Universal Service Administrative Company Connect America and Lifeline Programs: Connecting Communities to Affordable Broadband 1
Welcome Today s Presenters Mark Sweeney Chief Operating Officer & Vice President, Connect America Program Michelle Garber Vice President, Lifeline Program 2
USAC Discussion Overview Agenda Connect America Program Mission and goals By the numbers Program overview Modernization: From High Cost to Connect America Rate of Return modernization High Cost Universal Broadband (HUBB) portal Lifeline Program Program Overview 2016 Modernization Order: Inclusion of Broadband Changed Eligibility Criteria National Verifier Additional Program Changes 3
The Broadband Mission In today s world, broadband is critical infrastructure that drives economic growth, supports high wage jobs and enables communities and individuals to remain competitive in 21 st Century. It is a basic utility that opens the door to employment opportunities, educational resources, public safety, government services and access to advanced healthcare solutions. Nowhere is this more true than in rural America, where broadband can level the playing field by providing a platform for everything from distance learning to telemedicine to electronic commerce. The Connect America and Lifeline Programs are bringing robust, affordable broadband to rural communities and the people who live there to improve the quality of life for all residents of the United States. Broadband: critical infrastructure to improve the quality of life in rural America 4
USAC Stakeholder Engagement Our Mission: Build relationships with key stakeholders to better support rural and tribal communities and the providers that serve them Conduct targeted outreach while providing bestin class customer service to our partners and end users Customer Relationship Management Outreach Inform all levels of the USF ecosystem to raise awareness and promote broadband adoption in underserved communities Build lasting partnerships with carriers, local and state leaders, federal agencies and civil society groups to promote the Universal Service mission Education Partnership 5
The Connect America Program Expanding access to modern communications networks 6
Connect America Program Our Mission Expand broadband and voice coverage by collaborating with stakeholders to achieve a shared goal of providing universal service in unserved and underserved locations 7
Connect America Program Program Goals Preserve and advance universal availability of voice service Drive universal availability of modern networks capable of providing voice and broadband service to homes, businesses and community anchor institutions Drive universal availability of modern networks capable of providing advanced mobile voice and broadband service Ensure that rates for broadband and voice services are reasonably comparable in all regions of the nation Contain administrative costs and minimize the universal service contribution for consumers and businesses through efficient, effective program management 8
Connect America Program Connect America Fund by the Numbers Description Annual Amount Program Budget $4.5 billion CY 2015 Disbursements $4.49 billion Number of Study Areas 1602 2015 Administrative Cost $28.7 million 9
Connect America Program Overview Connect America Fund (CAF) Price Cap areas Rate of Return areas Mobile services Competitive ETCs Remote Areas Fund (TBD) CAF Phase I CAF ACAM Mobility Fund Phase I Frozen High Cost Support CAF Phase II CAF BLS Mobility Fund Phase II (TBD) Rural Broadband Experiments CAF ICC CAF ICC HCL (SNA, SVS) Key CAF Phase II (Auctions) CAF Programs Legacy Programs Future Programs 10
Connect America Program CAF Funding in Price Cap Areas CAF Phase I Incremental CAF Phase II CAF Phase II Auctions Rural Broadband Experiments (RBE) CAF Intercarrier Compensation (ICC) Interim program to spur broadband deployment $486 million Build out to locations unserved by 768/200 kbps Provides support based on a cost model $1.7 billion annually Six year support term Provide locations with speeds of at least 10/1 Mbps Provides support to areas declined in CAF II and extremely highcost areas through a reverse auction Ten year term of support Build out to unserved locations with speeds at least 10 /1 Mbps and 25/3 Mbps Provided support in Price Cap areas through an auction More than $40 million over ten years Build out to unserved locations with speeds between least 10/1 Mbps and 100/25 Mbps Allows recovery of revenues reduced due to ICC reforms in 2012 Support intended to invest in broadband infrastructure Program to be phased out eventually Letter of Credit requirement Letter of Credit requirement 11
Connect America Program CAF Funding in Rate of Return Areas Alternative Connect America Cost Model (A CAM) High Cost Loop Support (HCLS) Connect America Broadband Loop Support (CAF BLS) CAF Intercarrier Compensation (ICC) Support based on cost model Ten year support term Provide locations with speeds of at least 10/1 Mbps and 25/3 Mbps Legacy program to support voice and broadband services Provides support for the last mile of connection areas where the cost to provide service exceeds 115 percent of the national average cost Supports voice, voice and broadband, and broadband only services Formerly known as, ICLS Five year deployment obligation milestone Allows recovery of revenues reduced due to ICC reforms in 2012 Support intended to invest in broadband infrastructure Program to be phased out eventually 12
Connect America Program CAF Funding Mobile Services Mobility Fund Phase I $300 million in non tribal areas $50 million in tribal areas Build out of networks to support: 3G 50/200 kbps 4G 200/768 kbps Voice and Broadband Services Letter of Credit requirement 13
Connect America Program Modernization of the High Cost Program Creates the: Connect America Fund A series of FCC Modernization orders beginning in 2011 including the Rate of Return Modernization Order released in March, 2016 have radically transformed the High Cost Program to create the Connect America Fund. Legacy High Cost Voice Maintaining service Cost based funding Forms based reporting requirements Beneficiary audits Compliance Modernized Connect America Voice and broadband Maintaining and expanding service Incentive based support Systems based portal In program deployment verification Success 14
Connect America Program Rate of Return Modernization Order Goals Released by the FCC on March 30, 2016 Target support to areas where the market will not deliver broadband absent subsidy Connect locations that still lack access to broadband by requiring carriers to meet defined build out obligations Improve oversight, accountability and transparency in use of funds by requiring carriers to report regular progress on broadband deployment by precise location (latitude and longitude) Increase fiscal responsibility by creating framework for efficient expenditures of funds Ensure that total support remains within $2 billion annual budget 15
Overview of the Two Regimes Connect America Program Alternative Connect America Cost Model (A CAM) Connect America Fund Broadband Loop Support (CAF BLS) Support calculated by cost model Ten year funding term with set amount of monthly support Specific deployment obligations with annual interim deployment milestones Support calculated using existing mechanisms, as modified Stand alone broadband support Operating expense limitations Capital investment allowances Five year deployment obligations 16
Connect America Program High Cost Universal Broadband (HUBB) Portal The Rate of Return (RoR) Order directs USAC to build a new portal that will serve as a repository for geospatial deployment data showing where carriers are deploying broadband by latitude and longitude A means for collecting location specific service availability data from carriers across all Connect America Fund (modernized) programs millions of individual records Real time validation of data submissions Data storage, quality control and data manipulation engine Potential to eventually replace separate carrier filing tools API s and presentation layers for visibility of the collected data, with the publicfacing side of the portal to provide information about the state of the broadband market at the national, regional and local levels 17
Connect America Program Timeline for Rate of Return Order Implementation Q2 2016 Assess existing ICLS and HCL disbursements Deliver implementation project plan and operational design Identify changes to data collection forms Deliver to FCC plan for collection of geospatial location data Determine carrier specific transition calculations Q3 2016 Work with NECA to validate all carrier inputs and calculations Deliver stand alone tool to valiate location data Conduct user research to inform HUBB (Portal) development USAC publishes budget amount for second half of 2016, target amounts for HCLS and BLS, and forecasted BLS amounts for each carrier Implement budget control mechanisms Develop online challenge process and interfaces Q4 2016 Carrier ACAM elections USAC publishes budget amount, target amounts for HCLS and BLS, and forecasted BLS amounts for each carrier Q1 2017 Ten year ACAM payment period targeted to start 1/1 USAC prepared to accept geospatial deployment data CAF BLS payments begin Competitive carrier challenges for CAF BLS Implement 2017 budget control mechanisms HUBB (Portal) to go live for location data collection Q2 2017 Continued releases of HUBB (Portal) 18
Questions? 19
Contact Us Thank You! Please contact HCQuestions@usac.org if you have additional questions about the Connect America Program To sign up for emails about the Connect America Program, including news, updates and events, go to www.usac.org and click subscribe in the upper right corner 20
The Lifeline Program Connecting Rural and Tribal Communities 21
Program Overview $9.25 discount ($34.25 on tribal lands) on telephone service, and soon, broadband service Providers of Lifeline service are responsible to verify eligibility One benefit per economic household Subscribers must be recertified annually Carriers are reimbursed monthly 22
2016 Lifeline Modernization Inclusion of broadband Changed eligibility criteria Creation of National Eligibility Verifier Additional Changes Rolling Recertification Port Freeze Minimum Service Standards 23
Inclusion of Broadband Eligible consumers may apply their discounts to Lifeline BIAS the later of 12/1 or 60 days after PRA approval Existing voice ETC designations are considered broad enough to allow support for Lifeline broadband The discount cannot be applied to equipment All Lifeline providers, including broadband providers, are responsible for determining eligibility and conducting recertification until the National Verifier is implemented in their states 24
Broadband Implementation Considerations Identify current and potential future providers that will provide BIAS Learn about state statutes that may impact or be impacted by Lifeline broadband implementation Determine the best channels to educate consumers on the opportunity and processes, including providing materials to carriers and states Identify ways in which USAC can administratively assist with the implementation of BIAS 25
2016 Lifeline Modernization Inclusion of broadband Changed Eligibility Criteria Creation of National Eligibility Verifier Additional Changes Rolling Recertification Port Freeze Minimum Service Standards 26
Changed Eligibility Criteria Change Retained Removed Added Changed Criteria Affected SNAP, SSI, Medicaid, Federal Housing Assistance Tribal Programs: Tribal TANF, Bureau of Indian Affairs General Assistance, Food Distribution Program on Indian Reservations, Head Start NSLP, TANF, LIHEAP, state identified programs Veterans Pension and Survivors Benefit Programs States may not increase the income threshold of 135% of federal poverty level, as they could previously Income is now equal to IRS gross revenue New Subscribers: Effective December 1, 2016 or 60 days after PRA approval Existing subscribers: Effective at next recertification beginning in 2017 27
Program Breakdown Programs Currently Used for Eligibility Lifeline Household Participation Rate 33% Total Lifeline Subscribers 1Q16 12,676,022 Tribal Subscribers 1Q16 349,796 28
Eligibility Criteria Implementation Considerations Learn about changes to existing state eligibility systems and business processes that are impacted by the changed criteria Provide helpful information to carriers and states for verification of the new eligible Veterans Administration programs Determine best channels to educate existing and potential Lifeline consumers on the changes, including providing materials to carriers and states 29
2016 Lifeline Modernization Inclusion of broadband Changed Eligibility Criteria Creation of National Eligibility Verifier Additional Changes Rolling Recertification Port Freeze Minimum Service Standards 30
The National Verifier Objectives: Increase program integrity Facilitate consumer choice Reduce carrier burden Functions: Determine subscriber eligibility Populate the Lifeline Eligibility Database (LED) with any consumer deemed eligible Default basis for determining support payments phase out of FCC Form 497 31
The National Verifier November 30, 2016 Draft National Verifier Plan December 31, 2018 Deployed in at least 25 states December 31, 2017 Deployed in at least 5 states December 31, 2019 Deployed in all states and territories 32
National Verifier Implementation Considerations Identify the channels through which a consumer may want to enroll via the National Verifier, or via their provider Coordinate with states who have Lifeline programs Work with states and their existing eligibility systems or processes to get to the best solution one size does not fit all Work with federal agencies to automate eligibility through programs such as federal housing or veterans programs Develop manual processes for eligibility review of documentation where there is no data sharing, or where an exception occurs 33
2016 Lifeline Modernization Inclusion of broadband Changed Eligibility Criteria Creation of National Eligibility Verifier Additional Changes Rolling Recertification Port Freeze Minimum Service Standards 34
Rolling Recertification 2016 Recertification Process Conducted in accordance with current Lifeline practices Based on February 2016 FCC Form 497 subscribers Based on existing eligibility programs Completed by December 31, 2016 2017 Recertification Process Subscribers will be recertified based on new eligibility programs Subscribers will be recertified by their enrollment anniversary dates beginning with anniversaries of July 1, 2017 Subscribers have 60 days to recertify 35
Benefit Port Freeze Date of Enrollment: Subscriber applies benefit to Lifeline service Cannot Transfer Lifeline Benefit to New Provider for: Voice: At Least 60 Days BIAS: At Least 12 Months After Port Freeze: Subscriber may transfer Lifeline Benefit at any time Exceptions 1. Subscriber moves their residential address 2. The provider ceases operations or otherwise fails to provide service 3. Provider has imposed late fees for non payment greater than or equal to the monthly end user charge for the supported service 4. Provider is found to be in violation of the Commission s rules during the 12 month period and the subscriber is impacted by such violation 36
Minimum Service Standards & Voice Phase Out Service Description Voice Only Phase Out Fixed voice No minimum service standard Mobile voice 12/1/16 500 minutes 12/1/17 750 minutes 12/1/18 1,000 minutes and beyond Current $9.25 12/1/19 $7.25 12/1/20 $5.25 12/1/21 $0.00 Fixed broadband 12/1/16 10/1 Mbps download/upload, 150 GB/mo Adjusted annually thereafter Mobile broadband 12/1/16 500 MB/mo, 3G speeds 12/1/17 1 GB/mo, 3G speeds (subject to review) 12/1/18 2 GB/mo, 3G speeds (subject to review) Adjusted annually thereafter Those providing devices must also ensure they are Wi-Fi enabled, and mobile broadband providers offering devices must include a certain percentage of hotspot-enabled devices. 37
Questions? 38
Contact Us Thank You! Please contact LifelineProgram@usac.org if you have additional questions about the Lifeline Program To sign up for emails about the Lifeline Program including news, updates, and events Go to www.usac.org and click subscribe in the upper right corner 39