Federal & State Legislative & Regulatory Update – What’s New? Public Utilities Commission Federal & State Legislative & Regulatory Update – What’s New?

hello! Lynn Notarianni Telecom Section Chief, CO PUC   hello! Lynn Notarianni Telecom Section Chief, CO PUC P  303.894.5945 |  C 720.879.2985   1560 Broadway, Suite 250,  Denver, CO 80202 lynn.notarianni@state.co.us 

“ “Along the Front Range we take it for granted that we have high speed, reliable, affordable internet. Thirty percent of the state doesn’t have that and they are almost completely in rural parts of the state and yet that is the part of the state that I think the rest of us have … a moral obligation to help to support, just make sure they have that. Just like we did the rural electrification program back in the 1930s. But I think it’s also to our economic self interest.” J Hickenlooper - CBS4 1/11/2017

So what legal & policy activity is currently shaping our broadband environment?

1. Federal Legislative & Regulatory Activity The following slides outline key current federal government activity that addressess or may impact rural broadband deployment & high speed internet access.

Federal Legislation & Resolutions [*see Appendix A for titles & descriptions] Broadband Expansion Privacy Funding Miscellaneous S.19 S.88 S.174 S.228 S.277 S.604 S.645 S.742 S.787 S.993 H.Res53 H.R.288 H.R.599 H.R.686 H.R.800 H.R.1591 H.R.1581 H.R.1888 S.878 S.964 S.J.Res.34 H.R.1868 H.R.2356 H.R.2520 H.Res53 H.Res.230 H.J.Res.86 S.142 S.421 S.875 S.1013 S.1016 S.1116 H.R.800 H.R.547 H.R.1084 H.R.1139 H.R.1534 H.R.2425 H.R.2479 S.102 S.134 S.RES.23 H.R.423 H.R.557 H.R.940 H.R.1340

Federal Regulatory Activity Broadband Deployment Advisory Council – BDAC - established by the FCC on March 1, 2017 to make recommendations on how to accelerate the deployment of broadband by reducing and/or removing regulatory barriers to infrastructure investment Accelerating Wireless Broadband Deployment by Removing Barriers to Entry Wireless NPRM Fact Sheet - NPRM & NOI generally seeks comment on actions the FCC could take to expedite wireless infrastructure deployment including improvement of state/local gov’t siting processes and applications and potential revisions to processes driven by the National Environment Policy Act & Sec 106 Historic Preservation Act Accelerating Wireline Broadband Deployment by Removing Barriers to Entry Privacy - Wireline NPRM Fact Sheet - NPRM & NOI that proposes action designed to accelerate the deployment of next-gen networks & services by removing barriers to infrastructure investment at the federal, state & local level - NPRM includes pole attachment reform, copper retirement process & streamlining Sec 214 discontinuance process - NOI includes Sec 253 authority to pre-empt state & local laws inhibiting broadband deployment & pre-emption of state laws governing copper retirement

Federal Regulatory Activity Net Neutrality & Broadband Reclassification - WC Docket No. 17-108 - The NPRM proposes to reverse the FCC 2015 decision to regulate Internet Service Providers under Title II of the Communications Act and return to Title I regulation, to return to the original classification of mobile broadband internet access service as a private mobile service, to eliminate the internet conduct standard, and seeks comment on whether to keep, modify or eliminate the bright-line net-neutrality rules established by the Title II order. Privacy Rules Repeal - On April 3, 2017 Congress and President Trump signed a bill, that used the Congressional Review Act which allows the overturning of recently passed agency regulations, and nullified the Broadband Consumer Privacy Rules (Privacy Rules Summary) promulgated by the FCC in October, 2016. The FCC is working with the FTC to restore FTC authority to police Internet Service Provider Privacy Practices. Incentive Auction - FCC Incentive Auction - On March 29, 2016, the FCC commenced an “incentive auction” designed to repurpose spectrum for video and broadband services. Bidding in the auction closed on March 30, 2017, repurposing 84 megahertz of spectrum. The auction made “low-band” airwaves available for wireless broadband, and is intended to benefit consumers by easing congestion on wireless networks, laying the groundwork for “fifth generation” (5G) wireless services and applications, and spurring job creation and economic growth.

Federal Regulatory Activity Broadband Funding - Universal Service Fund Reform – The FCC modernized the USF for rate of return carriers (ROR USF Order) in March, 2016 by providing approximately $20 billion over 10 years to meet demand for broadband in areas lacking service and competition through two options, model based support or through a modified legacy mechanism option. - Rural Rate Floor – The FCC froze the federally mandated rate increase for rural phone customers served by rate of return ILECs, pending a review of the policy. The FCC froze the current minimum rate for local voice services at $18 per month. The minimum rate was scheduled to rise to $20 on July 1, and to $22 on July 1, 2018.(ROR Rate Freeze)  - Mobility Fund II – The FCC issued an order to allocated $453 million universal service funds annually for 10 years to extend 4G LTE coverage to eligible areas including any portion of a census block not fully covered with a min download speed of 5Mbps and requires median data speeds of 10/1 Mbps, latency of less than 100 ms, and rates that are reasonably comparable to urban rates. (Mobility Fund II NPRM)

2. State Regulatory & Legislative Activity The following slides outline key current state government activity that address or may impact rural broadband deployment and high speed internet access.

State Regulatory High Cost Support Mechanism (HCSM) Facts - Was created by the PUC in 1990 as the CO High Cost Fund (CHCF), codified by the legislature in 1992 and renamed in 1995 to the HCSM with the introduction of local competition and with a goal to ensure universal basic (voice) service for all consumers at fair, just and reasonable rates. - There are two primary components to the fund, contributions from both wireline and wireless providers, which at the 2.6% surcharge rate provides approximately $37 million/year and distributions to certain ILEC, CLEC wireline and wireless providers, which obligations are currently approximately $32 million/year. There are currently 13 companies receiving HCSM funds. - Similar to the FCC USF, distributions are calculated based on a model, which uses both actual cost data and proxy factors or is wholly based on actual cost depending on the classification of the provider. - 2014 Telecom Reform legislation revised the HCSM and allowed for money to be transferred to the newly created Broadband Fund based on money no longer needed to support basic voice service resulting from determinations of effective voice competition in areas of the state. - In 2015 the PUC approved a 4 year settlement with most HCSM recipients in support of a reduced and reasonable amount of continued voice funding that would create a more predictable and stable Fund and therefore additional dollars for broadband deployment.

State Regulatory Funding for rural broadband from the High Cost Support Mechanism (HCSM) - §40-15-509.5, C.R.S – allows the Commission to determine if (HCSM) funds are no longer needed to support voice service in rural areas and allocated that money for rural broadband deployment as determined by the Broadband Board. - The PUC has declared 102 effective competition areas to date through two effective competition proceedings and moved approximately $2+ million dollars based on the first effective competition determinations and which has been awarded for broadband grants. - An appeal in district court of the PUC’s decision on the second effective competition determination proceeding led to substantial delays in the PUC’s ability to allocate additional funding to broadband. - Although not completed, interim decisions in the District Court case along with stable HCSM contributions enabled the PUC to open a proceeding to determine if additional dollars are available to allocate. Upon the governor’s signature SB17-306 in conjunction with the 2017 Long bill provides additional broadband funding allocation direction to the PUC. - The remainder of the geographic areas not yet analyzed for voice competition along with an HCSM rulemaking will begin in the near future. Telecom Rule Reform - In Proceeding 16R-0453T – the PUC has comprehensively revised its telecom rules to conform with the 2014 Telecom Reform suite of legislation. A final order implementing the rules is expected in June, 2017.

State Legislation SB17-306 – Direct Transfer HCSM to Broadband Grant Recipients (SB17-306 HCSM) – Pending Signature - The bill provides for the direct transfer of money from the High Cost Support Mechanism to Broadband Grant applicants as approved by the Broadband Board. SB17-254 – Long Bill (HCSM to Broadband Transfer ) –Pending Signature - Indicates that $9.4 million shall be from money collected from the HCSM to be spent in rural Colorado for broadband. SB17-081 & Other Broadband Related Bill Drafts & Discussions (SB17-081 HCSM for Broadband) - Several bills, most never introduced, looked to further spur the deployment of broadband through statutory changes providing more specificity to voice service competition analysis, revisions to the Broadband Board and its process and changes to language governing the ability of municipalities to provide broadband services.

State Legislation HB17-1174 – Exempt Rural Telecommunications Local Improvement District Requirements (Exempt Telecom Local Improv Dist) – Signed by Governor - Under current law, a county seeking to establish a local improvement district to fund a telecommunications service improvement may construct the improvement if the county has an agreement with a telecommunications service provider to provide service, facilities, plants, or systems in the area in which the improvement will be constructed. The improvement must then be owned, operated, and maintained by the telecommunications service provider. The bill allows a rural county with a population of fewer than 50,000 inhabitants to establish a local improvement district to fund an advanced service improvement in an unserved area of the county under the same conditions that apply to the funding of a telecommunications service improvement through a local improvement district. The bill also defines the terms 'advanced service', 'rural county', and unserved area'. (CO General Assembly Bill Summary) HB17-1193 – Small Cell Facilities Permitting & Installation (HB17-1193 Small Cell) – Signed by Governor - The bill concerns the installation of small wireless service infrastructure within a local government's jurisdiction, provides for an expedited permitting process for small cell facilities and small cell networks, clarifies that the rights-of-way access afforded telecommunications providers extends to broadband providers and to small cell facilities and small cell networks, states that if a telecommunications provider or broadband provider complies with applicable law, it has the right to locate or collocate small cell facilities and small cell networks on a local government entity's light poles, light standards, traffic signals, or utility poles in the rights-of-way owned by the local government entity, and specifies the payments in exchange for permission to attach such facilities.

Thank you! Questions? You can get more information by contacting: lynn.notarianni@state.co.us ? Public Utilities Commission