Today:  FCC Proposes $63 Million Lifeline Fine, FCC Relaxes BDS Rules For Rate of Return Carriers, FCC Begins Remand Proceeding on Price Cap Carrier BDS Transport Services, FCC Revises Rules For 3.5GHz Band

FCC Proposes $63 Million Lifeline Fine

The FCC has proposed a $63,465,500 fine against American Broadband and Telecommunications Company, a wireless reseller based in Ohio, for apparent repeated, systematic, and large-scale violations of FCC rules governing the Lifeline program, which helps make communications services more affordable for low-income Americans.  The proposed fine is the largest ever proposed for violations of the FCC’s rules for carriers seeking to receive support from the federal Universal Service Fund, which pays for Lifeline and three other support programs.  The FCC also found the company’s owner, Jeffrey Ansted, liable for the proposed penalty.  It said that instead of using Lifeline funds to cover the cost of service for eligible subscribers, in many instances Mr. Ansted apparently used these funds for his personal benefit, including to pay for a Ferrari convertible, a $1.3 million condominium in Florida, landscaping work, yacht club and country club memberships, and an $8 million Cessna jet. 

The proposed fine is based on 42,309 apparently improper Lifeline claims made in August 2016, after the company had told the FCC it had fixed its systems and processes to ensure compliance with FCC rules. In August 2016 alone, American Broadband apparently sought and received Lifeline support for more than 12,000 deceased individuals.  The FCC’s investigation found that American Broadband, through its sales agents, apparently improperly sought and received Lifeline funding by creating numerous ineligible Lifeline subscriber accounts. For example, the company created fake accounts by enrolling deceased individuals and by manipulating the personal information (names, dates of birth, and social security numbers) of existing Lifeline subscribers. In addition, the company apparently filed inaccurate forms with the Lifeline program administrator and apparently failed to de-enroll subscribers it knew or should have known were ineligible to receive Lifeline support. 

FCC Relaxes BDS Rules For Rate of Return Carriers

At its October Open Meeting, the FCC voted to allow certain rural telecommunications carriers the opportunity to transition from rate-of-return regulation to light-touch incentive regulation for their business data services (BDS).  Eligible carriers include the over 200 carriers that opted into the FCC’s Alternative Connect America Cost Model, companies receiving support through the Alaska Plan program, and others affiliated with price cap carriers. The new framework grants these carriers flexibility to offer volume and term discounts and individualized contract offerings for their legacy BDS, relief from restrictive cost support requirements, and detariffs their packet-based and higher speed business data services.

Among other things, the Order:

• Provides an opportunity for eligible rate-of-return carriers to move their legacy business data services (DS3 or less) to incentive regulation that is similar to the price cap regulation adopted in 2017. Legacy business data services are those that operate at lower speeds
• Relieves electing carriers’ lower speed TDM-based services end user channel terminations ex ante pricing regulation in areas deemed competitive by a competitive market test.
• Eliminates ex ante pricing regulation of electing carriers’ higher speed TDM-based business data services (above DS3) and their packet-based business data services.
• Forbears from requiring electing carriers to comply with cost support, cost assignment and jurisdictional separations requirements.

A Further Notice of Proposed Rulemaking seeks comment on creating a pathway to ending ex ante pricing regulation for the lower speed TDM-based transport services of rate-of-return carriers opting in to the incentive regulation framework. 

FCC Begins Remand Proceeding On Price Cap Carrier BDS Transport Services

The FCC’s Order relaxing regulation of BDS services for rate of return carriers includes a Second Further Notice of Proposed Rulemaking seeking comment on a proposal to remove pricing  regulation of the TDM transport services of price cap carriers.  This proceeding is in response to a decision by the United States Court of Appeals for the Eighth Circuit’s decision vacating and remanding a portion of the FCC’s 2017 order deregulating price cap carrier’s BDS services.  In that case, the Court agreed with CLECs that the FCC failed to provide proper notice of its intent to deregulate DBS transport services.  Inteserra Briefing Service subscribers see Briefings dated 9/7/18, and 5/18/17.

FCC Revises Rules For 3.5GHz Band

The FCC adopted a Report and Order that makes modifications to the rules governing the Citizens Broadband Radio Service in the 3.5 GHz band.  This action is intended to encourage broader deployment in the band, ensure that the FCC’s rules service keep up with technological advancements, and help to maintain U.S. leadership in the deployment of next-generation services, including 5G. 

The FCC first established rules to facilitate shared access between federal and nonfederal use of the 3.5 GHz band in 2015.  At that time, it created a three-tiered framework of users consisting of Incumbents, Priority Access Licenses (PALs), and General Authorized Access (GAA) users.  The most recent order leaves that core sharing framework in place but makes targeted updates to the licensing and technical rules. 

Specifically, the Order:

• Changes the size of PAL license areas from census tracts to counties;
• Extends the PAL license term to ten years and makes these licenses renewable;
• Establishes end-of-term performance requirements;
• Ensures seven PALs are available in each license area;
• Allows the use of bidding credits for rural and Tribal entities;
• Permits partitioning and disaggregation of PALs;
• Updates information security requirements to protect registration information; and
• Facilitates transmission over wider channels while maintaining protections for other services

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The Regulatory Mix, Inteserra’s blog of telecom related regulatory activities, is a snapshot of PUC, FCC, legislative, and occasionally court issues that our regulatory monitoring team uncovers each day. Depending on their significance, some items may be the subject of an Inteserra Briefing.