Washington Update Presented by: Jeff Dupree Vice President – Government Relations NYSTA Annual Conference June 6, 2017 Copyright © 2017 National Exchange Carrier Association, Inc. All rights reserved. This presentation may be used by attendees for informational purposes only. No part of this presentation may be reproduced or transmitted in any form or by any means, electronic, mechanical, photocopying, or otherwise, without prior written permission of NECA.

What will Trump Administration Bring? Still determining tech/telecom policy $1 trillion infrastructure package? Includes broadband Reversal of Wheeler’s agenda @ FCC Open Internet Privacy Opens door to GOP direction on telecom issues Source: nbcnews.com Copyright © 2017 National Exchange Carrier Association, Inc. All rights reserved. This presentation may be used by attendees for informational purposes only. No part of this presentation may be reproduced or transmitted in any form or by any means, electronic, mechanical, photocopying, or otherwise, without prior written permission of NECA.

Running the Show in Congress GOP maintains Senate and House majorities Committees with FCC oversight responsibilities: Senator John Thune (R – SD), retains Chair of Committee on Commerce, Science and Transportation Rep. Greg Walden (R-OR) chairs the Committee on Energy and Commerce Rep. Marcia Blackburn (R-TN) heads up the Communications and Technology subcommittee Copyright © 2017 National Exchange Carrier Association, Inc. All rights reserved. This presentation may be used by attendees for informational purposes only. No part of this presentation may be reproduced or transmitted in any form or by any means, electronic, mechanical, photocopying, or otherwise, without prior written permission of NECA.

Copyright © 2017 National Exchange Carrier Association, Inc Copyright © 2017 National Exchange Carrier Association, Inc. All rights reserved. This presentation may be used by attendees for informational purposes only. No part of this presentation may be reproduced or transmitted in any form or by any means, electronic, mechanical, photocopying, or otherwise, without prior written permission of NECA.

Copyright © 2017 National Exchange Carrier Association, Inc Copyright © 2017 National Exchange Carrier Association, Inc. All rights reserved. This presentation may be used by attendees for informational purposes only. No part of this presentation may be reproduced or transmitted in any form or by any means, electronic, mechanical, photocopying, or otherwise, without prior written permission of NECA.

Changes at the FCC GOP FCC will be pro-competition 2-for-1 regulation elimination Commissioner vacancies Rosenworcel a lock for Democratic slot? Many names still kicking around for GOP slot Will Clyburn stay on? Formation of the Office of Economics and Data (OED) Copyright © 2017 National Exchange Carrier Association, Inc. All rights reserved. This presentation may be used by attendees for informational purposes only. No part of this presentation may be reproduced or transmitted in any form or by any means, electronic, mechanical, photocopying, or otherwise, without prior written permission of NECA.

Copyright © 2017 National Exchange Carrier Association, Inc Copyright © 2017 National Exchange Carrier Association, Inc. All rights reserved. This presentation may be used by attendees for informational purposes only. No part of this presentation may be reproduced or transmitted in any form or by any means, electronic, mechanical, photocopying, or otherwise, without prior written permission of NECA.

Net Neutrality “Protecting and Promoting the Open Internet” Original Open Internet Order released in 2010 Public disclosure Anti-blocking requirements Anti-discrimination Challenged by Verizon in D.C. Circuit Court Court ruled on January 14, 2014 Struck down anti-blocking and anti-discrimination rules Section 706 gave FCC authority to regulate broadband Internet access service Copyright © 2017 National Exchange Carrier Association, Inc. All rights reserved. This presentation may be used by attendees for informational purposes only. No part of this presentation may be reproduced or transmitted in any form or by any means, electronic, mechanical, photocopying, or otherwise, without prior written permission of NECA.

Net Neutrality FCC Order released March 12, 2015 No blocking, throttling or paid prioritization No discrimination among consumers or Edge Providers Adopts enhanced transparency requirements Broadband Internet Access Service (BIAS) as a “telecommunications service” subject to Title II “Light touch” application Broad forbearance from tariffs, rates Copyright © 2017 National Exchange Carrier Association, Inc. All rights reserved. This presentation may be used by attendees for informational purposes only. No part of this presentation may be reproduced or transmitted in any form or by any means, electronic, mechanical, photocopying, or otherwise, without prior written permission of NECA.

Net Neutrality “Restoring Internet Freedom” NPRM released May 23, 2017 Comments: July 27, 2017; replies: Aug 16, 2017 Proposed to return BIAS from Title II to Title I Eliminate Internet conduct standard Battle of the Data Call to action … again Value of “astroturfing” Copyright © 2017 National Exchange Carrier Association, Inc. All rights reserved. This presentation may be used by attendees for informational purposes only. No part of this presentation may be reproduced or transmitted in any form or by any means, electronic, mechanical, photocopying, or otherwise, without prior written permission of NECA.

ISP Privacy Proceeding Order released November 2, 2016 Defines information to be protected under Section 222 of Communications Act Extends Section 222 to ISPs Implement core principles of transparency, choice and security: Notice on info being collected and how it is being used; Opt-in consent for sensitive data, opt-out for non-sensitive data; Reasonable data security practices and notice requirements in event of a breach Copyright © 2017 National Exchange Carrier Association, Inc. All rights reserved. This presentation may be used by attendees for informational purposes only. No part of this presentation may be reproduced or transmitted in any form or by any means, electronic, mechanical, photocopying, or otherwise, without prior written permission of NECA.

ISP Privacy Proceeding FCC’s Open Internet Order turned ISPs into Common Carriers FTC no longer had authority to regulate ISPs due to the common carrier prohibition Significant industry opposition to FCC’s ISP Privacy Rules Not aligned with FTC Privacy rules ISPs treated differently than Edge Providers Copyright © 2017 National Exchange Carrier Association, Inc. All rights reserved. This presentation may be used by attendees for informational purposes only. No part of this presentation may be reproduced or transmitted in any form or by any means, electronic, mechanical, photocopying, or otherwise, without prior written permission of NECA.

ISP Privacy Rules -- Opposition and Rollback FCC Order stayed implementation Congressional Review Act used to rollback entire ISP Privacy Order CRA is a tool to eliminate administrative regulations by Congress Only used once prior to current Congressional session but 14 times in 2017 Prohibits agency from enacting substantially similar regulations in the future Copyright © 2017 National Exchange Carrier Association, Inc. All rights reserved. This presentation may be used by attendees for informational purposes only. No part of this presentation may be reproduced or transmitted in any form or by any means, electronic, mechanical, photocopying, or otherwise, without prior written permission of NECA.

Privacy Rules -- What Now? FCC proposes to reclassify BIAS as a Title I information service FTC to resume jurisdiction and protection of consumer privacy Rep. Blackburn introduced the BROWSER Act of 2017 Very similar to the FCC privacy rules, but: Would require both ISPs and Edge Providers: Implement strong privacy practices Require customers to opt-in to the use and sharing of sensitive data Preempts state internet privacy rules Copyright © 2017 National Exchange Carrier Association, Inc. All rights reserved. This presentation may be used by attendees for informational purposes only. No part of this presentation may be reproduced or transmitted in any form or by any means, electronic, mechanical, photocopying, or otherwise, without prior written permission of NECA.

USF Reform Order – the Basics USF Reform Order and Further Notice of Proposed Rulemaking (FNPRM) released March 30, 2016 Created two paths for rate-of-return carrier support: Model-based Alternative Connect America Fund Model (A-CAM) Support amounts are fixed for a 10 year period Non-model based Based on “reformed” legacy support mechanisms Rate of return transitions to 9.75% Copyright © 2017 National Exchange Carrier Association, Inc. All rights reserved. This presentation may be used by attendees for informational purposes only. No part of this presentation may be reproduced or transmitted in any form or by any means, electronic, mechanical, photocopying, or otherwise, without prior written permission of NECA.

USF Reform - New Concepts Support for standalone broadband Operating Expense (OpEx) limitation Capital Investment Allowance (CIA) limitation Budget Control Mechanism (BCM) Total RoR USF support capped at $2 billion per year, plus reserves dedicated to A-CAM Competitive Overlap provisions implemented Build-out obligations required to receive support Revised reporting: the “HUBB” Copyright © 2017 National Exchange Carrier Association, Inc. All rights reserved. This presentation may be used by attendees for informational purposes only. No part of this presentation may be reproduced or transmitted in any form or by any means, electronic, mechanical, photocopying, or otherwise, without prior written permission of NECA.

USF Reform – Implementation Stage 207 rate-of-return carriers opt-in to A-CAM 424 study areas; 18 in NY $505 million in annual support Alaska Plan adopted (14 companies) Continuing to address implementation issues Address waste, fraud and abuse? Means testing? Copyright © 2017 National Exchange Carrier Association, Inc. All rights reserved. This presentation may be used by attendees for informational purposes only. No part of this presentation may be reproduced or transmitted in any form or by any means, electronic, mechanical, photocopying, or otherwise, without prior written permission of NECA.

Rate Floor Order & NPRM released May 19, 2017 Freezes the floor at $18 for two years or until further action taken Urban rate survey = $22.49 Would have increased to $20 on July 1, 2017 Seeks comment on: Changes in methodology, or elimination altogether? Meeting intended purposes? Reduce administrative and compliance costs? Copyright © 2017 National Exchange Carrier Association, Inc. All rights reserved. This presentation may be used by attendees for informational purposes only. No part of this presentation may be reproduced or transmitted in any form or by any means, electronic, mechanical, photocopying, or otherwise, without prior written permission of NECA.

Separations Freeze Order released May 15, 2017 Extends freeze through December 31, 2018 Follow-up to Further Notice of Proposed Rulemaking (3/20/17) Comments submitted by 8 parties Continue work with Federal-State Joint Board on Separations to overhaul rules 2 Public Notices on April 24, 2017 seeking comment on comprehensive reform Expects recommended decision in early 2018 Copyright © 2017 National Exchange Carrier Association, Inc. All rights reserved. This presentation may be used by attendees for informational purposes only. No part of this presentation may be reproduced or transmitted in any form or by any means, electronic, mechanical, photocopying, or otherwise, without prior written permission of NECA.