State Commissioners Shift Focus to USF, Broadband
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Monday, July 16, 2018

State Commissioners Shift Focus to USF, Broadband

SCOTTSDALE, Ariz. – As regulatory oversight of telecommunications rates and services declines on the state level, state commissioners said today that their focus has shifted to ensuring that their universal service funds remain stable, and to what steps they can take to advance the deployment of broadband in rural areas of their states.

State regulators discussed the issues they are currently facing during a panel discussion held in conjunction with the National Association of Regulatory Utility Commissioners’ 2018 Summer Policy Summit held here this week.

The panel of state commissioners said that although many states have seen a reduction in telecom regulation, “it doesn't mean that nothing is happening.” Commissioners in several states said they are looking for ways they can assist in extending broadband to rural areas.

“Everything we are doing in telecom, at least for me, is simply broadband, broadband, broadband,” said New York Public Service Commissioner Greg Sayre. “… Every decision we make in telecom I say to myself, ‘is this going to improve broadband?’ I would be perfectly happy to get rid of all telecom regulation if we had competitive broadband service in every area of the state…but we have a long way to go to get there.”

Commissioner Sayre referred to the commission’s recent action in securing CAF funding that was rejected by Verizon Communications for the state. He also pointed to the PSC’s dispute with Charter Communications over what counts as broadband “passings” and whether the company has fulfilled its obligation to “pass” 145,000 new addresses that was an obligation the company agreed to when the PSC approved its acquisition of Time Warner Cable.

The commission recently determined that Charter had failed to meet its obligations to expand its broadband network by certain timeframes and failed to justify why it wasn't able to meet its obligations. The commission ultimately rejected 18,363 addresses “to which Charter claimed it expanded [its broadband] network as part of its required buildout requirement.” The commission found that these addresses were already passed by Charter or another company providing high-speed broadband or that Charter was separately required to pass the addresses pursuant to state regulations and/or franchise agreements.

Charter has said that it intends to challenge the New York Commission’s recent determination that the company has not met its broadband buildout obligations.

“I’m afraid we are heading down a long road of litigation,” Commissioner Sayre said. “And I’m very sorry to see it go that way.”

Meanwhile, Commissioner Sayre said that the PSC has taken an active role in assisting Charter and other telecom companies negotiate pole attachment agreements with utility pole owners. One of the reasons Charter said it was having trouble meeting its broadband obligations was that it wasn’t able to negotiate pole attachment agreements in a timely manner.

Commissioner Sayre said that the pole owners are not equipped with the staff necessary to keep up with the attachment and make-ready requests. The commission assisted by gathering all the parties and holding meetings to discuss “what was going wrong with the process.” In the end, they were able to develop a spreadsheet with all pending pole attachment applications.

“I don’t know if this is something that can be done everywhere in the country…but we now have a spreadsheet that contains every pending pole attachment application, and it seems to be working,” Commissioner Sayre said.

South Dakota Public Utilities Commission Chair Chris Nelson, meanwhile, said that his state is also interested in taking a proactive approach to expanding broadband in rural areas. The commission has recently become involved in the Mobility Fund challenge process, and is working to evaluate wireless coverage across the state to determine if the wireless maps are accurate.

“We have found that there are places that the maps show yes, there is no service there [and that is accurate],” he said. But we also found areas where wireless companies said yes we have data coverage there, but our complaints show that there is no coverage.”

State commissioners, meanwhile, are also tackling how to ensure that their state USFs remain funded and how those funds should be distributed.

“The main issue we have is universal service fund distributions and subsidies,” said Commissioner Thad LaVar, a member of the Utah Public Service Commission. “How do we continue to provide support to the higher cost areas of the state? That’s our primary regulatory issue right now.”

Commissioner LaVar said that revenue into the fund was “becoming volatile and difficult to predict. And the other problem was our process for determining level of support was complicated and time-consuming.” The Legislature in 2017 clarified those issues and expanded the state Lifeline program to include wireless providers, he said. The legislature also required the PUC to look at the contribution method and evaluate if a flat surcharge would be more appropriate and stable.

Ultimately, the commission “determined that a more stable and responsible, and competitively neutral assessment is a flat surcharge on access lines.” The commission is still trying to finalize additional USF issues, he said.

Commissioner Ann Rendahl, a member of the Washington Utilities and Transportation Commission, said that the Washington UTC is also currently grappling with USF issues. The state has a $5 million fund to help small carriers that were in danger of losing federal funding, but that fund is intended to wind down at the end of the year.

“It was supposed to be a transitional fund as federal funds waned. Some of the discussion has been if this should become a broadband fund because the legislature and the governors’ office are very focused on broadband deployment,” she said. “We’ve been asked to study and review what the best approach would be if the fund were extended, and how these funds should be used going forward.”

Ohio Public Utilities Commissioner Daniel Conway, meanwhile, said that although the Ohio commission doesn’t regulate a lot of areas with regard to telecom, it is dealing with a couple of regulatory issues. One of the issues is that incumbent providers can be relieved of their obligation to provide basic service in areas where there is a “reasonable and comparatively priced alternative.”

The concern, according to Commissioner Conway, is that once there’s a confirmation that there is an alternative voice service provider available, the alternative provider could withdraw from providing service and the commission doesn’t have the oversight of that withdrawal.

“We’re very concerned about what happens when we relieve the ILEC of its obligation to provide basic service, and then that alternate provider withdraws service,” he said. “What if we are left with a hole in our coverage, especially for 911 and emergency response?”

Another issue in Ohio is AT&T Ohio’s application to relinquish its ETC designation in the state. Complicating AT&T’s relinquishment request, according to Commissioner Conway, is the FCC’s proposal to eliminate the forbearance of the physical facilities-based requirement that “has led to a proliferation of wireless ETCs in Ohio, and most of them provide the backstop for the ILECs’ relinquishment.”

“So what do we do if the basis for granting the relinquishment turns out to be an illusion?” he questioned. -Carrie DeLeon, carrie.deleon@wolterskluwer.com

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