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Round-Up for the Week of February 28-March 4, 2022

Recent years have seen an explosion in demand for telehealth services, a trend accelerated by the COVID-19 pandemic, that has increased the bandwidth needs of rural health care providers. The Federal Communications Commission is proposing changes to its Rural Health Care Program rules that are designed to ensure that rural healthcare providers receive the funding necessary to access broadband and telecommunications services to provide vital healthcare services. The program provides support, capped at approximately half a billion dollars each year, to assist rural health care providers with the costs of broadband and other communications services.

The FCC is seeking comment on:

• options for determining support in the Rural Health Care Program's Telecommunications Program,
• ways to improve the accuracy of rates in the Telecom Program, and 
• ways to expedite and streamline the application and funding commitment process.

And the FCC is proposing:

• revisions to Telecom Program forms to improve the quality and consistency of Telecom Program data,
• revising its cap on upfront payments and multi-year commitments, and
• simplifying the invoicing process in the Telecom Program.

Below we dive into how the FCC is considering setting rates for the program, how to prioritize funding, and equity and inclusion issues.

The Rural Health Care Program

The goal of the Rural Health Care Program is to improve the quality of health care available to patients in rural communities by ensuring that eligible health care providers have access to telecommunications and broadband services. 

Rural Health Care is made up of two programs: the Healthcare Connect Fund Program and the Telecommunications Program. The Healthcare Connect Fund Program, established in 2012, provides support for high-capacity broadband connectivity to eligible health care providers and encourages the formation of state and regional broadband health care provider networks. Under the Rural Health Care Program, eligible rural health care providers, and those eligible non-rural health care providers that are members of a consortium that has more than 50 percent rural health care provider sites, receive a 65 percent flat discount on an array of communications services.  These services include internet access, dark fiber, business data, traditional digital service line (DSL), and private carriage services.  

The Telecommunications Program, established in 1997 as a result of the Telecommunications Act of 1996, subsidizes the difference between urban and rural rates for telecommunications services. Under the Telecommunications Program, eligible rural health care providers can obtain rates on telecommunications services in rural areas that are reasonably comparable to rates charged for similar services in corresponding urban areas.  

Eligible health care providers include:

1. post-secondary educational institutions offering health care instruction, teaching hospitals, and medical schools;
2. community health centers or health centers providing health care to migrants;
3. local health departments or agencies;
4. community mental health centers;
5. not-for-profit hospitals;
6. rural health clinics;
7. skilled nursing facilities, and
8. consortium of health care providers consisting of one or more entities falling into the first seven categories. 

Eligible health care providers must be non-profit or public. 

Determining Accurate Rates in the Telecom Program

The FCC is examining how to classify the inputs used to determine rates in the Telecom Program. To determine rates that reflect the cost of delivering service to health care providers, the data inputs used to determine rates must capture which health care providers are in “comparable rural areas,” as well as which Telecom Program supported services are “similar.”

1. How rural is a rural area

The FCC seeks comment on how to evaluate rurality to determine what areas are comparable for purposes of determining rates.

Defining "Rural"

For the Rural Health Care Program, a rural area is “an area that is entirely outside of a Core Based Statistical Area; is within a Core Based Statistical Area that does not have any Urban Area with a population of 25,000 or greater; or is in a Core Based Statistical Area that contains an Urban Area with a population of 25,000 or greater, but is within a specific census tract that itself does not contain any part of a Place or Urban Area with a population of greater than 25,000.”[1] A Core Based Statistical Area is “a statistical geographic entity consisting of the county or counties associated with at least one core (a densely settled concentration of population, comprising either an urbanized area (of 50,000 or more population) or an urban cluster (of 10,000 to 49,999 population) defined by the Census Bureau) of at least 10,000 people, plus adjacent counties having a high degree of social and economic integration with the core as measured through commuting ties with the counties containing the core.

The FCC proposes to retain this definition of a rural area, but invites answers to these questions: 

• Does our current definition meet the needs of the program for purposes of eligibility?
• Are there any alternative definitions that would be more appropriate? For instance, a definition that does not rely (or does not exclusively rely) on a healthcare provider’s location in relation to relatively densely settled areas. Would such a definition capture areas that reasonably could be viewed as “rural?”
• Until 2004, the FCC followed the definition used by the Federal Office of Rural Health Policy (FORHP) located within the Health Resources and Services Administration. Are there any definitions used by other government agencies, such as FORHP, or medical organizations that would be more appropriate at this time for the Rural Health Care Program?

Tiers of Rurality

The FCC seeks to identify methods for further classifying gradients or tiers of rurality. In the program, carriers must be reimbursed using rates for similar services provided to other customers in “comparable rural areas” in the state. The FCC definition of “comparable rural areas” includes areas immediately surrounding the health care provider and similar rural areas. The FCC invites comment on factors it should consider in determining what are “comparable rural areas” when establishing rates for telecommunications services. To what extent should population density, distance, topography, and existing infrastructure affect rates for telecommunications services? Are there other geographic cost factors the FCC should consider that affect telecommunication service rates?

The FCC seeks comment on whether establishing specific rurality metrics for each health care provider based on multiple geographic cost factors could more accurately determine prices available to health care providers in rural areas. Specifically, could measuring a combined set of factors such as population density, distance to a nearby urban area, topography, and existing infrastructure be effective in establishing levels of rurality that more accurately reflect the cost of service? How can the FCC account for variances in health care providers’ location and topography? Are there any other specific cost factors the FCC should consider based on the existing data that are more closely related to or affected by rurality?

Applying Geographic Cost Factors to Rurality Tiers

The FCC seeks input on whether its current rurality tiers used to determine “comparable rural areas” are appropriate for determining accurate and reasonable rates. Are there alternative methods of determining degrees of rurality? The FCC specifically asks about the Index of Relative Rurality and Rural Urban Commuting Area (RUCA) codes. The FCC also seeks comment on whether it should eliminate rurality tiers altogether and establish rates based on an applicant’s census tract information. Examples of such information could include population and business density, measures of terrain and topography such as elevation and slope, measures of distance from urban areas, percentage of built-up areas, etc.

Funding Prioritization

In the event the FCC adopts a new rurality tier system or an alternative to rurality tiers altogether, should the new system also be used for prioritization? When program demand exceeds available funding, the FCC’s current prioritization system prioritizes health care providers in Medically Underserved Areas and health care providers in more rural rurality tiers using the FCC’s current methodology for evaluating rurality. If the Commission changes the current methodology for evaluating rurality, should that new methodology replace the current rurality tiers in the prioritization system? Commenters that oppose using the same methodology for evaluating rurality and prioritization should provide viable alternative ways to prioritize funding.

2. Categorizing service technologies purchased by health care providers

The Telecom Program subsidizes the difference between the urban rate for a service in the health care provider’s state, which must be “reasonably comparable to the rates charged for similar services in urban areas in that state,” and the rural rate, which is “the rate for similar services provided to other customers in comparable rural areas” in the state. Correct categorization of “similar services” is critical to ensuring that the rates charged to rural health care providers and supported by Telecom Program funds align with the cost of delivering those services and that health care providers receive equitable, consistent funding. The FCC currently analyzes the similarity of services based on whether the services are “functionally similar as viewed from the perspective of the end user.” The FCC considers services to be “similar” if the advertised speed is 30 percent above or below the speed of the service requested by the health care provider. The FCC proposes to continue this "technologically-agnostic approach" and invites comment.

The FCC seeks comment on how to conduct more effective analysis of Telecom Program data which has been previously reported, or will be reported, to calculate more accurate urban and rural rates. The FCC also seeks comment on recategorizing or refining categorizations for existing Telecom Program service data so that the data more accurately identifies the services being purchased by rural health care providers. Could updating the program’s categorization of services more accurately reflect the functionality and cost of services purchased by rural health care providers by incorporating certain key data points? 

One potential approach could be to first separate data transmission from more comprehensive service offerings and then collect a limited, defined set of data points about the service purchased to enable similar services to be more accurately grouped together when determining rural rates. Rural health care providers could identify their service functionality based on three factors: system type, system scope, and additional services.

1. System type covers whether the network is a private network, a managed performance network, or a best effort public network.
2. System scope covers network endpoints, i.e., how many separate facilities are to be connected, and if more than one endpoint, whether there is a hybrid mix of transmission media (fiber, microwave, satellite) or service (MPLS, SD-WAN, Ethernet). For each endpoint the following factors would be considered: connectivity, i.e., whether it is point-to-point, point-to-multipoint, and multipoint-to-multipoint; facility type, i.e., copper, cable, microwave or other terrestrial wireless, fiber, and satellite; bandwidth/speed, separately for download and upload; and billable distance if applicable.
3. Additional services would allow for reporting of premises equipment (managed router service administration); priority maintenance support; security; redundancy/diversity options; availability; failover options; overflow options; data CAP; peak/non-peak options; VoIP; and service level agreements.

3. Selecting a rate determination mechanism

In the Rural Health Care Program, the intent of the rate determination process is to establish transparent, predictable, easy-to-administer rural and urban rates so that Telecom Program subsidies result in rural health care providers paying rates that are reasonably comparable to rates for functionally similar services in urban areas of the health care provider’s state and universal service support to service providers that is based on “rates for similar services provided to other customers in comparable rural areas."

The FCC invites comment on the most effective method for determining urban and rural rates in an objective, transparent manner that can be uniformly applied to all Telecom Program applications—and on whether, and if so how, to factor market competition into the rate determination mechanism. The FCC asks:

• Are there areas where rural healthcare providers that receive Telecom Program support have competing service alternatives sufficient to enable the FCC to rely on competition to establish reasonable rural rates?
• If an area has multiple service providers but only one bidder offers to provide service to the rural healthcare provider, should a rate determination mechanism consider the market to be competitive?
• How should the rate determination mechanism factor in rates for deregulated commercial services that may be similar to services sought through the Telecom Program but are not publicly available?

The FCC seeks comment on creating a nationwide regression model to estimate rural and urban rates and determine Telecom Program reimbursement on a state-by-state basis. The FCC admits it doesn't know exactly how providers, including providers of Telecom Program services, set prices but expects certain characteristics to influence a service’s price (known as explanatory variables for the purposes of this analysis). The FCC seeks comment on the appropriate set of explanatory variables.

Alternatively, the FCC seeks comment on adopting discount rates based on the rurality of the health care provider for the Telecom Program as a way to satisfy the statutory requirements for establishing rates. Under a discount rate system, the amount of support would be a percentage of the price of the service listed in the contract, and the percentage paid by the Universal Service Fund would increase as rurality increases. Would a discount rate system incentivize healthcare providers to search for or negotiate lower priced contracts? Would this mechanism consequently apply competitive pressure on telecommunications carriers to submit more competitive bids during the bidding process? The FCC seeks comment on potential discount percentages for the Telecom Program as well as whether discount percentage tiers could be determined strictly by the health care provider’s rurality or if other data points should factor into discount tier determination.

The FCC invites comment on whether independent, reliable cost curves might be used in a future rates determination process to account for the relationship between bandwidth and rates. Although rates generally increase as bandwidth increases if all other factors are unchanged, cost on a per megabit per second basis generally decreases as bandwidth increases. A pricing curve shows how the relationship between cost and bandwidth changes as bandwidth increases. The FCC asks:

• What, if any, independent cost curves reflect the relationship between bandwidth and price?
• Do these cost curves accurately reflect the relationship between bandwidth and price across all parts of the country?
• Would a single cost curve be appropriate for all technologies, or does the relationship between bandwidth and cost vary depending on the technology used to deliver the service?
• Would a single nationwide cost curve produce accurate rates across all geographies? 
• Would the use of a cost curve allow for support that is “reasonably comparable to rates charged for similar services” in urban areas? 

Finally, the FCC invites input on any other alternative rate determination methods. The Schools, Health & Libraries Broadband (SHLB) Coalition suggested that the FCC change the amount of the subsidy in the Telecom Program from 100 percent of the difference between the urban and rural rate to 95 percent of the difference between the urban and rural rate, while requiring health care providers to pay the remaining five percent. SHLB claimed at the time that such an approach would ensure that health care providers are price sensitive to the total cost of the services.

Multi-Year and Upfront Payments

The Rural Health Care Program cap for funding year 2021 was $612,016,418. And the FCC set an internal cap on multi-year commitments and upfront payments at $154,532,400. In this proceeding, the FCC is proposing to limit the application of the internal cap to only funding years for which the total demand exceeds the total remaining support available. And, in the unlikely event that there is an additional filing window in a given year, and if the total demand during the additional filing window exceeds the total remaining support available for the funding year, funding for upfront payment and multi-year commitment requests submitted during the additional filing window will be capped at the remaining support available within the internal cap. The FCC believes the proposed changes would preserve the internal cap’s intended purpose of preventing multi-year and upfront payment requests from encroaching on the funding available for single-year requests. The FCC invites comment on the possibility that these changes could have a negative impact on the program.

In instances when the internal cap applies and is exceeded, the FCC proposes to target funding for upfront costs and the first year of multi-year commitment requests and to fund the second and third year of multi-year commitments with any leftover funding. The FCC further proposes to fund upfront payments and the first year of multi-year commitments for all priority tiers (provided funding is available), and then the second and third years of the multi-year commitments until the internal cap is reached. This way, it is more likely that all health care providers that requested upfront payments and multi-year commitments can at least have their current funding year’s financial need satisfied. Applicants can still request the second and third year funding in the next funding year.

The FCC also proposes allowing the underlying contracts associated with those multi-year requests that are not fully funded to be designated as “evergreen.” The evergreen designation will exempt applicants from having to complete the competitive bidding process for the contracts when subsequently filing requests for support pursuant to these contracts. As a result, applicants can request multi-year commitments pursuant to these contracts in the next funding year without going through the competitive bidding process.

The FCC acknowledges that some health care providers, especially those in the higher prioritization categories, may be inconvenienced under the proposed method because they would have to file applications in future funding years for services that otherwise would fall under the second and third year of a multi-year commitment. But the FCC concludes that this inconvenience to those health care providers is outweighed by the benefit to health care providers who, without this rule change, could have funding requests for upfront costs and services in the first year of a multi-year commitment request denied or prorated.

The FCC invites public comment on these proposals. 

Digital Equity and Inclusion

Section 1 of the Communications Act of 1934 provides that the FCC “regulate[s] interstate and foreign commerce in communication by wire and radio so as to make [such service] available, so far as possible, to all the people of the United States, without discrimination on the basis of race, color, religion, national origin, or sex.” Based on this language, the FCC is advancing digital equity for all including people of color, persons with disabilities, persons who live in rural or Tribal areas, and others who are or have been historically underserved, marginalized, or adversely affected by persistent poverty or inequality. 

With this goal in mind, the FCC invites public comment on any equity-related considerations and benefits (if any) that may be associated with the proposals and issues raised in this proceeding. Specifically, the FCC seeks comment on how its proposals may promote or inhibit advances in diversity, equity, inclusion, and accessibility, as well the scope of the FCC’s relevant legal authority.

Timeline

The FCC opened this proceeding on February 18, but this Further Notice of Proposed Rulemaking has not yet been published in the Federal Register. When that happens, interested parties will have 30 more days to file their comments and then another 30 days to review the docket and file reply comments. An order that adopts new rules is not likely before Fall 2022. 

This proceeding advances as the FCC also conducts a Congressionally-mandated review of the Universal Service Fund, which provides all the financial support for the Rural Health Care Program. In the Infrastructure Investment and Jobs Act, Congress found that the persistent ‘‘digital divide’’ in the United States is a barrier to equitable distribution of essential public services, including health care—and that a broadband connection and digital literacy are increasingly critical to how individuals access health care. Achieving digital equity for all people of the United States, Congress found, requires additional and sustained investment and research efforts. The report the FCC must provide Congress on the Universal Service Fund—and achieving universal deployment, affordability, adoption, availability, and equitable access to broadband throughout the United States—is due to Congress in August 2022, likely before the FCC issues new Rural Health Care Program rules.

Update: Comments are due on or before April 14, 2022 and reply comments are due on or before May 16, 2022

Quick Bits

• NTIA Awards Additional $1 Million in Grants to Tribal Groups Seeking to Expand Broadband (NTIA)
• NTIA Awards $277M in Grants to Expand Broadband Infrastructure (NTIA)
• Consolidated’s fiber rollout in Maine gets $18 million boost from NTIA (Fierce)
• Key Broadband Map Contract Finalized for Broadband Serviceable Location Fabric (Fierce)
• Comcast Expands Affordable Connectivity Program Offers with Internet Essentials and Xfinity Mobile
• Democrats move a step closer to breaking deadlocks at FTC and FCC (Washington Post)

Weekend Reads (resist tl;dr)

• Digital Equity Takes Center Stage in U.S. Cities Post COVID (Government Technology)
• Rural LISC and Heartland Forward Map Emergency Broadband Benefit Uptake and Target Affordable Connectivity Program Outreach
• Percentage of broadband users consuming more than a terabyte of data per month continues to climb (OpenVault)
• Advancing Meaningful Connectivity: Towards Active and Participatory Digital Societies (Alliance for Affordable Internet)

ICYMI from Benton

• Reimaging Lifeline: Universal Service, Affordability, and Connectivity (John Horrigan)
• The Lifeline Market (John Horrigan)
• Does your telephone company participate in the Affordable Connectivity Program? (Grace Tepper)

Upcoming Events

Mar 8—Telecommunications Workforce Interagency Group (FCC)

Mar 9—Infrastructure Investment and Jobs Act Broadband Programs Pre-NOFO Technical Assistance Webinar #1 (NTIA)

Mar 9—The Power of Advocacy: How Nonprofits Are Shaping Broadband Policy In California (Michelson 20MM Foundation)

Mar 11—Public Hearing on Broadband Consumer Labels (FCC)

Mar 14—Black Churches Leading Digital Equity Conversations (Multicultural Media, Telecom and Internet Council)

Mar 16—March 2022 Open FCC Meeting

Mar 16—Building for Digital Equity—Demystifying Broadband Policy and Funding (Institute for Local Self-Reliance)

Mar 21—Task Force for Reviewing the Connectivity and Technology Needs of Precision Agriculture in the United States (FCC)

Mar 23—Infrastructure Investment and Jobs Act Broadband Programs Pre-NOFO Technical Assistance Webinar #2 (NTIA)

Mar 29—Bipartisan Tech 2022 (Next Century Cities)

Notes

1. See 47 CFR § 54.600(e), if you're scoring at home.

The Benton Institute for Broadband & Society is a non-profit organization dedicated to ensuring that all people in the U.S. have access to competitive, High-Performance Broadband regardless of where they live or who they are. We believe communication policy - rooted in the values of access, equity, and diversity - has the power to deliver new opportunities and strengthen communities.

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