FCC Chief: Agency Needs $36M Boost for IT Upgrades, USF Overhaul, Staffing

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By Bryce Baschuk  

March 25 --The Federal Communications Commission's $35.6 million funding increase it seeks for fiscal 2015 would be spent on technology upgrades, improvements in Universal Service Fund programs and staffing, FCC Chairman Tom Wheeler told lawmakers.

Wheeler made his remarks at a March 25 hearing before the House Appropriations Subcommittee on Financial Services and General Government. The administration is seeking to allocate $375.4 million for the FCC in FY 2015, a 10.5 percent increase from the agency's current budget of $339.8 million.

Also at the hearing, Wheeler and Republican FCC Commissioner Ajit Pai delved into a heated debate about the commission's forthcoming vote to tighten its media ownership rules.

Universal Service Fund

The FCC wants a $10.8 million boost to the USF programs, something that Wheeler said will bring sizable changes. The agency would use those funds to increase Lifeline enforcement, oversee the transition to all Internet protocol networks and modernize the E-Rate program.

“We need more muscular enforcement about what is going on in universal service,” Wheeler said. “The Lifeline program has been abused. My line from day one is, 'I want heads on pikes' and we need enforcement capability we don't have,” he said.

Lifeline, the USF program to offer financial discounts for phone service to eligible households, has been defrauded by some providers who offered subscribers multiple subsidized mobile phones. In 2013 the FCC brought nearly a dozen Lifeline enforcement actions against such providers and deployed the National Lifeline Accountability Database to help address the problem of duplicate enrollments that have plagued the program.

Over the next two years, the FCC aims to restructure the E-Rate program, also known as the schools and libraries universal service support mechanism, to distribute $2 billion per year to subsidize greater broadband capacity for U.S. schools and libraries. The 1996 Telecommunications Act directed U.S. telecommunications providers to contribute to the USF in the form of fees that would subsidize the deployment of broadband infrastructure to American schools and libraries.

Wheeler said the USF-funded E-Rate program is an “18-year-old program built around 18-year-old priorities. It needs redirection, it needs cost efficiency and we need new rules to develop that.”

The agency will vote on a new set of E-Rate rules before students return to school in September that will discontinue funding for legacy technologies, like pagers, and change the structure of the program for the 2015 school year. The commission recently announced that it would reallocate $2 billion worth of existing, unused E-Rate funds to subsidize greater broadband capacity for U.S. schools and libraries.

IT Upgrades, Salaries

The FY 2015 budget would provide the FCC with $13.5 million to upgrade many of the commission's “old, inefficient and insecure” information technology systems, Wheeler said.

“Forty percent of our IT systems are more than 10 years old. This means that for many of them there is no vendor support and they are costly to maintain.” Furthermore, the FCC's 207 different computer systems are “incompatible--they can't talk to each other and they are highly inefficient, and worst of all they are insecure,” he said.

“$13 million is a lot of money,” said Wheeler. “But the reality here is if we don't spend that now we will spend that in the next two years in the bailing wire and glue to pull existing systems together.”

Wheeler said the remaining requested funds are needed to hire additional employees, and satisfy mandatory requirements regarding salaries and benefits. “Cuts in employees left us chronically understaffed in enforcement,” Wheeler said in prepared remarks. The FCC currently has 1,725 full-time employees, the lowest number at the commission in 30 years, Wheeler noted.

The FCC also requires funds to assume management of the national broadband map from the Commerce Department's National Telecommunications and Information Administration, Wheeler said.

Joint Sales Agreements

The debate between Wheeler and Pai at the hearing took place ahead of the FCC's planned March 31 vote on an order that seeks to change the agency's media attribution rules to take into account the use of some joint sales agreements (JSAs) and shared services agreements (SSAs) among broadcast TV stations. JSAs and SSAs, which combine advertising and resources between TV stations that compete in the same market, are sometimes used to circumvent the commission's media ownership rules.

The FCC prohibits broadcast companies from owning two or more full power television stations in the same market. If the order is approved an owner of one broadcast station in a market that sells 15 percent or more of the advertising time for a competing station in the same market will be considered to have an ownership interest in that station.

Pai told lawmakers that the proposal, if adopted, “will result in less minority-owned broadcast properties.”

Wheeler bristled at the suggestion. “There is no way, shape, or form that the kinds of positive things that you are talking about here will not be allowed under the proposal,” he said.

“Bad practices often hide behind the skirts of good people,” Wheeler said. “JSAs are the way around the commission's long-standing rules and they have been done in an off-the-record, non-transparent way over the years. We will propose that it be made transparent. One of the results will be an opening-up of broadcast licenses for small, minority and female broadcasters.”

To contact the reporter on this story: Bryce Baschuk in Washington at bbaschuk@bna.com

To contact the editor responsible for this story: Heather Rothman at hrothman@bna.com