Federal Communications Commission

The Universal Service Administrative Company (USAC) submitted projections of demand and administrative expenses for the federal universal service fund for the second quarter of 2014.

According to USAC’s projections, $600 million in unused funds from previous funding years is available to carry forward to increase disbursements to schools and libraries via the E-rate program, more formally known as the schools and libraries universal service program.

On April 17, 2014, USAC submitted an estimate of demand for the E-rate program for Funding Year 2014 (July 1, 2014 to June 30, 2015) of $4.825 billion, which includes estimated demand for priority one services (telecommunications, telecommunications services and Internet access) of $2.630 billion.

The Wireline Competition Bureau announces that $200 million in unused funds will be carried forward to ensure funding is available for all eligible priority one funding requests received from schools and libraries in Funding Year 2014 in excess of the annual cap.

We have circulated a Notice of Proposed Rulemaking to my fellow commissioners on the topic of the Open Internet.

There are two things that are important to understand. First, this is a Notice, which asks a number of questions and seeks input on the best way to protect and promote the Open Internet. Second, all options are on the table. Our goal is to put into place real protections for consumers, innovators and entrepreneurs that until now have been only a matter of debate and litigation.

I believe this process will put us on track to quickly get to legally enforceable Open Internet rules. There has been a great deal of talk about how our following the court’s instruction to use a “commercially reasonable” test could result in a so-called “fast lane” and Internet “haves” and “have nots.” This misses the point that any new rule will assure an open pathway that is sufficiently robust to enable consumers to access the content, services and applications they demand and innovators and edge providers the ability to offer new products and services.

The focus of this proposal -- on which we are seeking comment -- is on maintaining a broadly available, fast and robust Internet as a platform for economic growth, innovation, competition, free expression, and broadband investment and deployment. We will follow the court’s blueprint for achieving this, and, I must warn you, will look skeptically on special exceptions.

If someone acts to divide the Internet between “haves” and “have-nots,” we will use every power at our disposal to stop it. I consider that to include Title II. Just because it is my strong belief that following the court’s roadmap will produce similar protections more quickly, does not mean I will hesitate to use Title II if warranted. And, in our Notice, we are asking for input as to whether this approach should be used.

Some recent commentary has had a misinformed interpretation of the Open Internet Notice of Proposed Rulemaking (NPRM) currently before the Commission.

There are two things that are important to understand. First, this is not a final decision by the Commission but rather a formal request for input on a proposal as well as a set of related questions. Second, as the Notice makes clear, all options for protecting and promoting an Open Internet are on the table.

I believe this process will put us on track to have tough, enforceable Open Internet rules on the books in an expeditious manner, ending a decade of uncertainty and litigation. I do not believe we should leave the market unprotected for multiple more years while lawyers for the biggest corporate players tie the FCC’s protections up in court.

Notwithstanding this, all regulatory options remain on the table. If the proposal before us now turns out to be insufficient or if we observe anyone taking advantage of the rule, I won’t hesitate to use Title II. However, unlike with Title II, we can use the court’s roadmap to implement Open Internet regulation now rather than endure additional years of litigation and delay.

Let me be clear, however, as to what I believe is not “commercially reasonable” on the Internet:

• Something that harms consumers is not commercially reasonable. For instance, degrading service in order to create a new “fast lane” would be shut down.
• Something that harms competition is not commercially reasonable. For instance, degrading overall service so as to force consumers and content companies to a higher priced tier would be shut down.
• Providing exclusive, prioritized service to an affiliate is not commercially reasonable. For instance, a broadband provider that also owns a sports network should not be able to give a commercial advantage to that network over another competitive sports network wishing to reach viewers over the Internet.
• Something that curbs the free exercise of speech and civic engagement is not commercially reasonable. For instance, if the creators of new Internet content or services had to seek permission from ISPs or pay special fees to be seen online such action should be shut down.

According to the Government Accountability Office, Federal agencies are currently spending over 70% of their Information Technology budgets on maintaining legacy systems.

Government-wide, these maintenance costs amount to over $54 billion a year spent on existing legacy systems, and delays needed transitions to newer technologies. Moreover, this cost only captures those legacy processes automated by IT; several paper-based, manual processes exist and result in additional hidden, human-intensive costs that could benefit from modern IT automation.

In the spirit of openness, I’d like to share our seven tracks as we embark on our journey to modernize the FCC enterprise. These tracks and supporting goals represent our focused efforts to bring the FCC into the 21st century and ensure the Commission has some of best IT in government supporting its mission.

Like an iceberg where a majority of the ice is hidden underwater, modernizing manual, human-intensive processes at the FCC will reduce legacy “sunk costs” at the Commission. The result will be a more agile, responsive, IT-enabled FCC enterprise able to work faster and float “above water”. Our workforce will be more effective, efficient in their time and energy, and better able to deliver the highest quality public service to the US public and FCC partners.

• Improve Secure Employee Telework & Mobility
• Secure Internal & External Collaborations
• Strengthen FCC’s IT Security Posture
• Transform Access to FCC Enterprise Data
• Modernize Legacy Systems & Tracking
• Improve FCC.gov & Complaint Reform
• Increase Transparency & System Usability

[Bray is the FCC’s Chief Information Officer]

On January 13, 2014, Sen Robert Casey (D-PA) wrote Federal Communications Commission Tom Wheeler asking the FCC to investigate the coverage and reliability of the telecommunication system in rural areas after a driver had to make separate 911 calls as he crossed over the Maryland/ Pennsylvania border.

He wrote, “While I understand the FCC is aware of the concerns that rural communities face when dealing with dropped calls or poor quality services, I believe a renewed effort must be made to drastically improve these services. I also ask that your office take a particular look at how emergency services and responses are being affected by poor quality phone service. Phone services are vital to rural communities and we must ensure we are striving to expand new and updated technologies to all Americans regardless of where they live.”

On April 11, Chairman Wheeler wrote back saying the FCC has taken important steps to increase mobile coverage in rural areas. As of October 2012, 99.3 percent of the total rural US population and 92.6 percent of total rural US road miles had mobile voice service coverage from one or more providers.

To address areas with limited mobile coverage, the FCC established a universal service support mechanism dedicated exclusively to mobile services. Specifically, the Commission set aside $300 million in one-time support to accelerate immediate deployment of networks for mobile voice and broadband services in unserved, largely rural areas.

This support was made available through a nationwide reverse auction, which took place in the fall of 2012. There were 33 winning bidders, extending broadband coverage up to 83,494 road miles in geographic areas located in 31 states and one territory.

In December 2013, a number of Members of Congress wrote to Federal Communications Commission Tom Wheeler seeing “swift action to improve and modernize the E-rate program in order to help connect our nation's schools with high-speed broadband over the next five years.”

In April 2014, Chairman Wheeler wrote back saying that E-rate modernization is among the most important tasks currently facing the FCC. Commission staff is reviewing the record that has been developed in response to the July 2013 Notice of Proposed Rulemaking, and meeting with stakeholders to ensure that we have robust input from all interested parties.

Just a few weeks ago, the staff released a Public Notice seeking focused comment on a handful of specific issues that have been raised by commenters. And my goal is for the Commission to adopt an Order later this spring that would implement fundamental structural and administrative changes, the results of which would go into effect in 2015.

We need to ensure that the E-rate program supports the high-capacity broadband needed to give our students access to twenty-first century educational opportunities, while simultaneously improving the efficiency and administration of the program and establishing explicit program goals and measurements.

In December 2013, a number of Members of Congress wrote to Federal Communications Commission Tom Wheeler expressing concerns about opening the door to wireless voice services being used by passengers on airplanes above 10,000 feet.

They wrote, “We are in support of new options for airline passengers to safely use wireless data for non-voice services such as text messaging, email, and internet browsing; but we are adamantly opposed to the use of cellular voice services during flights.”

On April 8, Chairman Wheeler wrote back to the Members outlining the FCC’s process for process for considering modernization an outdated technological rule and enable in-flight connectivity options that are available elsewhere in the world to the available in the United States. He noted that if the Commission determines that airborne mobile use is possible without negative effects to cellular networks, the *airlines,* under the FCC's proposal, would have the ultimate say as to whether and how to provide service using cellular airborne access systems, subject to applicable Department of Transportation and Federal Aviation Administration rules.

On March 25, Reps Doris Matsui (D-CA) and Brett Guthrie (R-KY) wrote to Federal Communications Commission Chairman Tom Wheeler encouraging the Commission to create a band plan that encourages a robust bidding process that maximizes revenue in the upcoming AWS-3 auction.

On April 15, Chairman Wheeler wrote back noting that the FCC unanimously adopted the AWS-3 Report and Order. The Order adopts allocation, service, licensing, and technical rules for 65 megahertz of spectrum, including 50 megahertz of paired spectrum at 1755-1780 MHz and 2155-2180 MHz. The upcoming auction will expand the workhorse A WS-1 commercial wireless band, which today is available for mobile broadband use.

The Commission adopted a band plan that will promote competition by offering licenses comprised of different geographic license areas and block sizes. This band plan will serve the spectrum needs of a variety of applicants, and promote auction participation and robust competition.

The Commission's action set the stage for an auction of the AWS-3 spectrum licenses later this year.

While adopting the A WS-3 Report and Order is a big step toward making this spectrum available for commercial use, additional details must be resolved before this auction can take place. We will address these challenges so that all parties have certainty about their rights and obligations in A WS-3, and to ensure that the auction is robustly competitive and successful.

To keep pace with technological advancements, I believe it is time for the Federal Communications Commission to consider modernizing our labeling requirements.

Electronic labeling, or e-labeling, could replace the current system of etched labels containing FCC certification information on the outside body of each electronic device. Instead, this information could be provided through software on device screens.

There are numerous potential benefits to e-labeling. Specifically, e-labels can provide more information to consumers than is conveyed today. Beyond the required FCC certification information, details can be added by manufacturers regarding device warranties, recycling, and trade-in opportunities. In addition, e-labels can be updated remotely to address any inaccuracies, such as typographical errors. Another advantage of e-labeling is cost savings. As devices have become smaller and more aesthetically appealing, etching the labels requires more design time and expensive equipment. E-labeling could dramatically reduce or eliminate these costs without sacrificing consumer information.

Along with the proposed benefits, there may be some perceived drawbacks to e-labeling that can be addressed. E-labeling should never be allowed in any way to short-circuit or undermine the FCC's certification process. The FCC should take every opportunity to ensure that its rules and procedures take advantage of modern technology and are as user-friendly as possible.

That is why I hope that the Commission will, in the near future, turn its attention to the possibility of permitting e-labeling through a means that will expedite its use. Doing so would not only be good government, it would stand to benefit equipment manufacturers, and more importantly, consumers.

Next year the FCC will conduct the first-ever “Incentive Auction,” which will harness market forces to reallocate valuable low-band (below 1 GHz) spectrum from television broadcasters who voluntarily choose to relinquish their channels in exchange for incentive payments, to wireless providers who will bid against each other to buy those frequencies to provide mobile broadband services.

Two national carriers control the vast majority of that low-band spectrum. This disparity makes it difficult for rural consumers to have access to the competition and choice that would be available if more wireless competitors also had access to low-band spectrum. It also creates challenges for consumers in urban environments who sometimes have difficulty using their mobile phones at home or in their offices.

To address this problem, and to prevent one or two wireless providers from being able to run the table at the auction, I have proposed a market based reserve for the auction. Any party desiring to bid on any license area will be free to do so. When the Incentive Auction commences, all bidders will be bidding and competing against each other for all blocks of spectrum.

We expect a fulsome bidding process. There will be no “reserved” spectrum during this initial stage of the auction. When the auction reaches a “trigger” point that the Commission will set in advance of the auction -- largely based on meeting a price threshold -- wireless providers with a dominant low-band position in a license area will be constrained from bidding on a few “reserved” spectrum blocks.

The exact amount of “reserved” spectrum available will depend on how much spectrum non-dominant providers are actively bidding for at the trigger point, but in no instance will the reserve exceed 30 megahertz. Those “reserve-eligible” bidders who are still actively bidding at the trigger point will then begin bidding for reserved spectrum against only other eligible bidders, and not against bidders who already hold a dominant low-band position in that license area.