10th annual universal service fund update · agenda 2019 form 499-a changes and reminders usf...
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10TH ANNUAL UNIVERSAL SERVICE FUND UPDATE
JOHN [email protected] (202) 342-8544
BRAD [email protected] (202) 342-8465
STEVEN [email protected](202) 342-8612
MARCH 6, 2019
DENISE [email protected] (202) 342-8614
AVONNE [email protected] (202) 342-8503
Agenda 2019 Form 499-A Changes and Reminders
USF Contributions
USF Audits
USAC Audit Trends
2019: What to Watch in USAC Audits
Major USF Program Developments
Lifeline
Schools and Libraries
Rural Broadband/Healthcare Connect Fund
Connect America Fund/Mobility Fund
USF Enforcement
FCC USF Enforcement Actions
OIG and Third Party Enforcement2
2019 FORM 499A
2019 Form 499A – Changes
2019 Form 499A
Incorporates new definitions for international service reporting
Potentially unintended substantive changes
Reseller certification
USAC template reseller certificate
Text Messaging
Classified as information service
2019 Form 499A – Procedural Reminders
No changes to DCIA
USAC may refer delinquent fees directly to US Treasury for collection
Onus on contributor to monitor delinquent payments
USAC puts delinquent carriers on Red Light Status
5
2019 Form & revisions to 2018 Form due by April 1
No exceptions for downward
revisions
Late filing fees will not be
waived
2019 CONTRIBUTIONS
Major 2018 USF Program Developments Contributions
USF Contribution Factor
20% for two quarters (highest ever)
Will this be the year for USF contributions reform?
Contribution reform is necessary and overdue
7
USF AUDITS
USAC Audit Trends – BCAP Audits
9
USAC implementing a hybrid audit selection model
Trend is increased audits; except for contributors
Contributor High Cost Low Income Schools & Libraries Rural Health Care
2017 Audits Planned 20 35 42 60 3
2018 Audits Planned 19 10 28 40 2
2019 Audits Planned 9 22 5 59 20
0
10
20
30
40
50
60
USAC Planned Audits
2017 Audits Planned 2018 Audits Planned 2019 Audits Planned
*
*Low income audits do not include mandatory biennial audits
USAC Audit Trends - PQAs
10
FY2018 - $8.8M in improper payments identified
Decrease in most program PQAs
But Rural HealthCare added back to PQA focus
309
365
443
0
200
300
360395
0
100
200
300
400
500
High Cost Low Income Schools and
Libraries
Rural Healthcare
PQA Audits
2018 Completed and 2019 Planned
PQA Audits Completed 2018 PQA Audits Planned 2019
USAC Audit Trends - Improper Payments
11
Continued focus on Improper Payments
USAC focusing on “real-time” audits to prevent improper payments
Increased percentage improper payments recovered in FY2018
USF Program Recommended Recovery
Total Disbursements
Audited
Recommended Recovery %
FY2018
Contributor $29M N/A N/A
High Cost $2.7M $46.1M 5.85%
Low Income $0.6M $17.7M 3.39%
Schools and Libraries $2.8M $26M 10.76%
Rural Healthcare $1.3M $18M 7.22%
Total $36.4M $107.8M
USAC Audits – What to Watch for in 2019
12
USAC working to decrease audit timeframes
Continued use of third-party resources to conduct audits
Team-based audit staffing could increase company response burdens
0
4
8
12
16
20
24
28
Contributor High Cost Low Income Schools and
Libraries
Rural
Healthcare
Mo
nth
s
Average Audit Duration
Current v Goal
Current Goal
RECENT USF PROGRAM DEVELOPMENTS
Major 2018 USF Program Developments Lifeline
14
National Lifeline Eligibility Verifier (NLEV)
Initial launch in 2018…to be completed in 2019
Stakeholders have expressed concerns about implementation
NLEV in many states lacks access to state databases
Subscriber re-verification and deenrollment process under scrutiny
USAC adopted significant limits on use of SNAP and Medicaid cards to demonstrate eligibility
NLEV lacks API to support carrier-assisted and online enrollment
Major 2018 USF Program Developments Lifeline
NaLA v. FCC Decision
D.C. Circuit vacated and remanded Order limiting Tribal subsidy to “rural”
areas and facilities providers
Tribal Facilities Requirement and Rural Tribal Limitation found to be
arbitrary and capricious for lack of reasoned decision-making supported by
record evidence
FCC failed to consider the impact of its Tribal limitations on access and
affordability
Procedural deficiencies including a failure to hold a promised future
proceeding and inadequate notice also cited
15
Major 2018 USF Program Developments Lifeline
2017 Digital Divide NPRM and LOI
Proposals to ban wireless resellers in doubt
Other proposals including a program spending cap and a maximum discount remain pending
Minimum service standards and voice sunset reconsideration petitions remain pending
Enforcement
American Broadband NAL
16
Major 2018 USF Program Developments Schools and Libraries (E-Rate)
Category Two Budget
Set to expire after FY 2019
WCB recommends extension
and other improvements
FCC still needs to take action before FY 2020 window opens
Amortization Waiver
FCC extended waiver for FY 2019
FCC proposed elimination of requirement
Increased certainty and lower costs
17
18
Major 2018 USF Program Developments Schools and Libraries (E-Rate)
California Wildfires
FCC extended filing deadlines to April 3, 2019 for:
o Requests for review or waiver of USAC decisions
o Form 486 submissions (Receipt of Service Confirmation)
o Form 472 submissions (Billed Entity Applicant Reimbursement Form)
Waived document retention rules (subject to limitations)
Enforcement
Limited FCC enforcement
Major DOJ prosecutions
18
Major 2018 USF Program Developments Rural Healthcare Fund / Rural Broadband
19
Rural Healthcare (RHC) Funding Cap Order
Increased the annual RHC Program funding cap from $400M to $571M and apply it to FY2017;
Implemented an annual adjustment for the funding cap for inflation, beginning with FY2018; and
Established a process to carry-forward unused funds from past funding years for use in future funding years.
Connected Care Pilot Program
FCC released an NOI seeking input on a $100M USF pilot to promote telehealth for low income Americans and veterans
Enforcement Actions
Dataconnex NAL (January 2018)
Major 2018 USF Program Developments Connect America Fund
CAF Phase II Auction
Reverse auction completed
o 103 winning bidders; $1.49 billion in support over 10 years
o Long-form application review and approval
Approx. $140 million ready for authorization
o Service requirements
Post-Auction Transition
Incumbent price cap Phase II support
Elimination of Phase I support
20
Major 2018 USF Program Developments Connect America Fund
21
Mobility Fund Phase II
Challenge process problems
Reverse auction delayed indefinitely
Puerto Rico/USVI Hurricane Relief
$64 million in immediate relief; additional funding teed up
Enforcement
Challenge process mapping investigations
Sandwich Isles
ENFORCEMENT
2018 USF EnforcementDevelopments
Proposed Fraud Division
Reallocation of existing personnel/expertise
USF Strike Force replacement
Unanswered questions and overlapping jurisdiction
Aggressive OIG
Separate investigations
USF suspension/debarment reform
Statute of limitations for USF recovery
23
2018 USF EnforcementTrends
24
Revocation
Reports
Legal and procedural hurdles
No follow up…yet
Personal Liability
Piercing the corporate veil
FCC claims broad authority
Inability to Pay
FCC required to consider
But barriers rising, not falling
2018 USF EnforcementOutlook
25
Reforms on the Horizon?
Limit USF recovery actions to seven years
USF enforcement action prioritization
Collection process tracking/improved DOJ referral process
Clarifying continuing violations
Enforcement shot clock
Elimination of ALJ
QUESTIONS?
JOHN HEITMANNPartnerCommunications (202) [email protected]
STEVE AUGUSTINOPartnerCommunications (202) [email protected]
DENISE SMITHSpecial CounselCommunications (202) [email protected]
BRAD CURRIERSenior AssociateCommunications(202) [email protected]
AVONNE BELLAssociateCommunications (202) [email protected]