USAC’s Latest Debacle – Rural Rate Setting

I have a long history with USAC, the agency that is supposed to oversee billions of dollars in funding to assure rural organizations, including health care facilities and schools, are not penalized by high telecommunications rates for services in rural communities. Regardless of that long history, I was caught quite by surprise by their latest debacle and attempt to correct their prior disregard for federal regulations, specifically 45 CFR 54.607.

Back in the day, I’m talking 2007, we would submit for USAC funding and California Teleconnect Funding (CTF) at the same time and California health centers would actually make money on the lines – yes, we would receive more funding than what the T-1 lines actually cost. USAC would pay the difference between the rural and urban rates and then CTF would pay 50% of the retail cost of the lines. Upon complete comprehension of the situation (USAC’s processes are quite convoluted and confusing), I became appalled and I submitted a complaint to USAC which, I like to believe, lead to corrections in the process that mandated USAC be the first payor and then CTF pay for 50% of the remaining cost.

The next course correction was with the urban rate documentation last funding year. With that little beauty, USAC cost health care facilities millions of dollars and bankrupted at least one telecommunications company. For years, USAC accepted the telecommunications company’s word, like a short letter, as to the comparable urban rate. Well duh, like who didn’t see the telecommunications companies’ abuse of that system! It ranged from false urban rates being submitted to even TeleQuality using a tariff with low rates as a ploy to entice rural providers to pay their absorbent resale prices. And yes, I have submitted a compliant to USAC regarding this practice as well. I also am working to submit a Freedom of Information Act (FOIA) request to get that TeleQuality urban rate release –I would love for it to have wide release and for TeleQuality to lose that ill-gotten advantage.

What I didn’t see coming is their latest, and I would have to say, the most disturbing move yet to enforce the rural rate setting as outlined in 45 CFR 54.607. Now keep in mind that the urban rate setting regulations are right after the rural rate setting at 45 CFR 54.605, so it’s not hidden somewhere obscure so no one can find it. Three weeks ago, USAC sent out emails requiring health centers make their telecommunications providers submit info on their rural rate setting. Well, one of the providers I am dealing with, Frontier Communications, does not set their rates using any of the three options allowed by the federal statutes. Yes, all the forms I submitted to USAC claiming they meet all the federal regulations leave me with visions of orange jumpsuits. I have unknowingly submitted false statements to the federal government. Hey, I watch the news these days – it’s very clear to me that one doesn’t want to do that, ever!

But wait, it gets better – in working with Frontier they developed a response that they feel justifies their rural rate setting but they can’t show us - it’s a secret that they can only show the FCC. My client has over $70,000 is at risk and they can’t see the submission that is, hopefully, going to justify Frontier’s pricing. Additionally, someone from USAC was able to email me in response to my two phone calls to the help desk and stated that we should continue to communicate with our “reviewer.” We didn’t know we had a reviewer, but it seems Frontier did. Frontier worked directly with USAC and our reviewer on our funding submission – doesn’t anyone else get a little nauseated over the perceived conflict and possible collusion associated with this process? From what I see, for anyone submitting the USAC funding forms and certifying that they are following all the federal regulations are putting themselves at risk as they will never see the actual documentation for the rural rate. They will never actually know what they are attesting to.

And lastly, probably the most disturbing of it all is the email we received back from Frontier assuring us that the submission was going to work. In the email, Frontier indicated that for the submission they consulted their “regulatory team” that includes “a member of the USAC board.” First, let’s hope it’s not the same regulatory team that helped them developed their rural rate setting that doesn’t meet any of the federal regulations! And Secondly, the blatant conflict of interest having a USAC board member part of a telecommunications company’s “regulator team” shakes me to a core.

Sadly, I no longer feel I can be in anyway associated with the USAC program nor support my clients with their USAC submissions. In addition, I firmly believe that the USAC program should receive a full congressional investigation into their operations and I will be pursuing this with my local representatives.