FCC Docket No. 80-286: One for the Guinness World Records?

By Randolph May

 

I couldn’t help suppressing a chuckle when I saw that Chairwoman Rosenworcel has circulated an item for consideration entitled “Jurisdictional Separations and Referral to the Federal-State Joint Board.

The item is in Docket No. 80-286.

If you’re familiar with the FCC’s docket numbering system, you’ll recognize that this proceeding was initiated in 1980. At the time, I was serving as the Commission’s Associate General Counsel. It was a long time ago.

As the Commission has explained many dozens of times in boilerplate language in the 44 years since the initiation of Docket No. 80-286: “Jurisdictional separations is the process by which incumbent local exchange carriers (incumbent LECs) apportion regulated costs between the intrastate and interstate jurisdictions.”

In short, jurisdictional separations is part of the process for FCC regulation of the rates of certain local telephone companies that are still required to file tariffs. The process starts with the local exchange carriers assigning regulated costs to various categories of plant and expenses, with these costs often further disaggregated among service subcategories. Then, the costs assigned to each category are apportioned between the interstate and intrastate jurisdictions.

Don’t worry! It is not my intent here to recite even a minute portion of the sometimes nearly incomprehensible twists and turns of this docket over four decades and counting.

But I do want to make a couple serious points. First, with all the dramatic competitive changes that have occurred in the communications marketplace since 1980, including in the “local” “telephone” market, is it still necessary for the FCC to be regulating the rates of what we still call “local exchange carriers”? If so, for how much longer?

And second, and more importantly, even a passing knowledge of the FCC’s cumbersome process for continuing to regulate the rates of local telephone companies should be more than sufficient to convince anyone of the importance of not allowing the Commission or the states to rate regulate broadband Internet access services. To coin a phrase: No how, no way!

Finally, I assume Docket No. 80-286 may be in the running for the Guinness World Records for the oldest, still active administrative agency docket. Someone else can research that, because I shudder to think!   

Joint Resolution in House Would Repeal FCC's New Title II Order

On May 23, Rep. Bob Latta announced that he had introduced a Congressional Review Act (CRA) joint resolution of disapproval to overturn the FCC's Safeguarding and Securing the Open Internet Order. By a 3-2 vote, the Commission reclassified broadband Internet access services as "telecommunications services" under Title II of the Communications Act, subjecting advanced broadband networks to public utility regulation. 

Rep. Latta deserves credit for introducing this CRA joint resolution. The House of Representatives should give the legislation due consideration. 

 

The CRA provides a fast-track process for Congress to repeal new agency regulations. For helpful background on the CRA in the context of broadband regulatory policy, see FSF Board of Academic Advisors' Member Daniel Lyons' June 2018 Perspectives from FSF Scholars, "The Congressional Review Act and the Toxic Politics of Net Neutrality."

 

The Free State Foundation filed public comments and reply comments with the FCC in opposition to public utility regulation. Several Perspectives from FSF Scholars have been published critiquing the imposition of public utility restrictions on broadband Internet networks," including my May 21 Perspectives, "The FCC's New Title II Order Allows Harmful Rate Regulation."

Memorial Day 2024

This is my eighteenth consecutive Memorial Day message. You can find the previous seventeen at the end of this message.

Foremost, on this Memorial Day, as always, we remember and honor all those servicemen and women who paid the ultimate price in America's wars. And we remember and honor their families too.

In less than two weeks, on June 6, we will commemorate the 80^th anniversary of D-Day, the day when some 156,000 American, British, and Canadian forces landed on Omaha Beach and four others along a 50-mile stretch of the heavily fortified coast of France’s Normandy region. The invasion, one of the largest amphibious military assaults in history, was the beginning of the end of World War II.

About 2500 Americans died in the invasion on June 6 alone.

So, on this Memorial Day, with the milestone D-Day anniversary fast approaching, below you will find some quotes – some from leaders of the invasion and some from ordinary soldiers – that I hope will encourage contemplation regarding Memorial Day and what it means for America.

*     *     *

“If any blame or fault attaches to the attempt, it is mine alone.” — General Dwight Eisenhower.

“Two kinds of people are staying on this beach—the dead and those who are going to die.” — Colonel George A. Taylor, commanding the Sixteenth Infantry Regiment, First Infantry Division, on Omaha Beach.

“These are the boys of Pointe du Hoc. These are the men who took the cliffs. These are the champions who helped free a continent. These are the heroes who helped end a war.” — President Ronald Reagan, on the 40th Anniversary of D-Day.

“I don't feel that I’m any kind of hero. To me, the work had to be done. I was asked to do it. So, I did. When I lecture kids, I tell them the same thing.” — Private First Class Joseph Lesniewski​, Easy Company, 2nd Battalion, 506th Parachute Infantry Regiment, 101st Airborne Division.

“This nation will remain the land of the free only so long as it is the home of the brave.” Elmer Davis.

*     *     *     

Every Memorial Day provides an opportunity for contemplative reflection regarding the sacrifice of those who gave, as Lincoln put it at Gettysburg, “the last full measure of devotion.” This is true also of commemorations of anniversaries like D-Day.

Finally, this from Ronald Reagan in his Farewell Address to the American people on January 12, 1989: "If we forget what we did, we won't know who we are. I am warning of an eradication of that – of the American memory that could result, ultimately, in an erosion of the American spirit."

For the sake of American memory, and the preservation of the spirit that has kept America a beacon of liberty and freedom, remember the sacrifice that our country's fallen paid with their lives.

My very best wishes to you and your family for a safe and meaningful Memorial Day.

PS – My past Memorial Day messages are here: 2023, 2022, 2021, 2020, 2019, 2018, 2017, 2016, 2015, 2014, 2013, 2012, 2011, 2010, 2009, 2008, 2007.

Legacy Copper Lines Divert Resources from Broadband Upgrades

Participants in an AT&T Policy Forum on Tuesday made a compelling case that "carrier of last resort" regulations – specifically, the costly obligation to maintain little-used legacy copper lines – divert resources away from broadband network construction.

Titled "Network Modernization: Connecting Changes Everything," the forum featured a fireside chat between Jonathan Spalter, USTelecom's President & CEO, and Chris Sambar, AT&T's Head of Network, Executive Vice President, Technology Operations.

During their conversation, Mr. Sambar revealed that AT&T spends upwards of $10 billion each year to maintain its copper lines – only 5 percent of which are still used.

Relatedly, on May 20, 2024, USTelecom published "Network Modernization: A Vital Step Toward Universal High-Speed Broadband," an Issue Brief highlighting the fact that "less than two percent of U.S. households today rely solely on landline connections."

Certainly in low-population-density areas where reliable wireless service is available, the rote enforcement of legacy rules requiring costly copper upkeep today does not serve the needs of residents.

More broadly, Congress, the FCC, and state regulatory bodies should update expeditiously their policies to redirect finite financial resources to their highest and best use: the construction of broadband infrastructure that brings twenty-first century connectivity – including enhanced emergency services – to rural communities.

As USTelecom concluded in its Issue Brief:

Consumer demand is driving the transition to universal broadband. But outdated regulations are pulling us back – siphoning off time and resources away from the goal of universal broadband to maintain old copper networks rather than speeding reliable, high-speed internet to everyone. We need a modern regulatory environment that advances rather than undercuts tech modernization. Achieving the shared goal of universal broadband requires a shared determination to look to the future, not remain stuck in the past.

Governor Moore Creates New Taxes to Keep This Year’s Spending Promises

At the beginning of Maryland’s 2024 legislative session, Governor Wes Moore introduced his 2025 budget, announcing that he intended for the state to follow a “fiscally responsible framework.” Many journalists noted his proposed budget’s shrinking of the structural deficit and elimination of Maryland’s cash shortfall, further supporting Governor Moore’s assertion of fiscal responsibility. However, throughout the legislative session, Gov. Moore has had to confront several large budget items' expenses, including the massive Kirwan education plan passed in 2021. While the state of Maryland is still making progress toward funding the plan, Gov. Moore created several new taxes and engaged in some creative financial maneuvers to get adequate funds. Previous Governor Larry Hogan allowed the expensive Kirwan education plan to go into law, though without his signature, and accompanied it with a warning of the impending massive costs. Additionally, to ensure Medicaid and foster care were adequately funded, Gov. Moore had to withdraw revenue from the state’s Rainy Day fund, a fund that exists to provide budget stability in times of revenue shortfall.

As for the new taxes going into place, the first is a biennial fee on electric vehicles and hybrids. Electric vehicle owners will be expected to pay a $250 fee every two years and $200 for hybrids to support the declining state revenue from gasoline taxes. However, this tax may have some major drawbacks as it removes incentives to purchase reduced-emissions vehicles instead of gas-powered ones. Additionally, rideshares through Uber, Lyft, or any other source will now have a 75 cent per-trip fee, which the state estimates will raise $45 million. This was controversial not only for environmental reasons, as sharing cars reduces traffic on roads and congestion when parked, but also because many ride-share trips start in low-income areas. This raises questions as to whether this fee is regressive in nature. While Gov. Moore’s hope for Maryland’s 2024 legislative session may have been for the General Assembly to be fiscally responsible in its treatment of the state’s budget, it didn’t work out that way, in part perhaps because of the governor’s lack of leadership. At the end of the day, taxes (even if called “fees”) were raised. Taxing behavior that the state should want to encourage is not a responsible policy, and hopefully, these sorts of fiscal policies will not be extended in the future.

Congress Shouldn't Have to Mandate Another Broadband Plan

Ted Hearn's Policyband reports that the House-passed bill reauthorizing the National Telecommunications and Information Administration (NTIA) contained a provision requiring the Biden administration to prepare – yet another! – national broadband plan.

 

According to Policyband – by the way, a site with much useful information if you haven’t checked it out – the Proper Leadership to Align Networks (PLAN) for Broadband Act, sponsored by Reps. Tim Walberg (R-Mich.) and Annie Kuster (D-N.H.), is a response to the 2022 Government Accountability Office report that detailed the current balkanized condition of the federal approach to funding broadband projects. The PLAN Act would give NTIA one year – after consulting with the FCC, the Agriculture Department, the Treasury Department and several more – to submit to Congress a plan to “support better management of federal broadband programs to deliver on the goal of providing high-speed, affordable broadband internet access service to all individuals in the United States.” The GAO report determined that “U.S. broadband efforts are not guided by a national strategy” and that “federal broadband efforts are fragmented and overlapping, with more than 100 programs administered by 15 agencies,” risking overbuilding as well as wasteful duplication.

Well, it shouldn’t take a law of Congress to get the government to develop a national strategy with a primary aim of eliminating the duplication inherent in separate 100 broadband funding programs administered by 15 separate agencies. Here at the Free State Foundation, we’ve been recommending that this be done for well over a year! It should just take a commitment to effective and efficient government.

 

We understand that there is a pronounced bureaucratic imperative that tilts towards wasteful overlap and duplication – but it’s past time to end it with respect to federal funding of broadband projects.

18 … and Up? Maryland Is the Latest State to Enact a Privacy Law

Last Thursday, Free State Governor Wes Moore signed into law the Maryland Online Data Privacy Act of 2024 (MODPA). With the stroke of his pen, Maryland became the eighteenth state to adopt a comprehensive data privacy statute – one with the most onerous "data-minimization" requirements we have seen thus far.

Forgive me if I sound like a broken record, but this most-recent addition to the already substantial set of state-specific data privacy laws further compounds the confusion experienced by consumers and the compliance challenges faced by companies, particularly small businesses.

Should it become federal law, the American Privacy Rights Act (APRA) discussion draft, about which I wrote in a recent Perspectives from FSF Scholars, would preempt this patchwork and establish a desperately needed nationwide data privacy regime.

For a general overview of the MODPA, please see my two previous posts to the Free State Foundation blog on the topic, which can be found here and here. For present purposes, I want to focus specifically on the MODPA's data-minimization language, which states that "controllers" must "[l]imit the collection of personal data to what is reasonably necessary and proportionate to provide or maintain a specific product or service requested by the consumer to whom the data pertains" (emphasis added).

The data-minimization model differs from the notice-and-consent approach – pursuant to which the bounds of permissible data collection are set forth in a company's privacy policy – that until recently served as the de facto standard nationwide. And Maryland's version is the most extreme data-minimization implementation to date.

Strict data-minimization requirements such as this, and the one spelled out in the APRA, could have unintended anti-consumer consequences. Limitations on the collection of personal data beyond what is "reasonably necessary and proportionate to provide or maintain a specific product or service requested by the consumer to whom the data pertains" – or, in the case of the APRA, "beyond what is necessary, proportionate, or limited to provide or maintain a product or service requested by an individual" (emphases added) – are inherently subjective standards that create substantial uncertainty and risk for companies. And that uncertainty and risk could have a chilling effect.

For example, companies may refrain from offering the "free" (that is, ad-supported) services that many consumers have come to rely on. The notice-and-consent model traditionally has allowed consumers to weigh the benefits of sharing personal information in exchange for these free services. The shift to a data-minimization approach could undermine that model, potentially leading to a reduction in the availability of complimentary online offerings.

The MODPA will go into effect on October 1, 2025, a year later than originally proposed.

The Conservative Case for Saving the Affordable Connectivity Program by Reforming It

 

The Affordable Connectivity Program, a $14.2 billion subsidy program established by Congress in 2021 to support broadband access for lower-income American households, may soon be ending. April was the last month during which the over 23 million participants received the full $30 ($75 on tribal lands) monthly subsidy. In May, customers will receive a partial ($14) benefit if their Internet service providers (ISPs) agree to provide one.

After that, the appropriated funds will be gone. For over a year, I’ve advocated extension of the ACP program. But as I wrote in a recent piece in the Washington Examiner, “only if it is meaningfully reformed to render it more fiscally responsible.” I said there, and previously, that “[t]his can be accomplished by adopting a considerably more restrictive eligibility requirement and further measures to reduce waste and fraud in the program."

There’s little doubt that, for most of us, access to a high-speed broadband connection enhances the quality of our lives. Adequate broadband access is usually required to take advantage of various educational opportunities, apply for jobs, interact with government websites, participate in community activities, or use social media. So, like government benefit programs that provide subsidies to low-income persons for securing food, housing, or energy assistance, a properly conceived and efficiently operated Affordable Connectivity Program can be an important “safety net” worthy of support from conservatives.

 

Moreover, by providing qualifying low-income households with a voucher to choose their broadband provider, the ACP program empowers them. Unlike the current legacy Lifeline model that provides support for telecom services indirectly to low-income persons by subsidizing the service providers, under ACP the consumer participates directly in the competitive broadband marketplace. This is a more market-oriented pro-consumer-choice approach.

 

So, there is a conservative case for saving the ACP program on the condition it is reformed.

 

Specifically, I have argued that "there is no reason why the ACP eligibility criterion should exceed 135% of the federal poverty level," the benchmark used for the FCC's Lifeline program. In any event, Lifeline should be folded into a reformed ACP program.

 

I made similar arguments in two earlier Perspectives from FSF Scholars, "The Affordable Connectivity Program: Time Is of the Essence for Congress to Act" in March 2023 and "Congress Should Extend and Revise the Affordable Connectivity Program" in October 2022. And others have expressed related concerns. As I noted in the Washington Examiner piece, Senator Shelley Moore Capito asserted that "we need to have accountability to make sure that the people who are receiving this benefit are the ones that actually cannot pay, and would not pay otherwise had they not had the extra money to be able to afford this."

More recently, Senator Ted Cruz leveled a more forceful critique:

[T]he [ACP] is not working as Congress intended: to assist those for whom cost was the barrier to gaining internet access…. [I]t turns out the vast majority of [participants] already had high-speed internet. Here's an FCC survey showing just 22 percent of the households receiving the taxpayer subsidy were previously unsubscribed to broadband. This means that for every household that didn't subscribe to premium internet, the federal government is subsidizing four households that did. Beyond this inefficiently, reports have also found – unsurprisingly – that ACP has had inflationary effects on the price of internet."

As the end date approaches, proponents have floated various legislative solutions, some with their own flaws. On April 26, Senate Commerce Committee Chair Maria Cantwell released an amended version of her Spectrum and National Security Act discussion draft that would reinstate the FCC's long-lapsed spectrum auction authority and lend the FCC $7 billion (up from $5 billion in the original) to replenish the ACP with the promise of future auction revenues as collateral.

As Harold Furchtgott-Roth, an economist and former FCC Commissioner, and Kirk Arner wrote in RealClear Markets:

This is a bad idea that would set a dangerous precedent. Federal agencies do not ordinarily borrow large sums from Treasury. If this were allowed to occur, other agencies would quickly seek similar 'borrowing authority' to pay for projects that are unaffordable today, hoping that requisite funds might be scrounged up somewhere else tomorrow.

They also agreed that "[i]f Congress decides to extend ACP, it should narrow the program to only cover households that but for the program's subsidy would not already be subscribed to Internet service."

Senator John Fetterman, meanwhile, has introduced a bill that would replace the current source of ACP dollars – that is, direct congressional appropriations accompanied by the oversight inherent to the legislative process – with yet another drain on the Universal Service Fund, a regressive "tax" on the dwindling user base of Title II "telecommunications services" whose contribution factor already has reached unsustainable levels. The Promoting Affordable Connectivity Act would require broadband and edge service providers to contribute to the USF in order to fund the ACP, purportedly, and magically, without further raising costs to consumers.

Direct congressional appropriations provide our elected leaders an opportunity periodically to reexamine the operation of federal programs, including ones like the ACP, to assess their efficiency and effectiveness in meeting their programmatic goals in a fiscally responsible manner. This includes, with respect to ACP, the eligibility requirements, the size of the benefit, and the controls to prevent waste, fraud, and abuse.

Eligibility for a household to participate in the program should be reduced from 200% of the federal poverty guideline (currently $62,400 in income for a household with four persons) to 135% (currently $42,120 for a four-person household). In line with the widely reported agreement of the bipartisan congressional Universal Service Working Group, the current $100 device subsidy should be eliminated as unnecessary. And effective controls to prevent fraud and abuse should be implemented.

And considering overall fiscal constraints, the size of the current monthly benefit should be subject to reevaluation too. As Senator Cruz said at a May 2 Senate Commerce Committee hearing, “History has shown that when the federal government starts subsidizing demand ­- in higher education, in agriculture ­- the subsidy gets capitalized and prices go up.”

In my view, if reformed to ensure it is operated on a fiscally responsible basis, including restricting the eligibility requirement to no more than 135% of the federal poverty guideline, the Affordable Connectivity Program is a worthwhile “safety net” program that should be extended.

 

Moreover, as I said in my earlier Washington Examiner op-ed, “if Congress does meaningfully reform the ACP program, it will constitute an important precedent demonstrating that ‘safety net’ programs can indeed be reformed.” In the “tax and spend” environment that prevails in Washington, this would be no small achievement in and of itself.