State Telecom Commissioners Slam FCC on Process, Rules
BOSTON -- The FCC was criticized by another group of stakeholders at INTX, as the show drew to a close Wednesday. All four state telecom regulator panelists heaped criticism on the FCC over a range of process and legal issues. Critiques involved moving Lifeline subsidies for the poor to broadband from voice in a way that allows the FCC to certify providers as eligible telecom carriers (ETC) instead of just states having that authority, and pre-empting anti-municipal broadband state law. Process concerns included that the federal commission takes too long to issue the text of orders, is too partisan, and commissioners don't cooperate. State commissioners of both parties said the FCC doesn't work closely with state telecom regulators and follow through by having such cooperation reflected in rules. Asked in Q&A whether the FCC had any bright spots, panelists praised it for moving USF to broadband.
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The state commissioners could not recall an instance where a governor told them publicly how to vote on a pending issue, they said when moderator and NCTA Vice President-State Government Affairs Rick Cimerman asked about an administration taking to the Internet to issue policy recommendations. President Barack Obama discussed in an online video earlier this year why he wanted to FCC to proceed with its unlock the set-top box initiative (see 1604150003). That NPRM and other FCC proceedings were slammed (see 1605160033) at INTX by CEO Michael Powell of NCTA, which put on the show, all stock analysts who spoke on another panel (see 1605160057), all lawyers on another panel, and executives (see 1605170040). FCC spokespeople didn't comment. In past emails, the agency representatives have defended Chairman Tom Wheeler’s cable-related policies, as did Wheeler here.
The FCC was wrong to interfere with state roles in certifying ETCs by allowing the companies to seek federal certification, state panelists agreed. Under the Telecom Act, states have authority, said speakers like Montana Public Service Commissioner Travis Kavulla, who's also NARUC president. He and other commissioners said the FCC Lifeline order lets carriers choose which body certifies them: the state or the FCC. They said that will result in forum shopping.
“In all likelihood, yes,” states may take the FCC to court on Lifeline, Kavulla said, as he has before (see 1604010042). National certification of Lifeline broadband offerings “is trying to circumvent the law,” he said. While states may seem “whiny” on their legal rationale, there's also a “policy” basis for not ceding ground, Kavulla said. States can better curtail Lifeline abuse, agreed panelists. “You can choose to obviate state regulation by seeking a federal route” to certification, Kavulla said. “That is an incredibly silly proposition” to let regulated entities “choose your own regulator,” he added. State legislatures might be the venue to address Lifeline policy, New York State Public Service Commissioner Greg Sayre said.
States apply stricter criteria when considering carrier ETC requests, commissioners said. South Dakota Public Utilities Commission Chairman Chris Nelson, chairman of NARUC’s Telecom Committee, said he's “the guy that gets [to ask] the hard questions to prevent waste, fraud and abuse in those programs, and frequently the companies go away” after the PUC raises questions. “Now, folks get to choose whether they want to answer the hard questions at the state level or go through whatever process the FCC chooses,” he said. Massachusetts has “a number of ETCs that we have not designated” as such, Department of Telecommunications and Cable Commissioner Karen Charles Peterson said. “We feel there is a responsibility to ensure there is not a lot of waste, fraud and abuse in the program.”
The FCC also took heat on process on the Lifeline order approved 3-2 at the agency’s March 31 meeting after a several-hour delay amid commissioner negotiations on whether to cap Lifeline’s budget. Kavulla joked about listening to “dulcet ... jazz tones” waiting for the FCC gathering to start on the webcast, at the “epic” meeting. It’s also “just really bizarre” that “commissioners on the FCC themselves would not be able to know the details of what they are voting on,” he said. The final version of such items “may or may not be what we thought it would be” when it eventually is released, Kavulla said. “It is not at all” how the Federal Energy Regulatory Commission works, he said of the other federal agency many state telecom and utilities commissions work with. Also unlike the FCC, where the chairman is always in the majority when a commissioner vote isn’t unanimous, FERC Chairman Norman Bay “is the one who is most often in the minority,” Kavulla said. “Can any of you imagine a decision-making culture like that at the FCC? ... That there are so many 3-2 votes shows that there is something amiss."
State commissions do better working in a bipartisan way, panelists said. Nelson said he's "just dumbfounded at the culture and how they operate. We are just seeing this hyperpartisanship." At the state level, “we might not agree, but we work through [issues] with [mutual] respect," said Nelson, a Republican. State commissioners can “work together and smooth the rough edges” off proposals, Sayre said. That the New York PSC has had a vacancy for about a year and is split politically 2-2 “doesn’t make a difference,” he said: “We have not had one 2-2 split” vote.
It’s not just FCC politics that rub state regulators the wrong way. Delays in releasing texts and in executing on policy changes were universally criticized. “If we can get them to issue the orders in a timely fashion, I think that would be very helpful,” Massachusetts’ Peterson said. Speakers said the FCC needs to do a better job matching its rhetoric of wanting to cooperate with states to its actions. “The perfect example is the Lifeline order, where they sort of push us to the side," Peterson said. "We are always trying to find a happy medium, to respect each other.” Nelson said “cooperative federalism starts with an understanding that there is respect.” The FCC “has too many times said we are moving jurisdiction from the states to our shop," he said. “That is not cooperative federalism.”
Kavulla had been skeptical on the FCC's transitioning USF to pay for broadband and not just subsidize phone service, but eliminating what he called the “rural-rural” divide is a good policy, he told us. “It has happened in fits and starts.” On what constitutes reasonably comparable broadband service, “they actually have delivered a little more clarity,” he said. Panelists praised the FCC Connect America Fund Phase II for telecom companies to get funding for broadband, and said their commissions would like any unused money when providers don’t take those funds in their states to go to pay for broadband their states. “It appears to me as if this CAF II process is going to work a little bit better than I envisioned when I read the order” and “may get some rural areas covered,” Nelson said. Sayre thinks the FCC is “going in the right direction” on Lifeline by moving it to broadband, and he said he has confidence the commission will move it to broadband only. Peterson said the FCC “can’t be all things to all people at all times” and that she keeps that in mind “as they make the tough decisions” when she is “not very supportive.”