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Intro:
The following program is brought to you by the Tennessee
Broadband Association.

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Lead Tennessee Radio, conversations with the leaders moving our
state forward.

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We look at the issues shaping Tennessee's future: rural
development, public policy, broadband,

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healthcare, and other topics impacting our communities.

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Trevor Bonnstetter:
Hi, I'm Trevor Bonnstetter, government affairs director for
Tennessee Broadband Association.

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My guest for this episode of Lead Tennessee Radio is Leif
Oveson, vice president of legislative affairs for NTCA.

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Thank you very much for joining us here today.

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Leif Oveson:
Happy to be here. Thanks for the invitation.

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Trevor Bonnstetter:
Leif, why don't you tell us a little bit about yourself, and what
you do on behalf of NTCA?

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Leif Oveson:
Sure. So I got my start.

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I'm originally from South Dakota, born and raised.

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Went to college there.

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Worked for a member of the US Senate, a senator from South
Dakota.

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That's how I got my start in Washington, D.C.

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I moved there to work for the senator.

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I worked in the Senate for three years, then moved over to the
House of Representatives, worked for a House member from South

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Dakota for four years.

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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.

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Most of the state of South Dakota is served by NTCA members.

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It's about as rural as you get.

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I really enjoyed working with them.

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I enjoyed what they were doing.

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I enjoyed their mission.

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And they had an opening at NTCA.

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And so I moved over there about 15 years ago.

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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.

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So in my current job, along with my government affairs
colleagues and some of the rest of our members of our policy

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team, our job is to represent our members on on Capitol Hill.

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Just about every company, every industry has lobbyists who go to
Capitol Hill to

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talk to members of Congress and their staff and make sure that
any laws, rules, regulations that may impact their

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industry, we have a voice for them.

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And so we do that on their own sometimes and often inviting our
members to come to Capitol Hill with us to tell their

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stories. So that is our main focus.

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A lot of that bleeds over to what's happening at the agencies.

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Oftentimes, we have to have members of Congress write to the FCC
or USDA.

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We have members come testify.

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We testify. I talked about Shirley testifying in a few weeks in
front of the House Energy and Commerce Committee.

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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

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members of Congress to play there.

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So we're working it from from all sides and staying very busy.

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The pandemic was certainly a busy time when members of Congress
are trying to get everyone connected.

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I thought maybe things would slow down after we passed these
deployment bills, and they became law.

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But I think if anything, we're busier now than we ever have been
before, which is both fun and challenging.

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And then on top of that, I get to travel around the country and
give these sorts of updates.

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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

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and at the agencies. But it's fun to come and talk to folks like
you and give these updates.

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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

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Tennessee Broadband Association here at the meeting here today.

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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

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their operations and the future operations.

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Tell us a little bit where we're at today with that decision.

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And where do you see this going down the road?

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Leif Oveson:
Yeah. Thank you for the question.

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This is certainly the issue that is top of mind for NTCA and our
members.

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And just to back up a little bit and make sure that the
listeners know what we're talking about.

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But the Fifth Circuit Court, which is based in New Orleans, 
ruled that the Universal Service Fund, which every

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single NTCA member is dependent on and ensures that rural
communities have reasonably affordable, comparable service

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to urban areas is unconstitutional.

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And what they decided was that the FCC or Congress,

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I'm sorry, Congress had given too much authority to the FCC
without proper guidance.

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And in addition to that, the FCC had granted too much power to a
private entity, which we all

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know is USAC, to administer the Universal Service Fund.

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And therefore, the combination of those two issues, they deemed
was unconstitutional.

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And we believe that's very unfortunate and misguided.

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Several other circuit courts had found that the Universal
Service Fund is constitutional.

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This is a program that has been in operation for about about 30
years.

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And so what was decided is that the program would stay as is as
long

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as the FCC asked the Supreme Court to take up this issue, to
petition the Supreme Court.

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And they did so on September 30th.

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And NTCA has also petitioned the FCC to consider this case.

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We did so along with some of our industry allies.

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And so currently, we are waiting for the Supreme Court to decide
whether or not they are going to take up the case.

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And we think that that decision is likely to come in the next
several weeks.

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And so, everyone is preparing on both sides for the Supreme
Court to act.

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And, we'll have to work with our allies on Capitol Hill to make
sure that if the court

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takes it up, that they hear from them, that they are the
lawmakers who created the Universal Service Fund.

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And we will be working with our members to contact members of
Congress to put together what is called

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an amicus brief, from Congress to the Supreme Court, explaining
that that, yes, indeed, the fund

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is operating as they intended it.

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It is constitutional and that the Supreme Court should hopefully
rule in favor of the fund and therefore the FCC.

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Trevor Bonnstetter:
Yeah. So let's talk a little bit about that, how the fund works
today.

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So the issue at hand really is not dealing with the issue of the
growth of the fund.

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It's not dealing with rate payers on phone services, actually
helping broadband

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services, which has been an issue that has been in the view of
all in telecommunications for many years.

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It's really dealing with the issue of the mechanics of who's
authorized to collect and who is not authorized to collect, and

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that's where the court case is staying today.

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Correct?

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Leif Oveson:
That is correct. It's very D.C., in the weeds.

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But to try to summarize what is happening here, you're right.

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Those are not the what the challenges are about.

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What those who have taken up the case and are challenging the
constitutionality of Universal Service

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Fund, were saying is that it's unconstitutional.

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And the court ruled at least, the Fifth Circuit Court, ruled in
their favor, mainly along the lines of it's called the

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nondelegation doctrine.

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And that actually is a constitutional principle that says that
there are certain legislative powers that Congress

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cannot hand over to an agency.

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One of those is the ability to tax and raise revenue.

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And what the Fifth Circuit Court has ruled has happened in the
case here.

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And then on top of that, they're saying that they've gone one
step further.

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And the combination of these two issues is actually what where
the problem lies is that not only did Congress violate the

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nondelegation doctrine by giving these revenue raising powers to
the FCC, but then the FCC violated, which

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is called a private nondelegation doctrine by then giving
additional powers and administrative authority over to USAC to

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administer the fund.

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And it's the combination of those two decisions that the Fifth
Circuit has

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ruled is the violation of the Constitution, not either one of
them on their own, but when you combine the two of them, that

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makes it non-constitutional.

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Trevor Bonnstetter:
Yeah. So where we stand today is there's two courts that actually
ruled in favor that it was constitutional.

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The Fifth Circuit on a, was it 9 to 7 vote, came in and ruled
that it was not constitutional.

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Unconstitutional, thank you.

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And with that being the case is now we have the FCC at the
Supreme Court trying to understand if it is constitutional or

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not, and talk a little bit about the paths that take place past
that.

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After the Supreme Court hears this, if it goes pro or con, what
will take place?

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Leif Oveson:
Yeah, it's kind of a, there's a standard operating procedure how
the Supreme Court, you know, works

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and several dominoes have to fall, and they have to fall in a
certain order.

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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

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program as long as the FCC petitioned the Supreme Court to take
this case up.

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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.

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And then others, including NTCA and some of our allies have also
written to the Supreme Court asking them to take this up.

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So that was step one.

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The next step that we are all waiting on.

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Trevor Bonnstetter:
Yeah. So just sorry to interrupt you there.

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Just real quick, on the stay.

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Both parties agreed to the stay was an important element in
regards to stability within the telecommunications industry for

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rural America.

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Because without the stay, having a ruling that says it's
unconstitutional.

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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

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saying it's unconstitutional," could slowly hit dominoes that
could have a very negative effect over rural America.

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So that was a big, big decision when both parties went and asked
for the stay.

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Correct?

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Leif Oveson:
That is. I'm glad you stopped me there.

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It's an important reminder.

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There are a variety of ways the court could have ruled, and the
fact that they issued a stay, and they

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remanded this back to the FCC to act is actually really
important in the sense that while this is all very alarming and

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we are taking this very seriously, and we're going to do
everything we can to make sure that the Supreme Court does find

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this constitutional, members of Congress are involved.

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The fact that things stay as is is extremely important, so that
has given us some time

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to take a look at the situation and does not mean that any
business or process is majorly

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disrupted at this current moment.

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So, yes, that was important.

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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

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take this up.

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And the lawyers that we have heard from have indicated that they
do expect this to be taken

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up, in part because this is a matter with major ramifications
throughout our country, not just throughout rural America, but

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throughout the entire country.

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It could be very disruptive.

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We think the Supreme Court will take that into consideration as
reason to make a determination.

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And then also the fact that there have been several circuit
courts who have ruled in different ways.

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A couple in favor and then one against.

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And I should actually point out that the circuit court that
ruled against it in that nine seven decision earlier had had

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three judges in that same circuit court say that it was
constitutional.

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So, they decided to review that in block, which means they all
the members of that circuit court would take this up.

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And then that is the first time where we have seen any group of
judges decide that this is not constitutional.

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And even that was, you know, a 9-7.

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So even one judge splitting it the other way would have made the
decision, so very narrow.

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Trevor Bonnstetter:
Thank you. Thank you.

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I think that leads us a little bit to contribution reform.

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Where's the status of that as of late?

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I know that this issue that we're discussing with being at the
Supreme Court on USF, but in the background is contribution

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reform. And how does that impact with what's going on?

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Leif Oveson:
Yeah. So I think it at times contribution reform is often being
forgotten.

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And that does make sense given the fact that this court case is
happening, and it's getting a lot of attention.

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But for a number of years and practically my entire time in this
industry, and even when I worked on Capitol Hill myself,

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there has been a need for for contribution reform.

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So this is the matter of how is the Universal Service Fund
funded.

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The dollar is going into the program, not to the distribution
side of reform going out the door.

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And there's a lot of listeners probably are aware of, the
Universal Service Fund is funded by all of us paying into it

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on our voice bills.

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That is our interstate and international portions of our phone
bills which are assessed.

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It is not assessed on our broadband bills.

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But because now the fund is mainly being used to support
broadband networks and because the

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voice funded system is very unstable and is prone to you could
say

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some abuse of how it's being paid into, how those assessments are
being made, it has created a lot

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of uncertainty, instability and also just growth in the
contribution percent, which is

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actually I believe north of 30% now.

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So there's widespread agreement amongst members of Congress,
many in the industry and not everyone, of

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course, that it is finally time to reform the contribution
system at NTCA.

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Our policy position is that that absolutely does need to happen.

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And we are in favor of both assessing edge providers, many of
those who are cost contributors

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to building rural networks, but are not helping in any way
support the network and also assessing broadband providers.

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There are some who have made the decision to support one or
other of those ways of going about contribution reform, or we

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have supported both bills, legislation to do to either of those.

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And so, those proposals have been floating around for quite some
time.

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But earlier this year, the Senate and a few House members
created a Universal Service Fund working

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group to actually tackle that.

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It's now a bipartisan, bicameral working group.

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They have been getting together for the last several months.

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They've actually drafted a proposal.

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There are still some issues that they are trying to work out
amongst themselves before they get that finalized.

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We are still rather optimistic that they'll work their way
through that.

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And then as they're doing this contribution reform effort, we
also are hopeful that they'll be able to tackle what

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we really are discussing when it comes to the matter in front of
the courts and possibly even take a look at funding ACP.

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So they have a lot on their plate as part of that working group,
or the big part of that is contribution reform.

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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

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have for somebody that is from Kentucky and Tennessee is when
does lame duck become election duck?

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The process and the procedures of getting things done in
Washington.

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Where is that break?

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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

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their home election or the presidential election.

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So when do we move from lame duck to election duck?

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And I don't know if that's a good term.

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Maybe there's a correct term for it.

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Leif Oveson:
It's getting earlier and earlier.

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So a Congress is of course referring to the House and Senate,
but a Congress is referring to the two year

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period between elections.

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And that's, you have January of one year, and then you have
until December 31st, two years later to

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pass bills. That's a Congress.

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It's a two year cycle.

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And so it used to be that as you got really close to election
weeks and maybe a few

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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

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turn their their attention to the election and be kind of
unwilling to pass bills for a variety of reasons, too close

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to election. And that seems to be drawing back further and
further towards those congresses is where it almost seems now,

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like almost a year out there in an election cycle, which is u
nfortunate because just in our industry, some of these issues

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we're talking about are things that we really need them to
grapple with.

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But it is what it is, and we are where we are.

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And we're just a couple weeks away from the election.

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So and Congress has has left town, and they are in their states
and districts in full campaign mode.

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Those who are up for reelection, and so the lame duck will start
when they come back a few days after the election.

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And that's where we are semi-optimistic that some of these
issues will be addressed, because at that point in time, they

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will know who is and isn't coming back.

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They can hopefully set politics aside.

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They'll know they have two years until the next election.

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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

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issues that that we're talking about and kind of put some of
their political differences and concerns about getting reelection

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aside and get down to business of passing some of these bills
that are just so critical to our industry to to get passed.

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Trevor Bonnstetter:
Great, great. So we've talked about contribution reform.

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We've talked a little bit – what about the broadband grant tax
exemption?

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Is it still in that kind of the same thing is what's going on
with contribution reform?

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Is it's going to be kind of after the election when we're going
to see that.

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And how does that really impact the members of the Tennessee
Broadband Association?

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Leif Oveson:
Yeah, really good question.

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So I think as anyone in the broadband space is aware, at least 
those

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who have received the grant are aware, if you receive a
broadband deployment grant, whether that's through the federal

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government, the state government, county or local, that's
actually considered part of your gross income, and therefore

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that's taxed at 21% on the federal level.

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And then in many states taxed several more percent on the state
level.

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And so what we were hearing from our members a number of years
ago was that doesn't

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make a lot of sense. It's not allowing NTCA members, whether
that's here in Tennessee or the

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members in Kentucky or North Dakota or California or anywhere to
fully leverage those dollars, having to pay

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21% of their grant back to Treasury.

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And so we worked along with others in the industry to get bills
introduced in the House and the Senate, bicameral bills that's

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introduced by Democrats and Republicans to make broadband
deployment

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grants exempt from that tax.

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We were hopeful that that bill would make it into a large tax
reform bill that passed the House earlier this

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year. Unfortunately, it did not.

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We had bonus depreciation extended as part of that bill, which
is another priority for us.

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But that Broadband Grant Tax Treatment Act, as it's known, did
not make its way into the bill.

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And so we have another bite at the apple, if you will, when that
bill hopefully comes over to the Senate.

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We were hoping that would be a number of months ago, soon after
it passed the House.

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Unfortunately, I think largely again because of politics and not
wanting to do anything before the election and give one party

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a talking point, we're semi-optimistic.

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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

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the year, that the Senate will take that House bill up.

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And if they do, we'll be pushing hard to get that Broadband
Grant Tax Treatment Act bill included in the Senate.

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And then hopefully when the Senate and the House would
conference, we could see that signed into law.

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But there are definitely some hurdles for us to get there.

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But we know it's extremely important, and we're pushing hard for
it.

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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.

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So a situation where if you get $100, $20, don't go back to the
government.

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So only 80% of the deployment goes out there for people within
the state of Tennessee receiving broadband.

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So appreciate all the work you guys are doing on that on behalf
of all the citizens in the state of Tennessee.

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In regards to BEAD, where do you see bead at right now?

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I mean, it's kind of a political thing being thrown around of
that they've had BEAD, they've had this big

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broadband initiative going on, and now it's become a political,
presidential political issue.

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Leif Oveson:
It absolutely has.

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And our CEO, Shirley Bloomfield, testified in front of the House
Energy and Commerce Committee regarding this program just a few

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weeks ago. And we are well aware that it has become a political
issue, unfortunately.

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But we're trying to stay out of politics as much as possible and
just make this program as effective as possible.

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So we were very optimistic when the bill came out of Congress,
and the focus on BEAD

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towards building future proof networks, which which our members,
NTCA members, are at the forefront of.

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Unfortunately, there was some language also included in there
that that maybe made some sense to some members of Congress, but

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is creating some potential hurdles for our members wanting to
participate in this program as it's being implemented on the

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state level. And just to mention a few of what those are that we
really think

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could unfortunately have have small providers turn away.

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And one of those is the geographic size of those BEAD grants.

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If it is decided in some states that the minimum geographic size
that you would have to serve in order

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to even apply for a grant, let alone receive one, is too large
in some states.

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We've seen it as large as largest county has to be at least as
large as a county.

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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

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that large.

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There are some other issues, such as matching it, where in some
states we've seen some proposals that say that the

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larger amount of money that a provider puts forward beyond even
the minimum amount required in law, the more likely you are

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to win an award.

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And unfortunately, while that may sound good up front and make
sense if you don't think more deeply about it, what that would

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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

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committing and serving these areas with the type of networks
that they deserve, give them more leverage to win over smaller

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providers. In the long run, we don't think that would be good
for the taxpayer or for these communities.

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And then also there are requirements in the program that require
any recipient recipients to offer

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certain low cost plans to their subscribers.

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And that's really difficult to implement in these really high
cost, hard to serve areas, especially with the Affordable

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Connectivity Program now having run out of funding that that $30
discount, which maybe have enabled a lot of our members to

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meet that requirement, has suddenly now gone away.

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And so we're going to need to see, I think, some increased
flexibility amongst the states and NTIA and how our members and

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others can implement that requirement.

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So there are definitely some challenges here.

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We're hoping as many of our members can participate as possible.

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But without resolution to some of these, it is absolutely true
that some of our members will probably have to walk away from

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it. We're hoping as many as possible will be able to
participate, and to the extent that this has become a political

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debate, is we do agree with those kind of, you know, saying,
"Wow, this is taking a long time." It is taking a long

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time. Part of that is just because unlike some other recent
federal programs, there are certain

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requirements and steps that have to happen that weren't in place
for others, such as getting broadband

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deployment mapping done.

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So that has led to a bit of a delay.

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And so while frustrating, some of the delay is understandable,
some of the red tape is

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maybe not. And we're working our way through all that and just
hoping that as many as our members as possible can participate,

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are willing to participate, because we think that's really good
for rural America.

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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

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possible.

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Trevor Bonnstetter:
Great, great.

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Well, I think we've talked about, a little bit about how
broadband, how your work in Washington is

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enabling members of the Tennessee Broadband Association to
deploy fiber and to enrich people's lives, and how the

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actual mechanisms are set up to make sure that it's affordable
for them to have it.

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Leads me to the next thing that, probably as just a regular
consumer in the state, ACP was enacted during

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the Covid and enabling homes to have connectivity.

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And this is probably one of the biggest things that we can talk
about today is how that turning that off has

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impacted households across the state of Tennessee.

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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

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there and where we're at today, and where we're going to go a
little bit in the future.

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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

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do a couple things and trying to do a couple things really
quickly.

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And they looked around and said, okay, there's depending on, you
know, whose numbers you look at and how you define broadband,

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upwards of, you know, 20 million Americans that aren't
connected.

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So let's put together some broadband deployment grant and loan
programs to try to get more people connected.

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But that's not the only problem here.

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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

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running to their house.

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00:27:54,520 --> 00:28:02,320
So they created the Affordable Connectivity Program, which is a
$30 discount for most American households that

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qualify, and a higher discount for those that live on tribal
lands.

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And they appropriated several billion dollars to fund that
program.

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The problem is it was rather popular.

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We actually thought it would be a little more popular among some
of our members customers than it was, but it was popular enough

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that it ran out of funding.

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It ran out of funding earlier this year, which, if I can just
digress for a second, is a reminder of

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why we don't want the Universal Service Fund appropriated.

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00:28:36,410 --> 00:28:43,730
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

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program funded, then that funding goes away and the program goes
away, and here we are with the ACP.

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So that's kind of a canary in the coal mine of why having
something appropriated is sometimes dangerous.

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But there was pretty widespread bipartisan support for the
program.

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00:29:01,730 --> 00:29:08,720
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

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good for their constituents, for their states and districts.

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00:29:12,230 --> 00:29:17,570
There was also a lot of emphasis on the need that, okay, we put
this together.

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Initially, it was kind of slapped together.

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It was done really quick.

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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?

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Some guardrails we could put on the program.

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For example, and I believe it's the school lunch program that if
you qualify for that, then your household qualifies for the ACP.

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But in some states, the entire state may qualify, every
household in a certain county or state may qualify for

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some of those discount low income programs.

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So maybe those aren't always the best measuring sticks to, you
know, to decide whether or not a house would qualify.

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So there's some things that I think some members of Congress
think are common sense reforms that need to happen if they're

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going to continue to support funding for this program.

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So that's one reason for the delay.

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Another is that it is being tied to the rip and replace program,
which

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00:30:13,420 --> 00:30:20,630
is a program that also has run out of funding that is used to
remove certain banned Chinese telecom equipment.

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And there are some members of Congress who are saying, we're not
going to move one of these without the other.

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And once you have two programs tied together, you're going to
have your challengers, your champions and detractors of each of

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those. And suddenly now it becomes doubly hard to to get that
passed.

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00:30:35,930 --> 00:30:43,610
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

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00:30:43,610 --> 00:30:51,470
replace program, we have not seen Congress find ability to fund
ACP yet, but there

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have been bipartisan bills to do so.

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And it's another one of those, again, sounding like a broken
record things that could possibly happen after the election when

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we kind of take the politics out of some of this.

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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

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00:31:07,940 --> 00:31:10,490
on in Washington and all the work you guys are doing on behalf,
so.

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Any parting words?

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00:31:12,350 --> 00:31:16,250
Leif Oveson:
No, I just say the the election is going to be very interesting.

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And once we get that out of the way, hopefully, hopefully we can
get get a couple of these things passed.

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On behalf of all of our members, I sure hope so.

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And thanks for the invitation to be here.