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Fifth Circuit to Rehear Petition Challenging FCC Jurisdiction on Universal Service Fund

A rehearing of the case means that the full court will reconsider the case and the previous ruling is vacated.

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WASHINGTON, July 3, 2023 – The Fifth Circuit Court of Appeals agreed to a full panel rehearing on the constitutionality of the Federal Communications Commission’s funding mechanisms for the Universal Service Fund, which supports various broadband expansion programs, on Thursday. 

Early last year, nonprofit research house Consumers’ Research and communication service provider Cause Based Commerce asked the U.S. Court of Appeals for the Fifth Circuit to find that Congress gave the FCC unfettered delegated authority to raise revenues akin to taxation under Section 254 of the Telecommunications Act of 1996.  

Consumers’ Research claimed that the FCC has illegally delegated the taxation authority to a private entity, the Universal Service Administration Company. It asked the fifth circuit to take action against the FCC’s “unfettered power” to “define the scope of universal service.” 

The appeals court ruled in March that Congress provided sufficient guidance to the agency when administering the fund, put in place guardrails to guide that administration, and that the FCC has sufficient oversight of USAC to allow for the subordination. 

A rehearing of the case means that the full court will reconsider the case and the previous ruling is vacated. A majority of the circuit judges in “regular active service” voted in favor of rehearing the case with a full panel of judges instead of the three who heard it the first time after parties filed a petition for rehearing. 

Oral argument has not been scheduled, according to the short order. 

William Hild, executive director of petitioner Consumers’ Research, told Broadband Breakfast in a statement in March that “with the acknowledgement that our case is ripe and that we have standing, we will look forward to continuing the legal fight to defend consumers from the unconstitutional USF tax on their phone bills set by unelected bureaucrats.” 

Consumers’ Research has also taken the issue to the Sixth Circuit, which sided with the FCC, and the Eleventh Circuit, which heard oral arguments this month and has yet to reveal where it stands. 

“In its subordinate role, USAC provides the FCC with fact-gathering, ministerial, and administrative support,” the Sixth Circuit decision said. “It submits for approval to the FCC the underlying data and projections that the FCC then uses to calculate the contribution factor.” 

“Critically, the FCC is not bound by USAC’s projections,” the decision added, noting the FCC may approve or deny the contribution recommended by USAC. 

The more appellate courts that rule on the matter, the greater the chance of disagreement between them, making it easier for Consumers’ Research to appeal to the U.S. Supreme Court. 

Industry leaders have come out in support of the Fifth Circuit’s original decision, claiming that it recognizes the importance of the USF to connect Americans to broadband services. Greg Guice, director of government affairs at advocacy group Public Knowledge, said in March that “the Fifth Circuit has once again affirmed the importance of our nation’s universal service mission and the FCC’s obligation to ensure it is achieved by placing the program on a sound financial footing.” 

Contributing Reporter Teralyn Whipple, who joined Broadband Breakfast in 2022, studied marketing at Brigham Young University. She has reported extensively on broadband infrastructure, investments and deployment. She has also headed marketing campaigns for several small companies.

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Broadband's Impact

CES 2024: FCC Commissioners Talk Net Neutrality, Spectrum, Favorite Gadgets

Commissioners Brendan Carr and Anna Gomez spoke at the event’s ‘Conversation with a Commissioner’ panel.

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LAS VEGAS, January 10, 2024 – Federal Communications Commissioners Brendan Carr and Anna Gomez talked net neutrality, spectrum policy, and their favorite pieces of tech at CES on Wednesday.

Carr serves as the FCC’s senior Republican, first confirmed as a commissioner in 2017. Gomez was confirmed in September 2023, ending years of an even split and giving Democrats a 3-2 majority.

Net neutrality

Carr has been an outspoken critic of the Commission’s effort to reinstate net neutrality rules. After approving the measure along party lines, the FCC moved forward with a proposal to do so in October and is accepting comments on the plan until January 17. 

The move would classify broadband as a telecommunications service under Title II of the Communications Act of 1934, opening internet providers up to more regulatory oversight from the Commission.

Carr took a similar tack on Wednesday, calling Title II a “backwards looking regime that made sense in the 1930s,” but expressed some support for less expansive, “common sense” legislation on the issue.

“This idea that we should, as a consumer, not see blocking, throttling, anti-competitive discrimination, these core sets of bright line ‘net neutrality’ rules, are ones I think are broadly agreed upon,” he said.

Gomez defended more comprehensive regulation, saying broadband is “central to everybody’s lives, and it really is important, I think, to have guardrails on the service to make sure that all consumers are benefiting from a competitive, innovative product.”

“We don’t have a national framework to ensure that, instead we have a patchwork of state laws,” she said.

Spectrum

Gomez said she would “really love to see the FCC’s spectrum auction authority re-upped, so to speak.”

The Commission’s ability to auction off bands of electromagnetic spectrum for commercial use expired for the first time in March 2023. Commissioners have pushed lawmakers in Congress to reinstate it, but efforts have stalled. A stopgap measure passed in December giving the FCC the ability to issue spectrum licenses that had been purchased before the authority expired, but the path for blanket authority remains unclear. 

“I don’t think people appreciate how long it takes to actually get a spectrum auction done. There’s so much pre-work that has to be done, and we can’t do any of that” without the authority, she said.

Carr agreed, both that Congress should reinstate the Commission’s auction authority and that the process of getting spectrum out the door often takes years of time and effort.

He also criticized the White House’s National Spectrum Strategy, a plan for studying nearly 2,800 MHz of spectrum for potential repurposing and improving the nation’s spectrum pipeline, saying the U.S. needs to move faster on making spectrum available to remain competitive.

“Under the last administration we freed up something like 6,000 MHz of spectrum just for licensed use, in addition to thousands of megahertz for unlicensed as well. The National Spectrum Strategy that the administration just put out says that we’re going to study, not free up, but study 2,800,” he said.

Favorite gadgets

Asked about her favorite piece of tech from the CES floor so far, Gomez said “I like the little Samsung robot.” The company unveiled on Monday a small ball-shaped robot called Ballie with a built-in projector.

Carr said his favorite technology that uses unlicensed spectrum is his Bluetooth headset.

“I’m almost exclusively on that thing,” he said.

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FCC

CTIA Urges FCC Extension for Implementing SIM Swap Safeguards

The wireless association is asking for more time because of technical complexities of new rules.

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WASHINGTON, January 10, 2024 – Wireless Association CTIA has formally petitioned the Federal Communications Commission for an extended deadline regarding the implementation of newly adopted rules aimed at safeguarding cell phone consumers from SIM swap and port-out fraud. 

The petition, filed on Monday, challenges the feasibility of wireless providers complying within the current six-month timeframe set by the FCC.

At the heart of the issue is the industry’s need for additional time to enact the protocols outlined in the FCC’s recent regulations. These rules mandate wireless providers to adopt more secure authentication methods before redirecting a customer’s phone number to a new device or provider. Additionally, providers are required to promptly notify customers about any SIM changes or port-out requests made on their accounts, further fortifying protection against fraudulent activities.

SIM swapping and port-out fraud have become rampant forms of identity theft, enabling perpetrators to wrest control of consumers’ cell phones by persuading carriers to transfer service to the fraudster’s possession or a new carrier’s account.

The crux of CTIA’s argument centers on the technical complexities involved in implementing these security measures across their systems. It emphasizes that the development of an account lock feature for customer use, a pivotal requirement of the new regulations, necessitates substantial system and database updates that will be both operationally intricate and costly.

In its petition, CTIA highlights the industry’s operational reality, pointing out that the standard time frame for IT-intensive system updates typically spans a full 18 months. They underscore that while this duration is customary, legacy systems pose even more substantial challenges.

The FCC’s rules, adopted during its November 15, 2023 open meeting, were intended to offer consumers enhanced protection by necessitating stricter authentication processes and immediate notifications regarding SIM changes and port-out requests. 

However, the final version of these rules differed from the initial proposals, veering toward additional provisions such as customer notification for failed authentication in SIM swap requests and broadening limits on employee access to Customer Proprietary Network Information to apply to all telecommunications service providers, not solely wireless entities.

The FCC has the option to issue a memorandum or order that modifies the rules or confirms that there will be no changes made.

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FCC Unveils Plans to Phase Out Affordable Connectivity Program

Despite efforts to secure additional funding, the FCC is initiating steps to cease new enrollments and establish an official end-date.

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Photo of Jessica Rosenworcel from University of Michigan's Gerald R. Ford School of Public Policy.

WASHINGTON, January 9, 2024 – The Federal Communications Commission on Monday announced its gradual phase-out plan for the Affordable Connectivity Program, intending to formally establish the program’s end date should congressional efforts to sustain it remain absent.

The FCC will begin efforts this week to set a date on when new program enrollment will cease. Subsequently, the commission will embark on establishing the program’s official end date, projected for April. This determination aligns with the anticipated depletion of the initial $14.2 billion in ACP funds based on current enrollment.

The FCC, in a letter to Congress dated Monday, proposed next steps to allow time to inform participating households, providers, and stakeholders of forthcoming changes. 

The ACP assists at least 23 million American households in maintaining their monthly internet subscription by providing a discount of up to $30 per month toward internet service and up to $75 per month for eligible households in high-cost areas and on tribal lands.

The letter penned by FCC Chief Jessica Rosenworcel highlighted the program’s jeopardy and iterated the need for Congress to urgently allocate $6 billion in funding to secure the program’s continuity. 

The FCC said it remains committed to supporting congressional efforts aimed at securing the necessary funding to sustain and expand the ACP, but is taking necessary steps to ensure ACP participants are well-informed of the effects of the program’s end.

The FCC letter raises concerns that ending the ACP could undermine the success of $42.5 billion in rural broadband network deployments subsidized by the Broadband, Equity, Access, and Deployment program, on account of rural households enrolling in the ACP at a higher rate than their urban counterparts.

“In summary, the ACP is in jeopardy and, absent additional funding, we could lose the significant progress this program has made towards closing the digital divide,” Rosenworcel put forth. “The commission stands ready to assist Congress with any efforts to fully fund the ACP into the future.”

There were no successful efforts to introduce legislation to extend program funding during the 118th Congress, though last year saw numerous appeals to sustain the program. 

President Joe Biden submitted a formal request in October to Congress for an additional $6 billion to fund the ACP until the end of 2024. 

Additional public support for the program was expressed by 45 bipartisan members of Congress advocating for the extension of ACP in August, along with 26 governors urging Senate leaders to maintain funding the program last November.

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