11 SERVICE FUND UPDATE - Kelley Drye & Warren
Transcript of 11 SERVICE FUND UPDATE - Kelley Drye & Warren
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11TH ANNUAL UNIVERSAL SERVICE FUND UPDATE
JOHN [email protected] (202) 342-8544
BRAD [email protected] (202) 342-8465
STEVEN [email protected](202) 342-8612
MARCH 10, 2020
DENISE [email protected] (202) 342-8614
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AgendaI. Overview of the Federal Universal Service Fund
II. Major USF developments in 2019 RDOF (and broadband mapping)
Lifeline
Supply Chain
Rural Healthcare
E-rate
Supply Chain Protection (Huawei/ZTE)
III. USF Audit Lessons Learned
IV. Contribution Reform
V. FCC Suspension and Debarment Tutorial and compliance plans
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OVERVIEW OF THE FEDERAL UNIVERSAL SERVICE FUND
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Federal USF ProgramOverview
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The Federal USF: $8.3B Fund (CY2019)
Support Programs:
High Cost/Connect America Fund/Rural Digital Opportunity Fund
Lifeline
Schools and Libraries (E-Rate)
Rural Health Care
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MA JOR USF DEVELOPMENTS IN 2019
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Major 2019 USF Program Developments RDOF (and broadband mapping)
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Rural Digital Opportunity Fund New high-cost program $20.4 billion over 10 years to spur broadband
deployment Auction in two phases (starting October 2020) Targeting areas without 25/3 Mbps service
Key Trends Focus on competitive bidding Favoring faster services with high data allowances/low
latency Scaling up networks over time
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Major 2019 USF Program Developments RDOF (and broadband mapping)Digital Opportunity Data Collection
Broadband mapping criticisms New fixed broadband data collection Crowdsourcing Used to direct RDOF Phase II support Location-specific information and mobile broadband
deployment data
Key Trends Verifying deployment data through public input Congressional pressure
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Major 2019 USF Program Developments Lifeline
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National Verifier Nationwide roll out nearly completed, but concerns remain:
Lacks access to state SNAP databases
API includes no document transmission capability
Real-time is not near real-time, training, and other issuesMinimum Standards and Voice Sunset
Waiver establishes 3GB minimum for mobile broadband
No relief for landline ETCs or voice support sunset
December 1, 2020 implementation date
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Major 2019 USF Program Developments Lifeline
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November 2019 FCC “Program Integrity” Item• Returns ETC designation responsibility to states
• Registration for ETC enrollment representatives (ERs)
• Bans commissions based on enrollments
• Reinstates annual subscriber recertification
• Adopts risk-based auditing
• No reimbursement during non-usage cure period
• FNRPM on goals, free handsets, privacy training and
background checks
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Major 2019 USF Program Developments Lifeline
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Enforcement Sprint investigation and OIG memorandum related to
compliance with the usage rule
Appeals NaLA v. FCC I
Tribal Lifeline wireless reseller ban and rural tribal imitation vacated and remanded
NaLA v. FCC II FCC refusal to reimburse for discounted service provided
during a mandatory non-usage cure period on appeal to D.C. Circuit
Mozilla v. FCC Remand proceeding open on whether and how the Lifeline
program can support broadband
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Major 2019 USF Program Developments Rural Healthcare
2019 RHC Reform Order – Major Program Shift Increased USAC role to provide transparency and
efficiency Prioritize funding to rural and underserved areas Majority-rural requirement for Healthcare Connect
consortia
Enforcement: TeleQuality Communications, LLC $31M Consent Decree First major Fraud Division action Novel consent decree provisions
Connected Care $100M telemedicine program
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Major 2019 USF Program Developments Schools and Libraries (E-Rate)
Amortization Waiver FCC eliminating amortization rule
Category 2 Budget Formalized and adopted 5 year Category 2 Budget
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Major 2019 USF Program Developments Supply Chain ProtectionFCC USF Support Spending Ban
No USF spending on entities designated as “national security threats”
Huawei and ZTE – designation pending but expected
Funding eligibility; Lifeline handsets issue
Rip-and-Replace FCC proposal - financial assistance for removing and
replacing “security threat” equipment and services
Congressional bill passed - $1B in funding for smaller telecom providers
ETC reporting on Huawei/ZTE use
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USF AUDITS
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USF Audits - Trends 2017-2019
15Source: USAC – Audit Committee Briefing Book (Jan. 27, 2020)
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CONTRIBUTION REFORM PROPOSALS
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Major 2019 USF Program Developments Contributions Continued record high USF contribution factors:
24.4% (3Q2019); 25% (4Q2019)
17 Chart source: Billy Jack Gregg -Universal Consulting
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Major 2019 USF Program Developments Contributions Will this be the year for USF contributions reform?
States propose expanded contribution base: Connections-based on residential service Expanded revenues-based on business services Include BIAS Limits on fund annual budget growth
Proposed USF Cap NPRM Likely no immediate impact on contribution rates Not popular with industry participants
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FCC SUSPENSION AND DEBARMENT
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FCC Suspension and DebarmentOverview
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Suspension/Debarment Expansion Empower FCC to cut off funding more quickly and
for wider range of misconduct Evidentiary standards Timeframes Cover all USF programs (plus TRS and NDBEP)
Disclosure Obligations/Reciprocal Debarment Contractors, subcontractors, suppliers, consultants, agents,
etc. Excluding debarred providers from participating in other
federal funding programs (and vice versa)
Many Open Questions
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Adopt Compliance Plans Now! Identify risk areas Solicit internal input Adopt new procedures and update them Regular employee/manager training Regular internal auditing
Alternative Dispute Resolution Options Pre-notice letters and administrative agreements
FCC Suspension and DebarmentCompliance Plans
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2020 USF Outlook One Big Question
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RDOF: Phase 1 Auction in October 2020?
RHC: Can USAC stand up the urban/rural rate database by July 2020?
Lifeline: Broadband Support and Minimum Service Standards?
E-Rate: Will FCC allow E-Rate support for network security?
USF Audits: Can USAC meet audit target deadlines?
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QUESTIONS?
JOHN HEITMANNPartnerCommunications (202) [email protected]
STEVE AUGUSTINOPartnerCommunications (202) [email protected]
DENISE SMITHSpecial CounselCommunications (202) [email protected]
BRAD CURRIERSenior AssociateCommunications(202) [email protected]