FCC Chairman Wheeler Hints at Potential USF Contribution Rate Increase to Support Modernization Plans; Other Substantive and Procedural Changes Outlined

In a speech on Monday, March 17, 2014 to education leaders, FCC Chairman Tom Wheeler acknowledged the possibility of raising the USF contribution factor to increase funding to the E-rate program, but Wheeler was clear that he would recommend doing so only “if warranted” and that directing more money to E-rate without further program changes “is not a sustainable strategy.” He also reaffirmed his commitment to direct more funding to Wi-Fi and other technology that can deliver high-speed connectivity, likely to the detriment of older technologies such as narrowband paging and other outdated services.

To achieve the efficiency changes he seeks, Wheeler announced the creation of a new agency “strike force” for the entire USF program to ensure that allocated funds are wisely spent and in adherence to the rules. He also announced that USAC will institute a new fast track process to accelerate the processing of E-rate applications proposing to utilize funds for scalable high-speed broadband connectivity. Beyond these procedural reforms, Wheeler articulated several programmatic reforms that will focus on driving substantive changes. First, the agency will explore why there may be a disparity in prices for like services paid by schools and libraries, and whether there is a role for the FCC to help ensure that schools and libraries are getting access to connectivity at “affordable rates.” Second, the agency will explore changes that will support the deployment of scalable technology that is capable of delivering increasingly greater amounts of bandwidth over time.

During a panel, led by DWT’s Jim Smith at the CompTel conference in Las Vegas, NV, Associate Wireline Bureau Chief Trent Harkrader reiterated Wheeler’s priorities. Significantly, though, Harkrader emphasized Wheeler’s intent to first complete reform efforts to reduce inefficiencies in the program before considering potential increases to contribution rates.