TELECOM ISSUES FOCUS
Welcome to the new Telecom Issues Focus page. The NTA, in continually striving to bring you the latest news and opinions regarding the telecommunications space, has implemented this new page where important telecom issues are brought forth and then viewers can comment.
You can jump to any past article using the links in the table of contents. Comments will be moderated for appropriate content.
Table of Contents
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March 2025 - Meet the new BEAD – Same as the old BEAD?
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February 2025 - Stage Set for State Broadband Regulation
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January 2025 - Net Neutrality is Dead
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December 2024 - Who Holds the Fate of Universal Service Funding?
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November 2024 - the Federal Universal Service Fund Funding Dilemma
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MARCH 2025
NTA Issue Focus – Meet the new BEAD – Same as the old BEAD?
Andrew Isar, Miller Isar, Inc.
March 2025
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As virtually all government operations and programs are up for review under the new Administration, it comes as no surprise that the $42.5 billion Broadband Equity, Access and Deployment (BEAD) program has come under scrutiny with some interesting implications.
Trump appointed Commerce Department Chief Howard Lutnick wasted no time in saying Commerce is initiating a “rigorous review” of the BEAD program, noting, “The Department is ripping out the Biden Administration’s pointless requirements… It is revamping the BEAD program to take a tech-neutral approach that is rigorously driven by outcomes, so states can provide internet access for the lowest cost.” (Press Release)
Meanwhile, two BEAD related bills have been introduced – the Streamlining Program Efficiency and Expanding Deployment (SPEED) for BEAD Act, introduced by Rep. Richard Hudson (R-NC), would remove BEAD requirements related to rate regulation, prevailing wages, climate resilience, diversity, equity and inclusion (DEI) initiatives and more. Separately, the Broadband Buildout Accountability Act, introduced by Senators John Curtis (R-UT) and Rick Scott (R-FL) would remove the BEAD program’s Freedom of Information Act (FOIA) exemption so that the public can request information on how BEAD money is being spent.
It is unclear how the National Telecommunications and Information Administration (NTIA), who oversees the BEAD program, may amend its current rules under pressure from the Administration and/or through legislation or on its own. Clearly, efforts to streamline access to BEAD funding and removal of program “fraud, waste, and abuse,” in concept could stand to accelerate deployment of much needed high-speed broadband Internet service to underserved or unserved rural areas. But then, the proverbial devil is in the details.
In a not too subtle nod to Elon Musk, a March 4,2025 The Wall Street Journal article reports that Ludnik has told staff that he plans to see the BEAD program become technology-neutral. Where the BEAD program has had a preference for fiber, it seems more than a coincidence that Musk’s Starlink may now stand a much better chance of drawing an estimated $10 to $20 billion in BEAD funding according to The Wall Street Journal, to the determent of fiber-based BEAD applicants and recipients.
Many states are already actively implementing their broadband grant programs, so it is unclear how those programs could be affected, if not delayed, and how some program applicants could be edged out through a technology-neutral BEAD program. So, are efforts afoot to truly make the BEAD program more effective, streamlined, and more transparent to the public, or are we just seeing a political quid pro quo to help a single service provider while many rural internet users will continue to wait for access to reliable, high-speed internet?
FEBRUARY 2025
NTA Issue Focus – Stage Set for State Broadband Regulation
Andrew Isar, Miller Isar, Inc.
February 2025
A recent U.S. Court of Appeals for the Second Circuit (New York, NY) decision regarding New York’s Affordable Broadband Act (ABA) could unwittingly set the stage for state broadband regulation, even as incoming FCC Chairman Carr begins taking a far more deregulatory stance. Though the ABA itself does not open the floodgates to state broadband regulation, the finding that New York is legally entitled to impose specific requirements on broadband providers certainly raises specter that more state broadband regulation may be in the offing.
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On January 14, 2025, New York’s 2021 (not a typo) ABA went into effect following unsuccessful appeals culminating in the U.S. Supreme Court’s December 16, 2025 denial of the New York State Telecommunications Association, Inc., et al.’s Petition for writ of certiorari seeking review of the Second Circuit’s decision upholding the law.
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The ABA imposes an obligation on Internet Service Providers to “offer high speed broadband service to low-income consumers,” as defined, regulates corresponding rates – a $15.00 per month rate cap - and speeds, and imposes other requirements including promotion and advertising broadband service availability for low-income consumers, subject to enforcement action. Providers are to submit annual compliance reports to the New York Department of Public Service. As enacted, the ABA broadly applies to “Every person, business, corporation, or their agents providing or seeking to provide wireline, fixed wireless or satellite broadband service in New York state” without exemptions.
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The string of appeals focused the ABA being preempted by the 1934 Communications Act, as amended, as the U.S. Court of Appeals for the Sixth Circuit most recently found in overturning the FCC’s Net Neutrality order that was to have resuscitated broadband regulation under Title II of the Act. The Second Circuit was not similarly persuaded. According to the Second Circuit,
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the ABA is not field-preempted by the Communications Act of 1934 (as amended by the Telecommunications Act of 1996), because the Act does not establish a framework of rate regulation that is sufficiently comprehensive to imply that Congress intended to exclude the states from entering the field, and
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the ABA is not conflict-preempted by the Federal Communications Commission’s 2018 order classifying broadband as an information service. That order stripped the agency of its authority to regulate the rates charged for broadband internet, and a federal agency cannot exclude states from regulating in an area where the agency itself lacks regulatory authority.
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The State of New York fully recognized that was forcing the legal preemption issue to the courts, noting in its brief to the U.S. Supreme Court that it did:
not seriously dispute that the [ABA] is the first of its kind. No other government (at any level) has ever enacted a statute that regulates retail broadband rates. New York does not dispute that the Second Circuit’s decision in NYSTA II [the appeal case] opens the door to other States following suit and a patchwork regime unknown in the internet’s history. Nor does New York deny that NYSTA II reaches far beyond broadband. It holds that the federal Communications Act does not preempt state rate regulation of interstate information services, a category that also includes video- and music-streaming services, cloud-storage services, and dozens more.
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On January 10, 2025 the Appellants filed a Petition for Rehearing with the Supreme Court. The Petition for Rehearing argues that at the time the Supreme Court denied the petitioners’ Petition for writ of certiorari, the U.S. Court of Appeals for the Sixth Circuit panel, “had unanimously stayed the FCC’s latest attempt to transform broadband into a public utility service—subject to the Communications Act’s Title II, which includes rate regulation…” The petitioners maintain that the Supreme Court should now reflect on the Sixth Circuit’s decision in finding that the ABA is similarly preempted under federal law. The Supreme Court is scheduled to consider the Petition for Rehearing on February 21, 2025.
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As one legal analyst recently noted, “By denying certiorari, the [U.S. Supreme Court] has effectively cleared the path for states to regulate rates charged by internet service providers. This case also serves as a reminder that, where the federal government takes a step back, states will often step in.” Unless the Supreme Court is persuaded that the ABA, like the FCC’s net neutrality order, is preempted under federal law, we may see similar state broadband laws and regulations pop up, resulting in a slew of patchwork state requirements that are sure to stifle broadband deployment.
UPDATE:
Supreme Court denies petition for rehearing on New York Affordable Broadband Act
On Feb. 24, 2025, the U.S. Supreme Court denied the New York State Telecommunications Association, Inc., et al.’s petition for rehearing of the court’s order denying their petition for writ of certiorari of a decision from the U.S. Court of Appeals for the 2nd Circuit upholding the New York Affordable Broadband Act.
JANUARY 2025
NTA Issue Focus - Net Neutrality is Dead
Andrew Isar, Miller Isar, Inc.
Jan 2025
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It is a safe bet that Net Neutrality is dead, certainly for the foreseeable future following the U.S. Court of Appeals for the Sixth Circuit’s (Cincinnati, OH) January 2, 2025 unanimous panel ruling in Ohio Telecom Association et al. v. Federal Communications Commission regarding the FCC’s May 2024 Net Neutrality Declaratory Ruling. The court found that Broadband Internet Service Providers offered unregulated “information services” under the plain language statutory definition in 47 U.S.C. §153(24) because broadband Internet access service allows users to retrieve and otherwise utilize information via telecommunications. It concluded that, “the FCC lacks the statutory authority to impose its desired net-neutrality policies through the “telecommunications service” provision of the Communications Act." The ruling applied to both wireline and wireless broadband services.
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The U.S. Supreme Court’s 2024 Loper Bright Enters. v. Raimondo decision overturning the Chevron defense, decidedly played a role in the Sixth Circuit’s decision. Under the Chevron defense, courts would generally defer to government agency interpretation of statute and rules governing the agency’s jurisdiction. According to the Sixth Circuit’s ruling, “unlike past challenges that the D.C. Circuit considered under Chevron, we no longer afford deference to the FCC’s reading of the statute… Instead, our task is to determine ‘the best reading of the statute’ in the first instance.”
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The Sixth Circuit’s ruling was decidedly pointed against the FCC, characterizing the FCC’s Net Neutrality Declaratory Ruling a “heavy-handed regulatory regime.” Indeed Republican Commissioner Brendan Carr, a long time Net Neutrality critic and incoming FCC Chair, in his detailed Dissenting Statement regarding the FCC’s Declaratory Ruling – an interesting read regarding Net Neutrality’s history - blamed President Obama for forcing the FCC’s hand on Title II broadband service regulation, underscoring among other things why Net Neutrality was entirely unfounded.
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With the new Republican Administration, an FCC Chair who vehemently opposed Title II broadband regulation, and a Republican majority of FCC Commissioners once a Republican is appointed to replace outgoing Chairwoman Rosenworcel, it is highly unlikely that broadband regulation will be considered anytime soon, certainly so long as the Loper decision stands. Nevertheless, questions remain regarding the impact of keeping broadband services free of regulation and the effect on consumers, as a Fierce Network Op-Ed piece suggests: “The FCC’s authority has become outdated under the Telecommunications Act of 1996. The agency’s authority covers telcos, but these providers have since morphed into broadband providers, over which the FCC has little authority.” The Sixth Circuit’s decision, while perhaps marking the end of FCC broadband service regulation once and for all, might nevertheless be viewed as microcosm of an ongoing battle between industry and consumer interests that will continue under other guises for years to come to be decided by the courts.
To make these Issue Focuses as relevant, informative, and useful as possible, please share your comments and suggestions. And if you have a regulatory-legislative topic of interest, believe an Issue Focus is missing the mark, or have questions, certainly contact me at aisar@millerisar.com.
DECEMBER 2024
NTA Issue Focus – Who Holds the Fate of Universal Service Funding?
Andrew Isar, Miller Isar, Inc.
Dec 2024
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When preparing the inaugural NTA Issue Focus last month, it was unclear how quickly the U.S. Supreme Court might act on the FCC’s appeal of the U.S. Court of Appeals for the Fifth Circuit’s finding that the FCC’s universal service funding methodology was unconstitutional, violated statutory authority, and was ultimately illegal. Late last month the Supreme Court granted the FCC’s writ of certiorari and a separate, supporting appeal by a coalition of interests including USTelecom. While I wish to avoid a singular focus on this matter, here is a quick update on developments in this case given its direct impact on NTA members.
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On November 22, 2024, the U.S. Supreme Court granted certiorari to the Federal Communications Commission and the separately to the SHLB Coalition, et al. who petitioned the U.S. Supreme Court for review the U.S. Court of Appeals for the Fifth Circuit decision granting Consumers’ Research, et al.’s petition for review of the first quarter 2022 universal service contribution factor. The challenges seek to test whether the Fifth’s Circuits finding that the funding methodology violates the Constitution’s “non-delegation” and “private non-delegation” doctrines, and moreover, whether fundamental changes to program funding will be needed will stand.
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Federal universal service funding for each of the four programs overseen by the Universal Service Administrative Company (USAC) on behalf of the FCC is staggering. The High-Cost Fund accounted for a $4.32 billion in fiscal year (FY) 2023; the E-Rate program accounted for $2.46 billion in FY 2023 funding; Lifeline funding was $869.9 million, and Rural Healthcare support was $468.2 million. The Universal Service Fund (USF) contribution factor – the percentage assessment on jurisdictional interstate and international revenues - has risen from 25.2% for the first quarter 2022, when Consumers’ Research first challenged the FCC’s contribution factor, to 35.8% in fourth quarter 2024, with no end to factor increases under the current funding methodology.
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As noted, in June, the Sixth and Eleventh Circuits upheld the USF funding methodology as constitutional, but in July, the full Fifth Circuit ruled 9-7 that the program violated constitutional limits by granting excessive power to the FCC and to USAC as the Commission’s delegated program administrator. In granting certiorari the Supreme Court directed the parties to address why they did not seek reconsideration of Fifth Circuit’s decision in one hour of oral argument. This is perhaps telling of where the Supremes may be headed.
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If the Supreme Court finds that the FCC failed to seek preliminary relief from the Fifth Circuit decisive, it could dismiss the case on procedural grounds, leaving unresolved the substantive challenges to the USF program. And, if the case proceeds – a finding that the issue is not moot – the Supreme Court will hear arguments on the merits of the case, potentially setting the stage for significant USF classification rulings and limits of FCC authority under the non-delegation doctrine.
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The outcome of the November elections may now come into play in the Supreme Court’s and FCC’s thinking. Chairwoman Rosenworcel issued a statement following the grant of certiorari referring to “the Fifth Circuit’s misguided decision.” Yet as Republican Commissioner Brendan Carr stands to assume the Chairmanship, it is unclear whether he will agree. Former Republican FCC Chairman Ajit Pai (2017 to 2021) has already expressed support for direct congressional USF funding, consistent with proposals from Senator Ted Cruz, R-Texas. Carr could follow suit.
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The outcome of the proceeding(s) will certainly impact NTA members at the federal and likely state level, if Nevada’s and other state USF programs follow court-mandated changes to the federal program funding or if Congress steps in. What is clear is that we can expect fundamental changes in how the USF is funded and possibly administered. We will keep you posted.
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And speaking of Commissioner Carr, we may also anticipate sweeping changes in the FCC’s regulatory orientation toward greater deregulation. According to Fierce Network, “Carr will likely support Elon Musk's efforts to push BEAD funds towards satellite broadband, as well as weigh in on spectrum policy issues that would favor Starlink.” As reported in our November 2024 Regulatory Review, Carr has already gone after Chief Executive Officers of Alphabet, Inc. Microsoft Corporation, Meta Platforms, Inc. and Apple, Inc. requesting information regarding the companies’ work with NewsGuard. Carr’s letter states that the companies “have played significant roles removing or blocking social media posts to labeling whole websites or apps as ‘untrustworthy’ or ‘high-risk’ in an apparent effort to suppress their information and viewpoints, including through efforts to delist them, lower their rankings, or harm their profitability” through NewsGuard use. It should come as no surprise that we can anticipate some regulatory “streamlining” under his administration, while perhaps including limitations on the Section 230 of the Communications Decency Act protections, which shield online platforms from being held legally responsible for content posted by third-party users. Next year certainly stands to be a year of regulatory change in the industry.
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To make these Issue Focuses as relevant, informative, and useful as possible, please share your comments and suggestions. And if you have a regulatory-legislative topic of interest, believe an Issue Focus is missing the mark, or have questions, certainly contact me at aisar@millerisar.com.
NOVEMBER 2024
NTA Issue Focus – the Federal Universal Service Fund Funding Dilemma
Andrew Isar, Miller Isar, Inc.
Nov 2024
This is the first in a series of industry issue focus discussions to highlight regulatory and legislative matters that may impact Nevada Telecommunications Association (NTA) members. As a long-time practitioner in the telecommunication’s regulatory arena, I clearly understand initial negative reactions to “regulatory” maters by some. And indeed, for many, regulation is simply a necessary evil of doing business in our industry. There is an upside to understanding issues that are in play and how those issues may impact corporate bottom lines. In other words, looking at regulatory and legislative issues with a member planning and profitability mindset. This is the perspective being taken in these Issue Focuses. With that in mind, let’s dive into our first topic.
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During the NTA fall conference, I spoke about Consumers Research’s challenges of the FCC’s universal service fund (USF) framework and quarterly assessments. These challenges have gained traction, first through a U.S. Court of Appeals for the Fifth Circuit (New Orleans, LA) and now on appeals to the U.S. Supreme Court. The outcome of the appeals, now coupled with the election results, may significantly impact how much service providers and ultimately their subscribers “contribute” to maintaining universal service funding and the effect of profitability and service affordability.
For those unfamiliar with the issue, Consumer Research, is a non-profit corporation founded in 2021 whose mission it characterizes as “seeking to increase knowledge and understanding of issues, policies, products, and services of concern to consumers and to promote the freedom to act on that knowledge and understanding.” Since 2022, Consumers Research has challenged the FCC’s quarterly federal universal service fund surcharge each quarter. Consumers Research maintains that the FCC’s USF funding methodology is unconstitutional, violates statutory authority, and is ultimately illegal, among other things, as most recently argued in its November 4, 2024 comments regarding the proposed 1Q25 contribution factor. Beyond challenging the USF before the FCC, Consumers Research has challenged the FCC’s USF contribution factor before several U.S. Courts of Appeal and this year achieved a favorable decision before the full Fifth Circuit, which remanded the case back to the FCC. Consumers Research was also successful in its request for the U.S. Supreme Court to grant a writ of certiorari regarding the U.S. Court of Appeals for the 11th Circuit (Atlanta, GA) denial on Consumers Research’s USF challenge.
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As anticipated, on September 30, 2023, the FCC petitioned the U.S. Supreme Court for a writ of certiorari seeking review of a U.S. Court of Appeals for the 5th Circuit decision that granted Consumers’ Research, et al.’s petition for review. The Commission argued the Fifth Circuit decision was incorrect and that Congress did not delegate legislative power to the Commission. In October, the Schools, Health and Libraries Broadband Coalition, et al. filed a letter with the Supreme Court supporting the FCC’s appeal as well as its own separate appeal, while attorneys general of West Virginia and 14 other states and the Arizona state legislature submitted a friend of the court brief supporting Consumers Research’s appeal, arguing that Congress should find a way to provide universal telecommunications services for everyone and that the Court needs to be the one to act, not industry participants.
Pending action by the U.S. Supreme Court, the election results may now point to Congressional action on the issue. Following his reelection, Texas senator Ted Cruz, current ranking member of the Senate Committee on Commerce, Science, and Transportation, is poised to become committee Chairman and move to recast the USF funding process through a Congressional appropriations process rather then through the current FCC process, as Cruz has argued.
With a change in the administration and Republican majority in the Senate, the chances of a recasting of the federal USF through Congressional action are fairly good. At time when the quarterly USF contribution factor has reached a whopping 35.8 percent of interstate and international revenues and likely growing, it becomes increasingly challenging for USF funding to maintain the status quo. The possibility of Congressional appropriations to the USF may benefit consumers by spreading funding over a broader range of taxpayers rather than through telecommunications service users alone. Doing so would stand to reduce the financial burden on service users, promote increased service usage if users no longer have to factor in USF assessment costs, and streamline USF reporting to the Universal Service Administrative Company in what has become an exceptionally challenging FCC Form 499 reporting process. On the flip side, a change in the funding process may begin to limit USF programs funding, including the E-Rate for Schools and Libraries, and overall subsidies that USF recipients have grown accustomed to.
Given the outcome of the elections, the Supreme Court may now find that Congress and not the FCC is to establish how USF will be funded, as Consumers Research has argued. This will undoubtedly have ramifications on state USF programs that have been modeled after the federal USF framework – now moving the state USF funding discussion to state legislatures. We will keep you posted.
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To make these Issue Focuses as relevant, informative, and useful as possible, please share your comments. And if you have a regulatory-legislative topic of interest, believe an Issue Focus is missing the mark, or have questions, certainly contact me at aisar@millerisar.com.
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Great Article Andrew, thank you!