FCC Commissioner Michael O’Rielly

It is unconscionable that some states divert fees collected for legitimate and needed 9-1-1 communications capabilities to unrelated purposes, threatening the public's safety for short-term budget relief. After almost fifteen years of working on the problem, we are no closer to resolving it. I suggest that the appropriate policymakers must implement new measures to end this practice once and for all. This may require uncomfortable conversations with states or taking forceful actions, but the current mechanism of shame and hope isn't working.

Here are three non-mutually exclusive ideas for the FCC to increase the pressure and force states to end this despicable practice:

• Interstate Services Prohibition: The FCC maintains sole jurisdiction over interstate communications services and, as such, we retain the right to bar diverting states from imposing 9-1-1 fees on the interstate calls.
• Prohibit Collection and Remittance by Providers: For diverting states, the collection of funds above what will be spent directly on 9-1-1 services is by definition misleading to consumers. The FCC can prevent any providers from collecting such funds or requiring them to remit the funds to diverting states. As part of this effort, the FCC could also define what are inappropriate uses of 9-1-1 funds and ensure providers are held harmless in the process.
• Commission Advisory Committees: The ability to serve on Commission Advisory Committees is a privilege, not a right. As such, the FCC can and should exclude any person from a diverting state from participating on an advisory committee, and this can be done without losing valuable advice.

Commissioner Clyburn: On the very same day a major content distribution network revealed that the private data of millions of users from thousands of websites had been exposed for several months, the FCC announced its intention to indefinitely suspend rules requiring broadband providers to protect users’ private data. The irony here is inescapable. With a stroke of the proverbial pen, the Federal Communications Commission—the same agency that should be the “cop on the beat” when it comes to ensuring appropriate consumer protections—is leaving broadband customers without assurances that their providers will keep their data secure.

It is for this reason, that I must issue this unequivocal dissent.

This Order is but a proxy for gutting the Commission’s duly adopted privacy rules—and it does so with very little finesse. First, the Order alleges deleterious divergence from FTC standards, when in actuality there is little daylight between the approaches taken by the two agencies. Second, the Order alleges significant harm to service providers, but cites absolutely nothing to prove it. In fact, the stay request does not even begin to estimate the costs associated with compliance. The outcome of this Order is not relief of regulatory burdens, as is evidenced by providers seeking a stay using the text of the FCC’s rule as the basis for their voluntary code of conduct. What it actually does is permit providers to shift the costs for corporate negligence onto private citizens.

Finally, I must express my disappointment that the Chairman even entertained this item being adopted on delegated authority. This would have marked the first time in which the Wireline Competition Bureau actually granted a petition for stay. Thankfully, my request to have this considered by the Commission preserved some degree of procedural integrity at the FCC.

Commissioner O’Rielly: I support this decision to stay the broadband data security rules while the Commission and Congress consider an appropriate resolution of the broader Net Neutrality proceeding.

To be clear, I think the law and Commission precedent are quite straightforward: the FCC lacks authority to adopt data security rules for any type of provider. Data security is not mentioned anywhere in the Communications Act, and other statutes and legislative efforts that have addressed the topic do not afford the FCC any role.

I consistently objected to the prior Commission’s unlawful attempts to freelance in this area long before the Net Neutrality Order and Privacy Order were adopted. I also pointed out that the Commission’s attempts to saddle the communications sector with experimental regulations could conflict with well-established FTC precedents that have served as a predictable road map for businesses and consumers alike.

Finally, I appreciate the opportunity to vote on this order at the Commission level. While I welcome greater participation by the full Commission in general, I think that Commission-level action on significant decisions like this one are particularly helpful to provide a clear and final statement of the agency’s position, which promotes transparency and certainty for all interested parties.

Federal Communications Commission member Michael O’Rielly has a few questions for the Universal Service Administrative Company. He is seeking assistance in identifying and eradicating the use of E-rate funds to overbuild existing broadband networks. Commissioner O’Rielly asks USAC to answer 10 questions no later than Feb 17.

1. How many E-rate applicants have requested funding to self-construct networks?
2. How many of these requests are for overbuilds?
3. Do the providers who are being overbuilt receive Universal Service Fund support?
4. Do any of the applicants propose to overbuild their own networks?
5. How many self-construction requests were denied on cost-effectiveness grounds?
6. How many self-construction requests have been approved?
7. Please detail USAC’s procedures to determine if these requests are cost-effective.
8. Please provide USAC materials that explain the self-construct option.
9. Please provide USAC materials concerning back-up networks.
10. Is it USAC’s view that E-rate funds may be used to build backup networks? If so, please point to provisions in FCC orders.

For Federal Communications Commission rules and procedures to be truly effective, everyone needs to know with a certain level of confidence what will happen if applicable deadlines are missed. Not only does this not exist today, but the Commission’s inconsistency with how it responds to late filings borders on arbitrary and capricious. To rectify, I suggest it is time to establish a universally-applied policy that, from now on, everyone is expected to either comply with all applicable deadlines or face the consequences.

Let’s remove the ambiguity and wide disparity of approaches once and for all. As it stands now, the FCC is unintentionally favoring some parties over others through its disparate treatment of its deadlines. Moreover, combining a short amnesty window to rectify current instances where licensees may not be in compliance with the implementation of firm deadlines, going forward, would help restore administrative certainty, transparency, parity, and confidence in our enforcement process.

The good work being done by the private sector and the Federal Communications Commission has not prevented some from advocating for expending additional Federal dollars for broadband, hopefully by providing additional resources to private companies to expand their reach and enter new territories (and not funding government networks). While seemingly helpful, there are serious potential drawbacks to this action, especially if it is done in a haphazard way. Here are just a few of the major issues and problems:

Harms to Private Sector – In countless meetings over the last three years, I have heard about the harmful effects of the Obama Administration’s economic stimulus legislation, especially the Broadband Technology Opportunities Program and Broadband Initiatives Program (BTOP & BIP). While supporters point to miles of fiber laid or anchor institutions connected, they fail to mention what this funding did to the competitors in the immediate and surrounding areas. When one provider received special funding, it distorted the ability of non-recipients to operate, pay off debt, raise capital, and satisfy consumer interest. In other words, artificially propping up select companies impacted the ability of others to compete, including growing their networks to unserved or underserved areas, and that doesn’t even include a critique of where grants were provided to overbuild existing providers. With areas completely unserved or in need of upgrades, it makes little sense to direct federal dollars to fund competition.
Overpaying and Over Subsidization – At its core, the FCC’s high-cost program is designed to limit any subsidy provided to broadband companies to only what is absolutely needed to promote access. The institution of reverse auctions uses market forces to get providers to compete – thereby driving down the subsidy costs – for particular areas. On the contrary, grant programs or loan subsidies do not induce any competitive pressure. This means the Federal government overpays for broadband deployment in these scenarios.
Lack of Coordination – Experience from the 2009 stimulus showed that insufficient coordination was done with the FCC by the Departments of Commerce and Agriculture as they created and operated their programs. That means that, as bureaucrats were preparing to distribute multi-billions of dollars, they had little to no understanding of the prior and future commitments made by the FCC or how their programs would fit together with the Commission’s data intensive high-cost program. In the end, the FCC was left to piece together the remnants of what was done by the other agencies in order to prevent duplication and address those areas still in need.
Bureaucrats Picking Winners & Losers – Application-based programs use highly-questionable selective criteria (e.g., points system) combined with human intervention to determine what projects to fund. This allows non-efficient factors to influence the outcome and cultivates an environment for political gamesmanship. At a time when so much focus is on reducing undue or improper involvement by DC lobbyists and politicians, shouldn’t there be equal concern that any new broadband programs aren’t monopolized by the well-connected?
Technology Discrimination – The FCC has spent the last 18 months ensuring that its program does not discriminate against any technology able to serve consumers. Unfortunately, many broadband programs are designed to be fiber first or fiber only and provide preferences to ensure other technologies do not win any funding or serve any consumers. This myopic view ignores the development of other technology capabilities and allowances for terrain. Dragging fiber to the top of every mountain may not make any sense in terms of cost, time to build, safety of installers and long term survivability against the surrounding elements. Alternatively, fixed wireless broadband or satellite may be the most appropriate solution.

Are there ways to reduce burdens on small cable providers without undermining the Federal Communications Commission’s overall mission and requirements? These providers say: look into eliminating or modifying the cable signal leakage rules for those companies that have deployed fiber in a service area.

While it is easy to conclude that our rules are obsolete as they pertain to fiber networks, the harder step is actually fixing the situation. When these rules were adopted, a traditional cable system used coaxial cable to transmit radio frequency (RF) signals carrying content to residential and business consumers. If operated properly, such systems do not cause any interference to spectrum users, such as aeronautical and navigation users. However, RF can “leak” from a cable coaxial system for various reasons, including loose connections, damaged plant or cracked cables. As a way to prevent this from occurring, system operators are required under the Commission’s rules to conduct regular monitoring for signal leakage, maintain logs showing the date and location of any leak, and test annually to demonstrate that a systems cumulative signal leakage is below acceptable interference levels. I learned during my meeting with the small cable providers a while back that, to comply with the annual testing requirement, they rent a small plane and circle their territory with appropriate RF sensors to determine if there any leakage. In the grand scheme of things, this is not a huge expense ($5,000) but when you operate 15 small systems, it costs upwards of $100,000 adding in time and labor. And that’s money that can be used to curtail rate increases or expand the network’s reach to unserved homes.

I want to discuss the incredible vitality of today’s video marketplace and how the FCC needs to modernize its rules to reflect current realities.

Digitization and the Internet have driven a proliferation of new platforms for consumers, especially in the last decade.

To win subscribers, video providers are seeking to offer more types of content in order to differentiate themselves in the marketplace. And programming production and distribution businesses have started converging to meet the growing demand for high quality original programming.

To realize the full benefits of this dynamism, the FCC should acknowledge the fierce competition that exists and it should get rid of regulations that no longer make sense.

I will make the analogy that the FCC is poised at this pivotal moment just like the proverbial ostrich. This bird is known for being stubborn and sticking its head in the sand. Instead of speeding forward to recognize the marketplace realities, I worry the FCC is desperately clinging to existing rules that were written prior to the digital revolution, prior to Wi-Fi, and prior to the Internet.

When the Federal Communications Commission voted to restrict television broadcasters’ use of joint sales agreements (JSAs), we warned that this decision would lead to “less ownership diversity” and “more television stations going out of business.”

Unfortunately, just two months later, this is coming to pass. Now, Sinclair Television Group announced its intent to surrender to the Commission for cancellation three television station licenses in the Charleston, South Carolina and Birmingham, Alabama markets. Sinclair reported that it was unable to find a viable buyer for any of these stations. As a result, it appears that these three stations will soon be going dark.

So what has the Commission’s decision wrought? Instead of increasing the number of African-American-owned television stations, we are driving stations off the air. This will mean job losses, less service to South Carolinians and Alabamians, and less ownership diversity. We do not see how such an outcome possibly serves the public interest, and we hope that the Commission will take action immediately to correct its misguided restrictions on JSAs.

[Commentary] Internet application and content companies, what some refer to as “edge providers,” are increasingly concerned by the Federal Communications Commission’s newfound ability to regulate the Internet, and rightfully so.

For years, edge providers -- Pandora, Google, LinkedIn, Facebook, WhatsApp, to name just a few -- have flourished from the government’s hands-off approach to the Internet. Both Republicans and Democrats championed a structure that allowed the “application layer” of Internet architecture to be free from government intervention, apart from occasional Federal Trade Commission activity.

That is now subject to change. A very real threat is that edge providers could fall within the reach of the FCC’s newly invented authority to regulate the Internet under Section 706 of the Telecommunications Act of 1996.

FCC Chairman Tom Wheeler recently announced the Commission will seek comment on proposed new net neutrality rules that will “meet the court’s test.” His focus may be on broadband providers, but edge providers shouldn’t be lulled into complacency. The notion of preserving an “open Internet” is so vague that any rules meant to accomplish that goal could unintentionally impact edge providers’ business models.

The only intellectually honest conclusion for net neutrality supporters is to extend the burden to everyone: broadband providers and edge providers. The only way to achieve that seems to be creative use of Section 706. With every Internet site, service and application vulnerable to Internet security threats, these could readily come under the purview of the FCC.

The joint sales agreement proposal being put forward appears flawed and not in the public interest.

My meetings and the record indicate that the JSA portion could significantly impair the ability of broadcasters with diverse voices to offer local programming, such as news, to meet consumer needs. Moreover, the proposal would establish a very subjective ‘Mother-May-I’ approach to obtain or retain a JSA, which is a recipe for market uncertainty and reduced offerings. Most importantly, this effort fails to meet the Commission’s obligations under current law. […]

Even before receiving the specifics of the proposal, I strenuously disagree with the intended direction, and hope it is dramatically changed before it is presented to the Commission for a vote later this month.

[March 10]