or ‘stage 1’ funding, I supported edits of my colleague, Commissioner Carr, to place additional safeguards on the funding, and offered my own to protect against the conditioning or diversion of universal service support for other purposes,” Commissioner Mike O’Rielly said. “Indeed, I have urged the agency to include what I have called ‘guardrails’ in each universal service reform order that has come before us to help ensure that scarce universal service dollars are used as intended. Here, it is also critical that funding be used to restore service, as it seems that prior emergency funding had little impact, except to help pay off old debts.”

Mr. O’Rielly said he “sought to adjust those portions of the Notice that may not have been exactly aligned with our important universal service reform principles. In particular, the Commission uses reverse auctions, wherever feasible, to allocate and distribute ongoing support. Given that there are multiple, overlapping mobile providers in Puerto Rico, it seemed illogical that we would want to continue to provide support to all of them for years without even having a game plan for phasing out redundant funding in the future. After all, another bedrock of our universal service reforms is that the Commission will only provide funding to one provider per area (and no funding in any area with an unsubsidized competitor). I am generally pleased that the item now proposes to conduct a reverse auction for mobile providers after a transitional period and that the competitive proposal process on the fixed side has been modified to be more auction like – in other words, more algorithmic and less discretionary.

“Furthermore, I was concerned about providing additional funding to Puerto Rico because it has admitted to diverting 9-1-1 fees paid for by its communications users. Fortunately, the Governor has provided written assurance that it is taking steps to fix the problem and will not divert fees going forward. I intend to ensure that this commitment is met on an on-going basis,” Mr. O’Rielly added. “I do remain troubled by a proposal in the item to require recipients of this particular funding to participate in the Commission’s voluntary Disaster Information Reporting System (DIRS). We have not required other USF recipients to use DIRS. Moreover, these territories are not the only places in the country that experience natural disasters. If there were concerns about the level of participation or information collected through DIRS during the horrific hurricanes in Puerto Rico and the U.S. Virgin Islands, such incidents should have been outlined in the item. During times of natural disasters, I generally am more concerned with ensuring people are safe and that service is restored than with mandatory reporting requirements. Further, it begs the question why the Commission isn’t conducting a rulemaking of general applicability, rather than imposing obligations piecemeal on providers who may have no choice but to accept them.”

Mr. O’Rielly added “that the Commission should work with Congress to determine whether any additional support provided through universal service could be reimbursed through emergency funding appropriated for hurricane relief. Other hurricane damaged infrastructure is being restored through appropriated funding, not from fees on consumers’ bills. And because of our budget limitations, providing additional funding from universal service generally comes at the expense of other recipients. Targeted funding from Congress would ensure that qualifying providers and beneficiaries receive the relief needed to rebuild and restore service without impeding the important work of other universal service program participants to connect unserved communities. “

“Although our actions today promise to bring connectivity to the high-cost areas of these territories, if we truly want to close the digital divide, we must also take actions to improve the other side of the digital divide equation: affordability and adoption,” Ms. Clyburn suggested. “Nearly half of the residents in Puerto Rico fall under the federal poverty line making affordability when it comes to communications services a clear issue. One of the Commission’s most powerful tools for closing the digital divide is its Lifeline program. Almost 20 percent of the Puerto Rico’s population rely on Lifeline, with 60 percent of eligible households signed up for the program — nearly double the national average. For these families, the service is quite literally a lifeline, facilitating connections to emergency services and critical health care. Under a pending proposal before the Commission, an estimated 75 percent of existing Lifeline customers in Puerto Rico could lose their telecommunications carrier. This would be like pouring salt in an open wound and prove counterproductive to our efforts to restore robust connectivity to the islands. We must safeguard the Lifeline program, and evaluate any negative impact that any of the proposals may have on those who need help the most.”- Paul Kirby, [email protected]

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