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Lead Tennessee Radio features conversations with the leaders who are moving Tennessee forward. Topics include rural development, broadband, technology, legislation, policy and more. The podcast is produced by the Tennessee Broadband Association.
Intro:
The following program is brought to you by the Tennessee
Broadband Association.
Lead Tennessee Radio, conversations with the leaders moving our
state forward.
We look at the issues shaping Tennessee's future: rural
development, public policy, broadband,
healthcare, and other topics impacting our communities.
Trevor Bonnstetter:
Hi, I'm Trevor Bonnstetter, government affairs director for
Tennessee Broadband Association.
My guest for this episode of Lead Tennessee Radio is Leif
Oveson, vice president of legislative affairs for NTCA.
Thank you very much for joining us here today.
Leif Oveson:
Happy to be here. Thanks for the invitation.
Trevor Bonnstetter:
Leif, why don't you tell us a little bit about yourself, and what
you do on behalf of NTCA?
Leif Oveson:
Sure. So I got my start.
I'm originally from South Dakota, born and raised.
Went to college there.
Worked for a member of the US Senate, a senator from South
Dakota.
That's how I got my start in Washington, D.C.
I moved there to work for the senator.
I worked in the Senate for three years, then moved over to the
House of Representatives, worked for a House member from South
Dakota for four years.
So I was there for about seven, and on my time on Capitol Hill,
I got to know South Dakota's NTCA members really well.
Most of the state of South Dakota is served by NTCA members.
It's about as rural as you get.
I really enjoyed working with them.
I enjoyed what they were doing.
I enjoyed their mission.
And they had an opening at NTCA.
And so I moved over there about 15 years ago.
I was a director of government affairs, and I think it was 4 or
5 years ago, I became the vice president of government affairs.
So in my current job, along with my government affairs
colleagues and some of the rest of our members of our policy
team, our job is to represent our members on on Capitol Hill.
Just about every company, every industry has lobbyists who go to
Capitol Hill to
talk to members of Congress and their staff and make sure that
any laws, rules, regulations that may impact their
industry, we have a voice for them.
And so we do that on their own sometimes and often inviting our
members to come to Capitol Hill with us to tell their
stories. So that is our main focus.
A lot of that bleeds over to what's happening at the agencies.
Oftentimes, we have to have members of Congress write to the FCC
or USDA.
We have members come testify.
We testify. I talked about Shirley testifying in a few weeks in
front of the House Energy and Commerce Committee.
And even though this issue that we talk about, USF is pending
before the Supreme Court, there's going to be a huge role for
members of Congress to play there.
So we're working it from from all sides and staying very busy.
The pandemic was certainly a busy time when members of Congress
are trying to get everyone connected.
I thought maybe things would slow down after we passed these
deployment bills, and they became law.
But I think if anything, we're busier now than we ever have been
before, which is both fun and challenging.
And then on top of that, I get to travel around the country and
give these sorts of updates.
For better or worse, I don't know if people are always happy
after I talk, after I talk about the challenges on Capitol Hill
and at the agencies. But it's fun to come and talk to folks like
you and give these updates.
Trevor Bonnstetter:
Well thank you, Leif. Well, let's go ahead and get started and
talk about a few of the issues that you've talked with the
Tennessee Broadband Association here at the meeting here today.
USF and the Fifth Circuit decision is high on the radar for all
telecom companies across the nation and how it's going to impact
their operations and the future operations.
Tell us a little bit where we're at today with that decision.
And where do you see this going down the road?
Leif Oveson:
Yeah. Thank you for the question.
This is certainly the issue that is top of mind for NTCA and our
members.
And just to back up a little bit and make sure that the
listeners know what we're talking about.
But the Fifth Circuit Court, which is based in New Orleans,
ruled that the Universal Service Fund, which every
single NTCA member is dependent on and ensures that rural
communities have reasonably affordable, comparable service
to urban areas is unconstitutional.
And what they decided was that the FCC or Congress,
I'm sorry, Congress had given too much authority to the FCC
without proper guidance.
And in addition to that, the FCC had granted too much power to a
private entity, which we all
know is USAC, to administer the Universal Service Fund.
And therefore, the combination of those two issues, they deemed
was unconstitutional.
And we believe that's very unfortunate and misguided.
Several other circuit courts had found that the Universal
Service Fund is constitutional.
This is a program that has been in operation for about about 30
years.
And so what was decided is that the program would stay as is as
long
as the FCC asked the Supreme Court to take up this issue, to
petition the Supreme Court.
And they did so on September 30th.
And NTCA has also petitioned the FCC to consider this case.
We did so along with some of our industry allies.
And so currently, we are waiting for the Supreme Court to decide
whether or not they are going to take up the case.
And we think that that decision is likely to come in the next
several weeks.
And so, everyone is preparing on both sides for the Supreme
Court to act.
And, we'll have to work with our allies on Capitol Hill to make
sure that if the court
takes it up, that they hear from them, that they are the
lawmakers who created the Universal Service Fund.
And we will be working with our members to contact members of
Congress to put together what is called
an amicus brief, from Congress to the Supreme Court, explaining
that that, yes, indeed, the fund
is operating as they intended it.
It is constitutional and that the Supreme Court should hopefully
rule in favor of the fund and therefore the FCC.
Trevor Bonnstetter:
Yeah. So let's talk a little bit about that, how the fund works
today.
So the issue at hand really is not dealing with the issue of the
growth of the fund.
It's not dealing with rate payers on phone services, actually
helping broadband
services, which has been an issue that has been in the view of
all in telecommunications for many years.
It's really dealing with the issue of the mechanics of who's
authorized to collect and who is not authorized to collect, and
that's where the court case is staying today.
Correct?
Leif Oveson:
That is correct. It's very D.C., in the weeds.
But to try to summarize what is happening here, you're right.
Those are not the what the challenges are about.
What those who have taken up the case and are challenging the
constitutionality of Universal Service
Fund, were saying is that it's unconstitutional.
And the court ruled at least, the Fifth Circuit Court, ruled in
their favor, mainly along the lines of it's called the
nondelegation doctrine.
And that actually is a constitutional principle that says that
there are certain legislative powers that Congress
cannot hand over to an agency.
One of those is the ability to tax and raise revenue.
And what the Fifth Circuit Court has ruled has happened in the
case here.
And then on top of that, they're saying that they've gone one
step further.
And the combination of these two issues is actually what where
the problem lies is that not only did Congress violate the
nondelegation doctrine by giving these revenue raising powers to
the FCC, but then the FCC violated, which
is called a private nondelegation doctrine by then giving
additional powers and administrative authority over to USAC to
administer the fund.
And it's the combination of those two decisions that the Fifth
Circuit has
ruled is the violation of the Constitution, not either one of
them on their own, but when you combine the two of them, that
makes it non-constitutional.
Trevor Bonnstetter:
Yeah. So where we stand today is there's two courts that actually
ruled in favor that it was constitutional.
The Fifth Circuit on a, was it 9 to 7 vote, came in and ruled
that it was not constitutional.
Unconstitutional, thank you.
And with that being the case is now we have the FCC at the
Supreme Court trying to understand if it is constitutional or
not, and talk a little bit about the paths that take place past
that.
After the Supreme Court hears this, if it goes pro or con, what
will take place?
Leif Oveson:
Yeah, it's kind of a, there's a standard operating procedure how
the Supreme Court, you know, works
and several dominoes have to fall, and they have to fall in a
certain order.
And so the first was that the Fifth Circuit said that there
would be a stay and in a sense, no real change to the
program as long as the FCC petitioned the Supreme Court to take
this case up.
And as long as they do so by September 30th, I think it actually
was actually on September 30th that the FCC has done that.
And then others, including NTCA and some of our allies have also
written to the Supreme Court asking them to take this up.
So that was step one.
The next step that we are all waiting on.
Trevor Bonnstetter:
Yeah. So just sorry to interrupt you there.
Just real quick, on the stay.
Both parties agreed to the stay was an important element in
regards to stability within the telecommunications industry for
rural America.
Because without the stay, having a ruling that says it's
unconstitutional.
And if both parties didn't take that and the opposing party if
they were to take the position of "I have a legal court that's
saying it's unconstitutional," could slowly hit dominoes that
could have a very negative effect over rural America.
So that was a big, big decision when both parties went and asked
for the stay.
Correct?
Leif Oveson:
That is. I'm glad you stopped me there.
It's an important reminder.
There are a variety of ways the court could have ruled, and the
fact that they issued a stay, and they
remanded this back to the FCC to act is actually really
important in the sense that while this is all very alarming and
we are taking this very seriously, and we're going to do
everything we can to make sure that the Supreme Court does find
this constitutional, members of Congress are involved.
The fact that things stay as is is extremely important, so that
has given us some time
to take a look at the situation and does not mean that any
business or process is majorly
disrupted at this current moment.
So, yes, that was important.
And now it is at the Supreme Court, and we expect in the coming
weeks for them to decide whether or not they are going to
take this up.
And the lawyers that we have heard from have indicated that they
do expect this to be taken
up, in part because this is a matter with major ramifications
throughout our country, not just throughout rural America, but
throughout the entire country.
It could be very disruptive.
We think the Supreme Court will take that into consideration as
reason to make a determination.
And then also the fact that there have been several circuit
courts who have ruled in different ways.
A couple in favor and then one against.
And I should actually point out that the circuit court that
ruled against it in that nine seven decision earlier had had
three judges in that same circuit court say that it was
constitutional.
So, they decided to review that in block, which means they all
the members of that circuit court would take this up.
And then that is the first time where we have seen any group of
judges decide that this is not constitutional.
And even that was, you know, a 9-7.
So even one judge splitting it the other way would have made the
decision, so very narrow.
Trevor Bonnstetter:
Thank you. Thank you.
I think that leads us a little bit to contribution reform.
Where's the status of that as of late?
I know that this issue that we're discussing with being at the
Supreme Court on USF, but in the background is contribution
reform. And how does that impact with what's going on?
Leif Oveson:
Yeah. So I think it at times contribution reform is often being
forgotten.
And that does make sense given the fact that this court case is
happening, and it's getting a lot of attention.
But for a number of years and practically my entire time in this
industry, and even when I worked on Capitol Hill myself,
there has been a need for for contribution reform.
So this is the matter of how is the Universal Service Fund
funded.
The dollar is going into the program, not to the distribution
side of reform going out the door.
And there's a lot of listeners probably are aware of, the
Universal Service Fund is funded by all of us paying into it
on our voice bills.
That is our interstate and international portions of our phone
bills which are assessed.
It is not assessed on our broadband bills.
But because now the fund is mainly being used to support
broadband networks and because the
voice funded system is very unstable and is prone to you could
say
some abuse of how it's being paid into, how those assessments are
being made, it has created a lot
of uncertainty, instability and also just growth in the
contribution percent, which is
actually I believe north of 30% now.
So there's widespread agreement amongst members of Congress,
many in the industry and not everyone, of
course, that it is finally time to reform the contribution
system at NTCA.
Our policy position is that that absolutely does need to happen.
And we are in favor of both assessing edge providers, many of
those who are cost contributors
to building rural networks, but are not helping in any way
support the network and also assessing broadband providers.
There are some who have made the decision to support one or
other of those ways of going about contribution reform, or we
have supported both bills, legislation to do to either of those.
And so, those proposals have been floating around for quite some
time.
But earlier this year, the Senate and a few House members
created a Universal Service Fund working
group to actually tackle that.
It's now a bipartisan, bicameral working group.
They have been getting together for the last several months.
They've actually drafted a proposal.
There are still some issues that they are trying to work out
amongst themselves before they get that finalized.
We are still rather optimistic that they'll work their way
through that.
And then as they're doing this contribution reform effort, we
also are hopeful that they'll be able to tackle what
we really are discussing when it comes to the matter in front of
the courts and possibly even take a look at funding ACP.
So they have a lot on their plate as part of that working group,
or the big part of that is contribution reform.
Trevor Bonnstetter:
Yeah. So, as you talk about that working group and their holding
back from actually addressing that issue, I guess a question I
have for somebody that is from Kentucky and Tennessee is when
does lame duck become election duck?
The process and the procedures of getting things done in
Washington.
Where is that break?
Is it when you're 12 months out from the election, things start
to get, the breaks start to hit, both parties are positioning for
their home election or the presidential election.
So when do we move from lame duck to election duck?
And I don't know if that's a good term.
Maybe there's a correct term for it.
Leif Oveson:
It's getting earlier and earlier.
So a Congress is of course referring to the House and Senate,
but a Congress is referring to the two year
period between elections.
And that's, you have January of one year, and then you have
until December 31st, two years later to
pass bills. That's a Congress.
It's a two year cycle.
And so it used to be that as you got really close to election
weeks and maybe a few
months out, Congress would kind of stop legislating and doing a
lot of the work that we all expect them to and really kind of
turn their their attention to the election and be kind of
unwilling to pass bills for a variety of reasons, too close
to election. And that seems to be drawing back further and
further towards those congresses is where it almost seems now,
like almost a year out there in an election cycle, which is u
nfortunate because just in our industry, some of these issues
we're talking about are things that we really need them to
grapple with.
But it is what it is, and we are where we are.
And we're just a couple weeks away from the election.
So and Congress has has left town, and they are in their states
and districts in full campaign mode.
Those who are up for reelection, and so the lame duck will start
when they come back a few days after the election.
And that's where we are semi-optimistic that some of these
issues will be addressed, because at that point in time, they
will know who is and isn't coming back.
They can hopefully set politics aside.
They'll know they have two years until the next election.
And so at that point in mid-November to the end of December,
we're hoping that they will be able to address some of these
issues that that we're talking about and kind of put some of
their political differences and concerns about getting reelection
aside and get down to business of passing some of these bills
that are just so critical to our industry to to get passed.
Trevor Bonnstetter:
Great, great. So we've talked about contribution reform.
We've talked a little bit – what about the broadband grant tax
exemption?
Is it still in that kind of the same thing is what's going on
with contribution reform?
Is it's going to be kind of after the election when we're going
to see that.
And how does that really impact the members of the Tennessee
Broadband Association?
Leif Oveson:
Yeah, really good question.
So I think as anyone in the broadband space is aware, at least
those
who have received the grant are aware, if you receive a
broadband deployment grant, whether that's through the federal
government, the state government, county or local, that's
actually considered part of your gross income, and therefore
that's taxed at 21% on the federal level.
And then in many states taxed several more percent on the state
level.
And so what we were hearing from our members a number of years
ago was that doesn't
make a lot of sense. It's not allowing NTCA members, whether
that's here in Tennessee or the
members in Kentucky or North Dakota or California or anywhere to
fully leverage those dollars, having to pay
21% of their grant back to Treasury.
And so we worked along with others in the industry to get bills
introduced in the House and the Senate, bicameral bills that's
introduced by Democrats and Republicans to make broadband
deployment
grants exempt from that tax.
We were hopeful that that bill would make it into a large tax
reform bill that passed the House earlier this
year. Unfortunately, it did not.
We had bonus depreciation extended as part of that bill, which
is another priority for us.
But that Broadband Grant Tax Treatment Act, as it's known, did
not make its way into the bill.
And so we have another bite at the apple, if you will, when that
bill hopefully comes over to the Senate.
We were hoping that would be a number of months ago, soon after
it passed the House.
Unfortunately, I think largely again because of politics and not
wanting to do anything before the election and give one party
a talking point, we're semi-optimistic.
There's just not a lot of time for it to happen, though, that
when they come back in the coming weeks here before the end of
the year, that the Senate will take that House bill up.
And if they do, we'll be pushing hard to get that Broadband
Grant Tax Treatment Act bill included in the Senate.
And then hopefully when the Senate and the House would
conference, we could see that signed into law.
But there are definitely some hurdles for us to get there.
But we know it's extremely important, and we're pushing hard for
it.
Trevor Bonnstetter:
So summarizing that a little bit as the impact that's taking
place is that you guys are working hard on trying to get that.
So a situation where if you get $100, $20, don't go back to the
government.
So only 80% of the deployment goes out there for people within
the state of Tennessee receiving broadband.
So appreciate all the work you guys are doing on that on behalf
of all the citizens in the state of Tennessee.
In regards to BEAD, where do you see bead at right now?
I mean, it's kind of a political thing being thrown around of
that they've had BEAD, they've had this big
broadband initiative going on, and now it's become a political,
presidential political issue.
Leif Oveson:
It absolutely has.
And our CEO, Shirley Bloomfield, testified in front of the House
Energy and Commerce Committee regarding this program just a few
weeks ago. And we are well aware that it has become a political
issue, unfortunately.
But we're trying to stay out of politics as much as possible and
just make this program as effective as possible.
So we were very optimistic when the bill came out of Congress,
and the focus on BEAD
towards building future proof networks, which which our members,
NTCA members, are at the forefront of.
Unfortunately, there was some language also included in there
that that maybe made some sense to some members of Congress, but
is creating some potential hurdles for our members wanting to
participate in this program as it's being implemented on the
state level. And just to mention a few of what those are that we
really think
could unfortunately have have small providers turn away.
And one of those is the geographic size of those BEAD grants.
If it is decided in some states that the minimum geographic size
that you would have to serve in order
to even apply for a grant, let alone receive one, is too large
in some states.
We've seen it as large as largest county has to be at least as
large as a county.
That's going to deter and just make it impossible for a lot of
small providers to be able to participate who do not serve areas
that large.
There are some other issues, such as matching it, where in some
states we've seen some proposals that say that the
larger amount of money that a provider puts forward beyond even
the minimum amount required in law, the more likely you are
to win an award.
And unfortunately, while that may sound good up front and make
sense if you don't think more deeply about it, what that would
actually mean is we believe that a lot of larger providers who
may not necessarily have as good a track record as our members to
committing and serving these areas with the type of networks
that they deserve, give them more leverage to win over smaller
providers. In the long run, we don't think that would be good
for the taxpayer or for these communities.
And then also there are requirements in the program that require
any recipient recipients to offer
certain low cost plans to their subscribers.
And that's really difficult to implement in these really high
cost, hard to serve areas, especially with the Affordable
Connectivity Program now having run out of funding that that $30
discount, which maybe have enabled a lot of our members to
meet that requirement, has suddenly now gone away.
And so we're going to need to see, I think, some increased
flexibility amongst the states and NTIA and how our members and
others can implement that requirement.
So there are definitely some challenges here.
We're hoping as many of our members can participate as possible.
But without resolution to some of these, it is absolutely true
that some of our members will probably have to walk away from
it. We're hoping as many as possible will be able to
participate, and to the extent that this has become a political
debate, is we do agree with those kind of, you know, saying,
"Wow, this is taking a long time." It is taking a long
time. Part of that is just because unlike some other recent
federal programs, there are certain
requirements and steps that have to happen that weren't in place
for others, such as getting broadband
deployment mapping done.
So that has led to a bit of a delay.
And so while frustrating, some of the delay is understandable,
some of the red tape is
maybe not. And we're working our way through all that and just
hoping that as many as our members as possible can participate,
are willing to participate, because we think that's really good
for rural America.
But we're certainly not done advocating to try to cut down on
some of this red tape, or at least as much of it as we can as
possible.
Trevor Bonnstetter:
Great, great.
Well, I think we've talked about, a little bit about how
broadband, how your work in Washington is
enabling members of the Tennessee Broadband Association to
deploy fiber and to enrich people's lives, and how the
actual mechanisms are set up to make sure that it's affordable
for them to have it.
Leads me to the next thing that, probably as just a regular
consumer in the state, ACP was enacted during
the Covid and enabling homes to have connectivity.
And this is probably one of the biggest things that we can talk
about today is how that turning that off has
impacted households across the state of Tennessee.
Tell us a little bit where you think ACP, and maybe you can give
a little bit of background of where you think ACP, how we got
there and where we're at today, and where we're going to go a
little bit in the future.
Leif Oveson:
Yeah. So as you were saying, ACP is definitely a product of some
of these Covid bills that passed when Congress was trying to
do a couple things and trying to do a couple things really
quickly.
And they looked around and said, okay, there's depending on, you
know, whose numbers you look at and how you define broadband,
upwards of, you know, 20 million Americans that aren't
connected.
So let's put together some broadband deployment grant and loan
programs to try to get more people connected.
But that's not the only problem here.
We have a number of households that, you know, "have access" to
broadband, but still can't afford it, even if they have a line
running to their house.
So they created the Affordable Connectivity Program, which is a
$30 discount for most American households that
qualify, and a higher discount for those that live on tribal
lands.
And they appropriated several billion dollars to fund that
program.
The problem is it was rather popular.
We actually thought it would be a little more popular among some
of our members customers than it was, but it was popular enough
that it ran out of funding.
It ran out of funding earlier this year, which, if I can just
digress for a second, is a reminder of
why we don't want the Universal Service Fund appropriated.
And we'd like to continue with the current mechanism is because
if Congress, in a sense, can't get their act together to keep a
program funded, then that funding goes away and the program goes
away, and here we are with the ACP.
So that's kind of a canary in the coal mine of why having
something appropriated is sometimes dangerous.
But there was pretty widespread bipartisan support for the
program.
We saw senators and House members on the far left and the far
right kind of rally behind it and saying it was doing a lot of
good for their constituents, for their states and districts.
There was also a lot of emphasis on the need that, okay, we put
this together.
Initially, it was kind of slapped together.
It was done really quick.
It's done a lot of good. But now that it's been implemented for
a while, are there some ways that we can improve it?
Some guardrails we could put on the program.
For example, and I believe it's the school lunch program that if
you qualify for that, then your household qualifies for the ACP.
But in some states, the entire state may qualify, every
household in a certain county or state may qualify for
some of those discount low income programs.
So maybe those aren't always the best measuring sticks to, you
know, to decide whether or not a house would qualify.
So there's some things that I think some members of Congress
think are common sense reforms that need to happen if they're
going to continue to support funding for this program.
So that's one reason for the delay.
Another is that it is being tied to the rip and replace program,
which
is a program that also has run out of funding that is used to
remove certain banned Chinese telecom equipment.
And there are some members of Congress who are saying, we're not
going to move one of these without the other.
And once you have two programs tied together, you're going to
have your challengers, your champions and detractors of each of
those. And suddenly now it becomes doubly hard to to get that
passed.
So because of the reforms that some want added to the program,
and it's now it's connection kind of oddly to the rip and
replace program, we have not seen Congress find ability to fund
ACP yet, but there
have been bipartisan bills to do so.
And it's another one of those, again, sounding like a broken
record things that could possibly happen after the election when
we kind of take the politics out of some of this.
Trevor Bonnstetter:
Great. Well, thank you very much for taking the time to come
visit with us today and tell us a little bit about what's going
on in Washington and all the work you guys are doing on behalf,
so.
Any parting words?
Leif Oveson:
No, I just say the the election is going to be very interesting.
And once we get that out of the way, hopefully, hopefully we can
get get a couple of these things passed.
On behalf of all of our members, I sure hope so.
And thanks for the invitation to be here.