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broadband, but that qualified providers are being discouraged from participating in FCC subsidy programs due to the "outdated" state-by-state ETC reporting requirements.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.

Federal Communications Commission chairman Ajit Pai posted his first official FCC blog item addressing what he said had been sensationalized and misleading reporting about the FCC's move to rescind nine Lifeline subsidy authorizations. He did not point fingers at any story in particular. (The New York Times on Sunday published an article about Pai's early moves, noting that "[h]e stopped nine companies from providing discounted high-speed internet service to low-income individuals.") 

"[B]ased on the some of the coverage, one would think that we had ended Lifeline broadband subsidies altogether," he wrote. "So I want to set the record straight about the modest steps we have taken and why we have taken them....Hyperbolic headlines always attract more attention than mundane truths."

The chairman wanted to point out -- and did -- that the move only affected 9 of the 900 companies participating in the Lifeline program, which is meant to provide essential communications services to low-income residents. "In other words, 99% of the companies participating in the program are not affected at all," he said.

He also wanted to clarify that only of the nine had any customers yet. Pai pointed out that those nine had not been rejected outright, but were still "pending."

The decision to rescind them was among a number of Pai FCC moves affecting decisions under then-chairman Tom Wheeler that came after the election, and Pai made clear that was also a factor.

"Many of these designations were approved in the last days of the last Administration (two days before Inauguration Day), over the objections of two of the four Commissioners, despite the fact that the FCC’s congressional oversight committees had requested that the Commission not take controversial actions during the transition between Administrations (consistent with the request from those same committees during the Republican-to-Democrat transition in 2008–09)," Pai said in the post. "Thus, a majority of Commissioners never supported approval of these designations."

On Friday (Feb. 3), Pai's acting bureau chief revoked the eligibility and accompanying streamlined treatment, citing a National Tribal Telecommunications Association petition to reverse the eligibility on some of the companies, and because it would "promote program integrity by providing the Bureau with additional time to consider measures that might be necessary to prevent further waste, fraud, and abuse in the Lifeline program."

Pai complained that the FCC under his predecessor had failed to sufficiently root out such abuse.

Citing "shortcomings in the Bureau’s prior orders" and "procedural failings" including allegedly not informing tribal governments that they were seeking eligibility from the FCC, acting bureau chief Kris Montieth said the bureau "cannot conclude at this time that LBP designations are in the public interest for any of the entities..."

That drew a lot of pushback from Lifeline advocates, including from the Hill, the Communications Workers of America and the American Library Association. 

But Pai made clear in his blog that the process needed vetting before more companies were allowed to participate in the program. 

"[E]very dollar that is spent on subsidizing somebody who doesn’t need the help by definition does not go to someone who does," he said. "That means that the Commission needs to make sure that there are strong safeguards against waste, fraud, and abuse before expanding the program to new providers."