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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
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
2
OVERVIEW OF THE FEDERAL UNIVERSAL SERVICE FUND
Federal USF ProgramOverview
4
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
MA JOR USF DEVELOPMENTS IN 2019
Major 2019 USF Program Developments RDOF (and broadband mapping)
6
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
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
7
Major 2019 USF Program Developments Lifeline
8
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
Major 2019 USF Program Developments Lifeline
9
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
Major 2019 USF Program Developments Lifeline
10
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
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
11
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
12
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
13
USF AUDITS
USF Audits - Trends 2017-2019
15Source: USAC – Audit Committee Briefing Book (Jan. 27, 2020)
CONTRIBUTION REFORM PROPOSALS
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
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
18
FCC SUSPENSION AND DEBARMENT
FCC Suspension and DebarmentOverview
20
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
21
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
2020 USF Outlook One Big Question
22
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?
QUESTIONS?
JOHN HEITMANNPartnerCommunications (202) [email protected]
STEVE AUGUSTINOPartnerCommunications (202) [email protected]
DENISE SMITHSpecial CounselCommunications (202) [email protected]
BRAD CURRIERSenior AssociateCommunications(202) [email protected]
