Rep. G.K. Butterfield (D-N.C.) said Monday (March 22) that he will soon reintroduce a bill that would eliminate the ETC (eligible telecommunications carrier) requirement for accessing Lifeline broadband subsidies.

Butterfield's pledge came during a hearing on the LIFT America Act infrastructure bill in the House Energy & Commerce Committee and will almost certainly be celebrated by NCTA-the Internet & Television Association. 

Also Read: It's Time to Dial Back on ETC Requirements

Butterfield represents a rural North Carolina that desperately needs broadband, but that qualified providers are being discouraged from participating in FCC subsidy programs due to the "outdated" state-by-state ETC reporting requirements.

Butterfield had support from hearing witnesses on both sides of the (former) FCC aisle. Former Democratic FCC chairman Tom Wheeler said the ETC designation no longer made sense and that it was trying to graft phone-era policy on broadband. "It makes no sense to continue ETC as one of the tests."

Former Republican commissioner Michael O'Rielly said he supported his last bill, and would do so this time around. He said the burden of ETC is not worth the cost of compliance for many, so they don't participate. O'Rielly pointed out that Congress' Emergency Broadband Benefit subsidy money--over $3 billion--does not have an ETC requirement, and while O'Rielly is no fan of the LIFT bill, pointed out that it had no ETC requirement for its $80 billion in broadband buildout subsidies, either. 

O'Rielly said Congress would run into some problems with state regulators, but that it "absolutely" had to eliminated the ETC designation.

Butterfield introduced the Expanding Opportunities for Broadband Deployment Act in 2020. It would give more broadband providers access to the FCC's Universal Service Fund subsidy money to build out high-cost and low-income areas, which are ones where it is sufficiently expensive to provide service that there is no business case for it without those subsidies. 

The Expanding Opportunities for Broadband Deployment Act would eliminate the requirement that only ISPs designated eligible telecommunications carriers (ETCs) can get USF high-cost dollars, something cable operators have been pushing for years. 

"By retiring the eligible telecommunications carrier (ETC) designation, more ISPs with a proven track record of operating broadband networks would compete for government support," NCTA said when Butterfield introduced the bill last year.

This month marked an important development in the vital Universal Service Fund (USF) program, with the introduction of the Expanding Opportunities for Broadband Deployment Act by Rep. G.K. Butterfield (D-N.C.). With America still working its way through the challenges of the COVID-19 pandemic, it’s not a moment too soon.

At a time when all trends point toward reduced regulation as the key to expanding broadband access to more consumers, especially those living in the more costly and remote service areas, this needed legislative reform would eliminate the outdated requirement of an Eligible Telecommunications Carrier (ETC) designation for broadband providers seeking USF grant money. By reforming this onerous and unnecessary obligation, the net result will be more broadband access and better connectivity for millions of Americans.

As many know, the ETC designation was created in the 1996 Telecommunications Act when voice service was the dominant telecommunications method in America, and state utility commissions played a significant role in the regulation of Title II telephone operators. This is no longer the case, with consumers now enjoying countless options to be connected via broadband, wireless and fiber. The ETC requirement makes no sense in the modern telecom age. It is not only obsolete, but actively discourages internet service providers (ISPs) from participating in federal funding programs that help connect Americans targeted to benefit from the USF program to vital information impacting their health, employment and education.

‘Phone Service’ Regimes Costly

The ETC designation forces ISPs to subject themselves to up to 40 state regulatory “phone service” regimes, which can be discouragingly costly and time-consuming. Worse still, it exposes providers to an unforeseen array of burdensome and unpredictable state regulatory requirements.

Outside of the ETC designation, state utility commissions have little oversight over broadband providers, making the designation entirely unnecessary and redundant to FCC oversight. The heavy costs and complexity of ETC status, with no palpable benefits, make it obvious why some of the most qualified providers are choosing not to participate in federal broadband grant programs, resulting in fewer choices and a less robust broadband market for millions of marginal U.S. broadband consumers.

FCC commissioner Michael O’Rielly accurately makes the point, “Compared to the burden and risk of becoming an ETC, certain providers have determined in the past and likely will again that the reward simply isn’t worth it.” Certainly, a 24-year-old telephone regulation that is dissuading ISPs from partaking in a worthy grant program intended to connect more Americans has no place in our current wireless world. O’Rielly adds, “Broadband [is] an interstate information service [and] should not function as a backdoor way to expose providers to burdensome and unpredictable intrastate regulations.” This is common sense that works to everyone’s benefit.

It’s not just broadband providers feeling the heavy weight of this antiquated regulation. The ETC further directly subjects consumers themselves to frustrating obstacles by demanding that low-income broadband customers switch services to a recognized ETC carrier to be eligible for federal support programs. This serves no purpose other than to disrupt the lives of broadband customers with no resulting benefit, again demonstrating how ancient regulations are hurting and inconveniencing average consumers.

FCC Can Be a Safeguard

With regard to concerns about abandoning ETC oversight, the FCC is well-positioned to safeguard the distribution and use of federal funds by grant recipients and auction winners, and ensure those same providers are equipped to meet service requirements and operational milestones. The ETC designation adds no benefits and protections beyond current FCC enforcement, a reality highlighted by the fact that many states operate their own broadband funding programs without the ETC designation requirement.

America’s consumers seeking better and more secure ways to stay connected over the internet appreciate the efforts of Rep. Butterfield in this critical effort for common sense regulatory reform. During the COVID-19 pandemic, staying connected to critical information has never been more important. The ETC designation is not only failing to help strengthen our nation’s online connections, it is actually doing the opposite of its stated goal and driving providers away and reducing consumer choice. For a better connection for the Americans who need it most, ending the ETC designation makes enormous sense. 

Gerard Scimeca is an attorney and co-founder of CASE, Consumer Action for a Strong Economy, a free-market oriented consumer advocacy organization.