Tuesday, November 19, 2019
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Fraud and Supporting Broadband Service in High-Cost Areas
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FCC Should Take Additional Action to Manage Fraud Risks in Its Program to Support Broadband Service in High-Cost Areas
GAO was asked to review funding reforms and fraud controls the Federal Communications Commission has implemented for rate-of-return carriers. This report examines the extent to which FCC: (1) has implemented funding reforms specific to rate-ofreturn carriers, and (2) is managing fraud risks for the high-cost program in accordance with leading practices. One of the reforms that GAO reviewed established a funding mechanism for the carriers whereby FCC determines the level of financial support to provide the carriers based on cost and revenue estimates produced by a model. Stakeholders told GAO that this model-based funding mechanism is less prone to fraud risks than the traditional cost-accounting funding mechanism, which reimburses carriers for their reported costs. However, FCC did not make use of this reform mandatory and a substantial number of rate-of-return carriers continue to receive support from the traditional funding mechanism. FCC officials said they developed the model-based funding mechanism in consultation with industry stakeholders. However, FCC officials said they did not have plans to assess the accuracy of cost estimates from the model, which has been in use for several years, or require carriers to receive model-based support as a way to reduce fraud risks. By assessing the model, FCC would have greater assurance that it is producing reliable cost estimates and be better positioned to determine whether to make its use mandatory.
FCC’s efforts do not fully align with some elements of GAO’s fraud risk framework, including:
- planning regular fraud-risk assessments tailored to the high-cost program, and
- designing and implementing an antifraud strategy for the program.
Without regular fraud-risk assessments of the high-cost program, FCC has no assurance that it has fully considered important fraud risks, determined its tolerance for risks that could be lower priorities, or made sound decisions on how to allocate resources to respond to fraud risks. Not doing so could result in FCC compensating carriers for improper, ineligible, or inflated costs. Furthermore, in the absence of an antifraud strategy, FCC has little assurance that it can prevent or detect the types of documented rate-of-return carrier misconduct that have previously occurred. Designing and implementing an anti-fraud strategy that conforms to leading practices would help FCC effectively manage and respond to the fraud risks identified during the fraud-risk assessments.
Municipal broadband networks, an idea that some in the cable business believe looks a lot better on paper than in practice, may be on the verge of a breakthrough. As ultra-high-speed internet service becomes increasingly important to economic growth — at least four presidential candidates have mentioned muni broadband as a way to goose local economies — municipal broadband is increasingly being looked upon as a low-cost way for consumers to get access to the high-speed data they need, and giving local governments an inroad with businesses and employers. On the flip side, cable operators have tried to block muni networks at almost every gate, arguing they cost too much, unfairly compete with incumbent operators who have invested heavily in rural infrastructure and represent a potentially massive tax liability to consumers when they fail. The truth, as with a lot of issues in the communications business, lies mostly in between. But no matter which side you’re on, one thing is increasingly clear: municipal broadband is gaining steam and some communities are finding innovative ways to finance and maintain projects. And the risk, as many areas are finding out, is becoming worth it.
Federal Communications Commission Chairman Ajit Pai has announced his plans to begin freeing up valuable airwaves within the C-Band, a part of the spectrum—the radio frequencies that our cell carriers, television stations, and others use to transmit services—historically used for satellite television. Once freed, the spectrum would be auctioned and used for 5G and other advanced wireless services. The FCC is making the right call here. This announcement puts the public interest ahead of the desires of the few private actors currently occupying the spectrum, who sought to leverage the hype around 5G to enrich themselves at the public’s expense. But the fundamental challenge facing nationwide coverage of 5G is the lack of ubiquitous dense fiber infrastructure, which 5G relies on. Why hasn’t the U.S. made fiber a priority in the same way? Part of the problem is we’ve allowed the hype around 5G to blind us to the $80+ billion challenge of building out dense fiber networks to support national 5G.
Senate Commerce Committee Chairman Roger Wicker (R-MS) and Communications Subcommittee Chairman John Thune (R-SD) introduced the 5G Spectrum Act. The legislation would ensure mid-band spectrum is quickly available in the market by requiring a transparent and competitive public auctioning process. The bill specifically would require that at least 50 percent of the auction revenues be reserved for the American people. The 5G Spectrum Act would:
- Provide the coverage and capacity essential for deployment in America’s rural communities.
- Require the FCC to conduct a public auction of C band spectrum.
- Require the auction to start no later than December 31, 2020.
- Require the FCC to make available at least 280 MHz of spectrum.
- Require the FCC to capture for the taxpayer at least 50 percent of the fair market value of the spectrum.
We believe that a comprehensive federal privacy and data security law is essential to hold institutions accountable, restore consumer trust, and protect our privacy. We have developed a set of core principles that should be included in any comprehensive data protection legislation. Under our framework, consumers would control their personal information, and corporations, non-profits, and political entities would be held to higher standards for when and how they collect, use, share, and protect our data. Nothing in this framework should be interpreted to change or displace existing privacy laws, or privacy laws scheduled to go into effect. Our principles will: Establish data safeguards, Invigorate competition, Strengthen consumer and civil rights, and Impose real accountability.
Few companies have more riding on proposed privacy legislation than Google and Facebook. To try to steer the bill their way, the giant advertising technology companies spend millions of dollars to lobby each year. Not so well-documented is spending to support highly influential think tanks and public interest groups that are helping shape the privacy debate, ostensibly as independent observers. The groups included such organizations as the Center for Democracy and Technology, the Future of Privacy Forum and the Brookings Institution. Such organizations—which bristle at the notion that donations may affect their views—often have great sway over legislators, journalists, and the public due largely to their collective expertise on complex issues and inside knowledge of the legislative process. But they also often push positions that favor the goals of Google and Facebook, critics say.
Benton (www.benton.org) provides the only free, reliable, and non-partisan daily digest that curates and distributes news related to universal broadband, while connecting communications, democracy, and public interest issues. Posted Monday through Friday, this service provides updates on important industry developments, policy issues, and other related news events. While the summaries are factually accurate, their sometimes informal tone may not always represent the tone of the original articles. Headlines are compiled by Kevin Taglang (headlines AT benton DOT org) and Robbie McBeath (rmcbeath AT benton DOT org) — we welcome your comments.
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