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FCC Grilled Over USF Reform Impact On Telecom In Native Lands

FCC came under some fire Thursday in a Senate committee for the impact of
Universal Service Fund reforms on carriers serving Native lands, which are
being implemented beginning July 1.

Those reforms include phasing out some legacy
phone support as the FCC migrates to wired and wireless broadband, legacy
support smaller carriers have been using to secure long-term loans made by
another government agency, the Agricultural Department's Rural Utilities
service (RUS).

Senate Indian Affairs Committee Chair Daniel
Kahikina Akaka (D-Hawaii) said Thursday that the FCC's Universal Service
reforms have "disproportionate and potentially dangerous" impacts on
Native communities.

That came in a hearing Thursday on Universal
Service Fund Reform: Ensuring a Sustainable and Connected Future for Native

Various legislators weighed in with their
concerns that the reforms would cut off $600,000 in annual support to some
companies supplying communications services in high-cost Native areas as the
FCC migrates support from phone to broadband. He suggested that could actually
be a setback for Native American Broadband Connectivity.

That point was seconded by Sen. Lisa Murkowski
(R-Alaska), who said she recognized, as did most legislators, that the USF fund
needed reforming. But she also said that the need to address waste and fraud
should not have the unintended consequence of hurting the people reforms were
meant to help.

FCC Commissioner Mignon Clyburn came to the
FCC's defense. She told the committee that the reforms "will make a
significant dent in the digital divide." She also pointed out that there
was a waiver process in place "for those carriers who cannot adjust
to the reforms." She also pointed to the FCC's Office of Native Affairs,
which is helping with the transition.

Among Akaka's concerns was that the FCC's
reduction in USF funding could cause some telecom companies to default on Rural
Utilities Service loans, which depend on USF funds for repayments.

RUS Administrator and
former FCC Commissioner Jonathan Adelstein said the vast majority of RUS loans depended on USF
funding. He used the analogy of building a big, expensive house by taking out a
mortgage rather than building it with additions paycheck to paycheck.

Sen. John Barrasso (R-Wyo.) said he had sent
letter to chairman about taking into account the impact of reform on telecom
providers before implementing them, making the point that he was still waiting
for an answer.

Barrasso asked whether some of the FCC
regression analysis data underlying the USF changes was flawed, as prepared
testimony in a second hearing panel alleged. Clyburn said that if there is
erroneous data, the FCC would make the "necessary modifications."

Sen. Tom Udall (D-N.M.) pushed the point,
asking for any comment on those allegations. Clyburn said the FCC's process had
been one of the most open and engaged, and that it was triaged.
"Ultimately, she said, the goal was that everyone would be served.

Sen. Udall also said some of the witnesses on
the second panel alleged there had not been enough outreach from the FCC to
Native tribes.

Clyburn said that more resources would always
be welcome. She said the FCC's Office of Native Affairs and Policy had had more
than 250 meetings. "There has been engagement." Not everyone is going
to be happy with the pace of change, she said, but that USF had to be put on a
"sustainable path." Clyburn said she was not going to support a flash
cut, and that the FCC did not have a flash cut.

Sen. Murkowski said there were concerns that
that waiver process is costly and difficult. She also said "It seems clear
that there are data errors that need to be followed up with." She thanked
Clyburn for the open door policy, but said that is not giving smaller telecoms
much comfort.

She asked how much Alaska telcos would lose due
to reform, and asked how the companies were expected to sustain their business.
Clyburn said that only two Alaska carriers' high-cost
support was capped by the reforms.

Clyburn said she would look into suggestions
that the Navajo Nation could be excluded from FCC mobility funding because it
was considered to already have 3G service. Sen. Udall brought up the issue and
said he would be surprised since some areas of the nation don't even have cell
phone service.

The cost of the waivers was an issue at the
hearing. In response to question from Akaka, Clyburn said Clyburn said the
application cost is $8,000, though she was not ruling out other costs. She
called it a streamlined process and the fee "not inconsistent" with
other filing fees.

Sen. Murkowski said that she had heard from
companies that the actual cost could be as much as $180,000. Clyburn said there
was no requirement to hire outside consultants.

Clyburn's bottom line was that the transition
would not be easy, or comfortable for everyone, but would ultimately be an
effective and efficient process for getting broadband to unserved areas,
including tribal lands.