Federal Policy Update “Fins to the left, fins to the right...” Illinois Telecommunications Association Annual Convention June 2018 Federal Policy Update “Fins to the left, fins to the right...” Eric Keber Vice President of Government Affairs WTA – Advocates for Rural Broadband

Universal Service Fund – High Cost Program Order of December 2018 – Where are we now? March 25 – FCC extended additional ACAM support to companies already receiving ACAM support. May 2 - FCC extended offers of ACAM support to 516 companies. FCC estimates if all carriers opt in to the offer, they will deploy 25/3 Mbps broadband to over 1.1 million homes and businesses. Original deadline: June 17, but was extended to July 17 because the FCC found errors in 36 offers that it then had to recalculate FNPRM Issues Competitive areas – should USF be phased down in areas where a competitor provides voice and 25/3 broadband? How to minimize BCM uncertainty due to CBOL conversions Tribal areas served by companies that don’t select ACAM – should there be a tribal factor like there is for ACAM?

Universal Service Fund – High Cost Program Broadband Network Performance Testing Applies to all recipients of USF with CAF Phase II, ACAM, Rural Broadband Experiments, and Alaska Plan build-out obligations as well as cost-based RLECs with build-out requirements RLECs must conduct speed and latency testing every quarter for a week (7 days) from 6pm to midnight. RLECs must test up to 50 CAF-supported subscriber locations per broadband service tier per state, with lesser requirements for RLECs with fewer than 500 locations per state. Testing was set to begin 3Q19 with first results submitted to USAC in July 2020. Delayed to 1Q20

Universal Service Fund – High Cost Program Broadband Network Performance Testing WTA Application For Review – Filed Sept. 19 Delay rule for two years for small providers No penalties for problems beyond control of the providers Reduce testing frequency to once per year Reduce number of testing locations to 10 to 15 per state Provide a period of time for carriers to address problems in network before loss of USF

Universal Service Fund – High Cost Program CAF Phase II Auction Auction took place from July 24 to August 21 103 winning bidding in 24 states will receive $1.4 billion over ten years to connect 713,000 locations Broadband network testing will ensure winners complete the job

Assigned Annual Support Universal Service Fund – High Cost Program CAF II Winners in Illinois Winning Bidder Assigned Annual Support Assigned Locations AMG Technology Investment Group LLC $35 million 15,022 Wisper ISP 8,907 Benton Ridge Telephone Co. $24 million 6,041 Illinois Electric Co-op $2.2 million 804 Shawnee Communications $1.7 million 567 Wabash Independent Networks $669k 359 ClearSKY Systems $127k 207 ArisWave Consortium $147k 72 LDT Broadband $19k 145

Universal Service Fund Proposed Cap on Overall Fund May 31 – FCC released NPRM that proposes to cap USF at $11.2 billion “By explicitly linking the expenditures in multiple USF programs through the overall cap, we seek to promote a robust debate on the relative effectiveness of the program.” – NPRM “[The FCC has increased funding all four programs] and it has done so without the constraints of a topline budget, and in turn, without considering the effect of spending decisions for the whole USF enterprise and how to fairly and efficiently allocate scarce funds among the four programs. The proposed budget of $11.42 billion is more than $3 billion above current program disbursements and would be indexed to keep pace with inflation.” Commissioner Mike O’Reilly

Universal Service Fund Proposed Cap on Overall Fund “The cap is arbitrary because it has no relation to the actual nature of the internet inequality problem in this country. How can we cap the amount of money needed to support broadband when we don’t even know the number and locations of the Americans that still need to be connected?...Instead of imposing an arbitrary cap, the FCC should be improving its data collection and analysis capabilities so it can understand the true nature of the problem and measure its progress.” - Commissioner Geoffrey Starks “I do not support an approach that fosters the universal service hunger games.” - Commissioner Jessica Rosenworcel

Universal Service Fund Contributions Factor

USF High Cost Fund Assessable Revenues

Other Issues Mapping Broadband Infrastructure/LIFT Act House Democrats introduced legislation to provide $40 billion for national reverse auctions Any area with less than 25/3Mbps is “unserved”; more than 25Mbps and less than 100Mbps is “underserved” Rural Broadband Network Advancement Act H.R. 2929 – assess large edge providers to help pay for rural networks RUS Re-Connect Pilot Program E-Rate Overbuilding Supply Chain Security Video Policy Reform

Questions? Contact: eric@w-t-a.org 202-548-0202