FEDERAL COMMUNICATIONS COMMISSION WASHINGTON O FFICE OF THE C H AIRMAN The Honorable Shelley Moore Capito United States Senate 172 Russell Senate Office Building Washington, D.C. 20510 Dear Senator Capito: February 18, 2016 Thank you for your letter regarding accountability mechanisms the Commission has implemented to ensure that carriers use disbursements from the Connect America Fund, in particular Phase II, responsibly and efficiently. Your views are very important and will be included in the record of the proceeding. I agree that the Commission plays an important and unique role in supporting rural connectivity. Part of that role is ensuring that recipients of Connect America support use disbursements responsibly and efficiently and that we hold accountable those that do not meet their commitments. We take our responsibility as stewards of public funds seriously, and we do our utmost to safeguard the integrity of the Universal Service Fund (USF). To that end, the Commission has in place accountability mechanisms that include rigorous reporting and build-out requirements for Connect America Phase II . The mechanisms ensure that carriers use the funds for their intended purpose, that buildout-out requirements are being met, and that locations reported.as newly served are actually receiving service that meets the Connect America Phase II standards. All recipients of federal high-cost universal service support must file annual reports with the Commission, the Universal Service Adminfstrative Company (USAC) - the entity designated by the FCC as the administrator of USF funds - and, to the extent applicable, the relevant state commission, the relevant authority in a U.S . Territory, or the Tribal government. For recipients of Connect America Phase II model-based support, these annual reports must include, among other things: a geocoded list of locations with newly deployed facilities in the previous calendar year, a certification, under perjury, that the carrier offered broadband meeting the requisite public interest obligations to those locations, and the total amount of Phase II support used for capital expenditures in the previous calendar year. The Commission carefully reviews these annual progress reports . In addition, USAC separately reviews annual progress reports filings and also conducts regular audits of support recipients. Finally, state commissions with jurisdiction over recipients must file certifications with the Commission and USAC annually, based in part on their own review of the annual reports assuring that the support was used for the intended purpose in the preceding calendar Page 2-The Honorable Shelley Moore Capito year and will be used for the intended purpose in the coming calendar year. Carriers not subject to the jurisdiction of a state commission (none of which receive Phase II model-based support) make that certification directly to the Commission and USAC. Carriers do not receive support without this certification. Carriers that fail to satisfy their obligations-for instance, by not building to the required number oflocations or by not providing service that meets the Commission's requirements-are subject to increased reporting obligations and support reductions that scale with the extent of the recipient's non-compliance, but are given the opportunity to cure. Recipients of support may also be subject to enforcement actions for non-compliance with the terms and conditions of funding. Sanctions stemming from these enforcement actions take into account the nature, circumstances, extent, and gravity of any violation. These clear and straightforward accountability mechanisms ensure that recipients of Connect America support deploy networks in rural communities in a responsible, accountable, and efficient manner. You also reference the importance of transparency, which I agree is essential. We expect to make public certain buildout data reported by carriers. This data will allow the public to monitor carriers' progress and see the impact of universal service support on broadband deployment in high-cost areas. I appreciate your interest in this matter. Please let me know if I can be of any further assistance. FEDERAL COMMUNICATIONS COMMISSION WASHINGTON OFF ICE OF T HE C H AIRMAN The Honorable Steve Daines United States Senate 320 Hart Senate Office Building Washington, D.C. 20510 Dear Senator Daines: February 18, 2016 Thank you for your letter regarding accountability mechanisms the Commission has implemented to ensure that carriers use disbursements from the Connect America Fund, in particular Phase II, responsibly and efficiently. Your views are very important and will be included in the record of the proceeding. I agree that the Commission plays an important and unique role in supporting rural connectivity. Part of that role is ensuring that recipients of Connect America support use disbursements responsibly and efficiently and that we hold accountable those that do not meet their commitments. We take our responsibility as stewards of public funds seriously, and we do our utmost to safeguard the integrity of the Universal Service Fund (USF). To that end, the Commission has in place accountability mechanisms that include rigorous reporting and build-out requirements for Connect America Phase II. The mechanisms ensure that carriers use the funds for their intended purpose, that buildout-out requirements are being met, and that locations reported as newly served are actually receiving service that meets the Connect America Phase II standards. All recipients of federal high-cost universal service support must file annual reports with the Commission, the Universal Service Administrative Company (USAC) - the entity designated by the FCC as the administrator of USF funds - and, to the extent applicable, the relevant state commission, the relevant authority in a U.S. Territory, or the Tribal government. For recipients of Connect America Phase II model-based support, these annual reports must include, among other things: a geocoded list of locations with newly deployed facilities in the previous calendar year, a certification, under perjury, that the carrier offered broadband meeting the requisite public interest obligations to those locations, and the total amount of Phase II support used for capital expenditures in the previous calendar year. The Commission carefully reviews these annual progress reports. In addition, USAC separately reviews annual progress reports filings and also conducts regular audits of support recipients. Finally, state commissions with jurisdiction over recipients must file certifications with the Commission and USAC annually, based in part on their own review of the annual reports assuring that the support was used for the intended purpose in the preceding calendar Page 2-The Honorable Steve Daines year and will be used for the intended purpose in the coming calendar year. Carriers not subject to the jurisdiction of a state commission (none of which receive Phase II model-based support) make that certification directly to the Commission and USAC. Carriers do not receive support without this certification. Carriers that fail to satisfy their obligations-for instance, by not building to the required number oflocations or by not providing service that meets the Commission' s requirements-are subject to increased reporting obligations and support reductions that scale with the extent of the recipient's non-compliance, but are given the opportunity to cure. Recipients of support may also be subject to enforcement actions for non-compliance with the terms and conditions of funding . Sanctions stemming from these enforcement actions take into account the nature, circumstances, extent, and gravity of any violation. These clear and straightforward accountability mechanisms ensure that recipients of Connect America support deploy networks in rural communities in a responsible, accountable, and efficient manner. You also reference the importance of transparency, which I agree is essential. We expect to make public certain buildout data reported by carriers. This data will allow the public to monitor carriers' progress and see the impact of universal service support on broadband deployment in high-cost areas. I appreciate your interest in this matter. Please let me know if I can be of any further assistance. ~ Tom Wheeler FEDERAL COMMUNICATIONS COMMISSION WASHINGTON O F F ICE OF THE CHAI R MAN The Honorable Angus King United States Senate 133 Hart Senate Office Building Washington, D.C. 20510 Dear Senator King: February 18, 2016 Thank you for your letter regarding accountability mechanisms the Commission has implemented to ensure that carriers use disbursements from the Connect America Fund, in particular Phase II, responsibly and efficiently. Your views are very important and will be included in the record of the proceeding. I agree that the Commission plays an important and unique role in supporting rural connectivity. Part of that role is ensuring that recipients of Connect America support use disbursements responsibly and efficiently and that we hold accountable those that do not meet their commitments. We take our responsibility as stewards of public funds seriously, and we do our utmost to safeguard the integrity of the Universal Service Fund (USF). To that end, the Commission has in place accountability mechanisms that include rigorous reporting and build-out requirements for Connect America Phase II. The mechanisms ensure that carriers use the funds for their intended purpose, that buildout-out requirements are being met, and that locations reported as newly served are actually receiving service that meets the Connect America Phase II standards. All recipients of federal high-cost universal service support must file annual reports with the Commission, the Universal Service Administrative Company (USAC) - the entity designated by the FCC as the administrator of USF funds - and , to the extent applicable, the relevant state commission, the relevant authority in a U.S. Territory, or the Tribal government. For recipients of Connect America Phase II model-based support, these annual reports must include, among other things: a geocoded list of locations with newly deployed facilities in the previous calendar year, a certification, under perjury, that the carrier offered broadband meeting the requisite public interest obligations to those locations, and the total amount of Phase II support used for capital expenditures in the previous calendar year. The Commission carefully reviews these annual progress reports. In addition, USAC separately reviews annual progress reports filings and also conducts regular audits of support recipients. Finally, state commissions with jurisdiction over recipients must file certifications with the Commission and USAC annually, based in part on their own review of the annual reports assuring that the support was used for the intended purpose in the preceding calendar Page 2-The Honorable Angus King year and will be used for the intended purpose in the coming calendar year. Carriers not subject to the jurisdiction of a state commission (none of which receive Phase II model-based support) make that certification directly to the Commission and USAC. Carriers do not receive support without this certification. Carriers that fail to satisfy their obligations-for instance, by not building to the required number of locations or by not providing service that meets the Commission' s requirements- are subject to increased reporting obligations and support reductions that scale with the extent of the recipient ' s non-compliance, but are given the opportunity to cure. Recipients of support may also be subject to enforcement actions for non-compliance with the terms and conditions of funding. Sanctions stemming from these enforcement actions take into account the nature, circumstances, extent, and gravity of any violation. These clear and straightforward accountability mechanisms ensure that recipients of Connect America support deploy networks in rural communities in a responsible, accountable, and efficient manner. You also reference the importance of transparency, which I agree is essential. We expect to make public certain buildout data reported by carriers. This data will allow the public to monitor carriers' progress and see the impact of universal service support on broadband deployment in high-cost areas. I appreciate your interest in this matter. Please let me know if I can be of any further assistance. ~fa(~ Tom Wheeler