Bridggita   This page is intentionally left blank  Table of Contents INTRODUCTION AND SUMMARY OF REQUEST .......................................5 Fiscal Year 2023 Proposed Appropriation Language ........................................................................ 11 Summary of FYs 2021 - 2023 FTEs and Funding by Bureaus and Offices ......................................... 12 FTEs - Historical and Estimated...................................................................................................... 13 Summary of Changes - Regulatory Fees (Offsetting Collections) ...................................................... 14 Narrative Explanation of Changes - Salaries and Expenses - Regulatory Fees .................................... 15 Office of Inspector General Narrative.............................................................................................. 18 Universal Service Fund Activities and Costs .................................................................................... 19 Overall Status of Audit Recommendations....................................................................................... 22 SPECTRUM AUCTIONS ................................................................................23 Spectrum Auctions Program - Explanation of Requested Change ...................................................... 25 Spectrum Auctions Program ........................................................................................................... 26 Spectrum Auctions Activities ......................................................................................................... 36 Summary of Distribution of Resources - Spectrum Auctions Program ............................................... 36 Spectrum Auctions Expenditures Report ......................................................................................... 37 Spectrum Auctions and Cash Collected/Generated ........................................................................... 41 Spectrum Auctions Program – Cash Collected/Generated vs. Expenditures........................................ 41 New Budget Authorities Already Provided ......................................................43 COVID-19 Telehealth Program ...................................................................................................... 43 Broadband Deployment Accuracy and Technological Availability (Broadband DATA) Act and Broadband Deployment Locations Map........................................................................................... 44 Secure & Trusted Communications Network Reimbursement Program.............................................. 46 Emergency Broadband Connectivity Fund-Emergency Broadband Benefit Program and Affordable Connectivity Fund-Affordable Connectivity Program....................................................................... 47 Emergency Connectivity Fund ........................................................................................................ 49 Summary Activities for New Budget Authorities Received in FY 2020 and FY 2022 ......................... 50 3 This page is intentionally left blank 4 INTRODUCTION AND SUMMARY OF REQUEST 5 This page is intentionally left blank 6 INTRODUCTION AND SUMMARY OF REQUEST The Federal Communications Commission (FCC or Commission) is pleased to present its fiscal year (FY) 2023 budget request. The FCC is an independent regulatory agency of the United States Government. The FCC is charged with regulating interstate and international communications by radio, television, wire, satellite, and cable. The Commission also regulates telecommunications and advanced communication services and video programming for people with disabilities, as set forth in various sections of the Communications Act. As specified in section 1 of the Communications Act of 1934, as amended, the FCC’s mission is to “make available, so far as possible, to all the people of the United States, without discrimination on the basis of race, color, religion, national origin, or sex, rapid, efficient, Nation-wide, and world-wide wire and radio communication service with adequate facilities at reasonable charges.”1 In addition, section 1 provides that the Commission was created “for the purpose of the national defense” and “for the purpose of promoting safety of life and property through the use of wire and radio communications.”2 The FCC is directed by five Commissioners appointed by the President and confirmed by the Senate for five-year terms, except when filling the unexpired term of a previous Commissioner. Only three Commissioners can be from the same political party at any given time. The President designates one of the Commissioners to serve as the Chairperson. The FCC’s vision is to pursue policies to bring affordable, reliable high-speed broadband to 100 percent of the country and encourage the private sector to build, maintain, and upgrade next- generation networks so that the benefits of advanced communications services are available to all Americans. The FCC will work to promote diversity, equity, inclusion, and accessibility; empowering consumers; enhancing public safety and national security; and advancing America’s global competitiveness. Furthermore, in FY 2023, the FCC will continue to improve its processes to deliver on the needs of today and the future in a more proactive and efficient manner to maintain a current high level of performance. Through these reform efforts, the Commission will develop and implement reforms that focus the Commission on effectively and efficiently leveraging human capital to deliver on programs that are the highest need to citizens and where there is a unique Federal role. For FY 2023, the Commission is requesting the budget and personnel amounts that are summarized in the bullets and a table below: The Commission requests $390,192,000 in budget authority from regulatory fee offsetting collections. This request represents an increase of $16,192,000 or 4.3 percent from the FY 2022 annualized Continuing Resolution (CR) level of $374,000,000. 1 47 U.S.C. § 151. 2 Id. 7 The Commission requests $132,231,000 in budget authority for the spectrum auctions program. This request represents a decrease of $2,264,000 or 1.7 percent from the FY 2022 annualized CR level of $134,495,000. As of January 31, 2022, the Commission’s spectrum auctions program has generated over $233 billion for government use; at the same time, the total cost of the auctions program has been less than $2.3 billion or 1 percent of the total auctions’ revenue. In creating a lean, accountable, and efficient Commission that works for the American people, the Commission requests 1,600 Full Time Equivalents (FTEs) funded by budget authority from regulatory fee offsetting collections, spectrum auctions program, and other budget authorities provided by President and Congress. This FTE level is an increase of 128 from the FY 2022 estimated level of 1,472. With this FTE level, the Commission will meet its mission demands in FY 2023. (Dollars in Thousands) FY 2022 FY 2023 Change in Request Annualized Congressional FTEs1 FTEs1 FTEs1 Amount CR Amount Request Budget Authority - Offsetting Collections: Regulatory Fees - Commission2 1,412 $362,673 1,540 $378,061 128 $15,388 Regulatory Fees - Office of Inspector General (OIG) 60 $11,327 60 $12,131 0 $804 Subtotal - Offsetting Collections 1,472 $374,000 1,600 $390,192 128 $16,192 Budget Authority - Other Offsetting Collections: Auction Cost Recovery Reimbursement - Commission $134,358 $132,088 -$2,270 Auction Cost Recovery Reimbursement - OIG $137 $143 $6 Subtotal - Auction Cost Recovery Reimbursement $134,495 $132,231 -$2,264 Economy Act Reimbursable Agreements $4,000 $4,000 $0 Subtotal - Other Offsetting Collections $138,495 $136,231 -$2,264 Total Gross Proposed Budget Authority2 1,472 $512,495 1,600 $526,423 128 $13,928 1The FTE numbers include Auctions Program FTEs. Refer to page 40 for a breakdown of FTEs between Regulatory Fees and Auctions Program FTEs. 2The Commission’s other budget authorities are summarized on page 43. 8 In furtherance of these objectives and the FCC’s mission, the FY 2023 budget request will be used to support the following Strategic Goals for FY 2023: Strategic Goal 1: Pursue a “100 Percent” Broadband Policy The COVID-19 pandemic put a spotlight on the serious broadband gaps that exist across the country, including in rural infrastructure, affordability for low-income Americans, and at-home access for students. This continuing digital divide means millions of Americans do not have meaningful access to essential infrastructure for 21st century success. In response to the COVID- 19 pandemic and the challenges that many Americans face, the agency should advance access to communications that are essential for Americans to work remotely, learn remotely, receive healthcare, and engage in commerce. To this end, the FCC will pursue policies to help bring affordable, reliable, high-speed broadband to 100 percent of the country. Strategic Goal 2: Promote Diversity, Equity, Inclusion and Accessibility The FCC will seek to gain a deeper understanding of how the agency’s rules, policies, and programs may promote or inhibit advances in diversity, equity, inclusion, and accessibility. The FCC will pursue focused action and investments to eliminate historical, systemic, and structural barriers that perpetuate disadvantaged or underserved individuals and communities. In so doing, the FCC will work to ensure equitable and inclusive access and facilitate the ability of underserved individuals and communities to leverage and benefit from the wide range of opportunities made possible by digital technologies, media, communication services, and next-generation networks. In addition, the FCC recognizes that it is more effective when its workforce reflects the experience, judgement, and input of individuals from many different backgrounds. Advancing equity is core to the agency’s management and policymaking processes and will benefit all Americans. Strategic Goal 3: Empower Consumers Consumers who are well informed about their rights and what they’re buying are more confident and more likely to participate in the digital economy. The FCC will tackle new challenges to consumer rights and opportunities stemming from the COVID-19 pandemic, plans for post- COVID recovery, and digital transitions. The FCC also will pursue effective enforcement and new approaches to protect consumers from unwanted and intrusive communications, phone-based scams, telephone privacy issues, and other trends that affect consumers. The FCC will work to enhance competition and pursue policies that protect the competitive process to improve consumer choice and access to information. The FCC will work to foster a regulatory landscape that fosters media competition, diversity, and localism. The FCC also must work to ensure the availability of quality, functionally equivalent communications services for persons with disabilities. Strategic Goal 4: Enhance Public Safety and National Security There is no task at the FCC that is more important than keeping the American people safe. The FCC will pursue policies to promote the availability of secure, reliable, interoperable, redundant, and rapidly restorable critical communications infrastructure and services. The FCC also will promote the public’s access to reliable 911, emergency alerting, and first responder communications. The FCC will work to ensure the continued availability of timely emergency 9 alerts. The FCC will work in coordination with Federal and state, local, Tribal, and territorial government partners and industry stakeholders to support disaster response and to ensure the nation’s defense and homeland security. Strategic Goal 5: Advance America’s Global Competitiveness The FCC will take action to promote investment and advance the development and deployment of new communications technologies, such as 5G, that will allow the nation to remain a global leader in an increasingly competitive, international marketplace. The FCC will identify incentives and policies to close security gaps and accelerate trustworthy innovation. The FCC will work with its federal partners to advocate for US interests abroad. Strategic Goal 6: Foster Operational Excellence The FCC should be a model for excellence in government by effectively managing its resources, maintaining a commitment to transparent and responsive processes that encourage public involvement and decision-making that best serves the public interest, and encouraging a culture of collaboration both internally and across government agencies. Additional Useful Information to Better Understand the Budget Request Below is some additional useful information for readers to better understand the information presented in the Commission’s budget request: FY 2021 numbers presented are actual numbers. FY 2022 numbers presented are annualized Continuing Resolution numbers. The Consolidated Appropriations Act, 2022 (P.L. 117-103) was signed by the President on March 15, 2022. The FTE numbers included in the charts in Fiscal Year 2023 Requirements by Bureaus and Offices section also include FTEs from the Spectrum Auctions Program, and other budget authorities provided by the President and Congress, but the personnel compensation and benefits dollar amount only represent personnel compensation and benefits dollars from Salaries and Expense (S&E) - Regulatory Fees. 10 Fiscal Year 2023 Proposed Appropriation Language For necessary expenses of the Federal Communications Commission, as authorized by law, including uniforms and allowances therefor, as authorized by 5 U.S.C. 5901–5902; not to exceed $4,000 for official reception and representation expenses; purchase and hire of motor vehicles; special counsel fees; and services as authorized by 5 U.S.C. 3109, $390,192,000, to remain available until expended: Provided, That $390,192,000 of offsetting collections shall be assessed and collected pursuant to section 9 of title I of the Communications Act of 1934, shall be retained and used for necessary expenses and shall remain available until expended: Provided further, That the sum above appropriated shall be reduced as such offsetting collections are received during fiscal year 2023 so as to result in a final fiscal year 2023 salaries and expenses appropriation estimated at $0: Provided further, That, notwithstanding 47 U.S.C. 309(j)(8)(B), proceeds from the use of a competitive bidding system that may be retained and made available for obligation shall not exceed $132,231,000 for fiscal year 2023: Provided further, That, of the amount appropriated under this heading, not less than $12,131,000 shall be for the salaries and expenses of the Office of Inspector General. 11 Summary of FYs 2021 - 2023 FTEs and Funding by Bureaus and Offices (Dollars in Thousands) FY 2021 FY 2022 FY 2023 Bureaus and Offices Annualized CR Congressional 1 Actuals 1 1 FTEs FTEs Amount FTEs Request Chairwoman and Commissioners 22 $4,480 22 $5,926 23 $6,236 Consumer & Government Affairs Bureau 111 $21,128 109 $22,117 119 $25,096 Enforcement Bureau 188 $38,551 185 $38,795 212 $48,165 International Bureau 83 $16,083 83 $16,560 88 $18,483 Media Bureau 130 $23,994 127 $24,141 133 $25,658 Public Safety & Homeland Security Bureau 98 $20,485 98 $20,672 104 $22,858 Wireless Telecommunications Bureau 150 $13,404 145 $13,582 158 $17,016 Wireline Competition Bureau 153 $31,183 156 $33,421 172 $39,139 Office of Administrative Law Judges 4 $686 4 $733 4 $775 Office of Communications Business Opportunities 10 $2,066 10 $2,134 13 $2,858 Office of Economics and Analytics 111 $21,276 122 $51,274 134 $22,833 Office of Engineering & Technology 76 $13,943 74 $14,609 79 $15,995 Office of General Counsel 72 $17,082 72 $17,477 79 $19,434 Office of Legislative Affairs 8 $1,515 8 $1,599 8 $1,686 Office of Managing Director 184 $100,177 181 $96,534 194 $107,850 Office of Media Relations 12 $2,374 11 $2,238 12 $2,463 Office of Workplace Diversity 5 $685 5 $861 8 $1,515 Subtotal 1,417 $329,112 1,412 $362,673 1,540 $378,061 Office of Inspector General 47 $8,997 60 $11,327 60 $12,131 Total - Salaries & Expenses 2 1,464 $338,109 1,472 $374,000 1,600 $390,192 1The FTE numbers include the spectrum auctions program FTEs. 2The Commission’s other budget authorities are summarized on page 43. The Commission is responsible for the overall management, oversight, and administration of the Universal Service Fund (USF), including all USF policy decisions. All USF related activities are currently funded by regulatory fees. The Universal Service Fund Activities and Costs section on pages 19 through 21 provides more details related to the Commission’s USF activities and related costs. 12 FTEs - Historical and Estimated Fiscal Years 1985 – 2023 13 Summary of Changes - Regulatory Fees (Offsetting Collections) (Dollars in Thousands) FY 2022 FY 2023 TOTAL NET CHANGE Annualized Congressional Regulatory Fees - Offsetting Collections: CR Amount Request Amount Percent Commission $362,673 $378,061 $15,388 Office of Inspector General $11,327 $12,131 $804 Total Spending Authority - Offsetting Collections $374,000 $390,192 $16,192 4.3% Full-Time Equivalents (FTEs) - Commission1 1,412 1,540 128 FTEs - Office of Inspector General 60 60 0 Total Full-Time Equivalents 1,472 1,600 128 Explanation of Changes - Regulatory Fees (Offsetting Collections) FY 2022 Annualized CR Amount $374,000 FY 2022 One-Time Reductions: Broadband DATA Act Reduction for FY 2023 -$33,000 Reversal of FY 2021 One-Time Investment Requests2 -$2,579 Reversal of FY 2022 Rent Savings -$2,322 Total - FY 2022 One-Time Reductions -$37,901 FY 2023 Base Before Increases, Adjustments & One-Time Investments $336,099 FY 2023 Base Increases: Additional 113 FTEs $22,859 Pirate Act (includes 15 Additional FTEs) $5,000 IT - Virtual Desktop Infrastructure (VDI) Consumption $2,500 IT - Regulatory IT and Cyber Security Compliance $2,226 IT - Data & Fraud Detection Tool $2,025 IT - Application Development Team $1,040 Office of the Inspector General $200 Subtotal - FY 2023 Base Increases $35,850 FY 2023 Base Adjustments (Inflationary Increases): Personnel Compensation $13,761 Non-Salary Inflationary $3,402 Subtotal - FY 2023 Base Adjustments $17,163 FY 2023 Adjusted Base Before One-Time Investment Requests $389,112 FY 2023 - One-Time Investment Requests: IT - Critical Infrastructure Upgrade $1,080 Subtotal - FY 2023 One-Time Investment Requests $1,080 FY 2023 Total Request $390,192 TOTAL NET CHANGE $16,192 4.3% 1Includes Spectrum Auctions Program FTEs. 2Reversal of FY 2021 One-Time Investment Requests is comprised of IT - Cloud Services and Systems Modernization ($1,022), Mapping - Geographic Information System ($420), Computational Power System ($262), Enterprise Level Data Architecture ($525), and On-Line Market Surveillance Tool ($350). 14 Narrative Explanation of Changes - Salaries and Expenses - Regulatory Fees Personnel Compensation and Non-Salaries Inflationary Increase to Base: $17,163,166 Personnel Compensation ($13,761,422) – The request includes a 4.6 percent increase for personnel compensation and benefits. This increase also includes related increases for the Office of Inspector General (OIG), which total $557,595. Non-Salary Inflationary Increase ($3,401,744) – This request provides expected inflationary increases for phones, utilities, printing and reproduction services, contractual services, supplies, travel, training, and other expenses. The total non-salary increase also includes related increases for the OIG, which total $46,965. FY 2023 Base Increases and One-Time Requests for New Investments: $36,930,176 Base Increases ($35,850,176) Additional FTEs ($22,859,176) The COVID-19 pandemic put a spotlight on the serious broadband gaps that exist across the country, including in rural infrastructure, affordability for low-income Americans, and at-home access for students. Congress appropriated over $10.8 billion to the Commission to provide critical connection and assistance needed during the pandemic. In addition, Congress appropriated $14.2 billion to continue this critical broadband affordability program beyond the pandemic. For FY 2023 and forward, the Commission requires new FTEs to sustain its critical mission and operational needs and to maintain current high level of performance, including to oversee these new efforts. New FTEs will serve a variety of functions, including pursuing policies to bring affordable, reliable high-speed broadband to 100 percent of the country; analyzing available data to support data driven policies; promoting diversity, equity, inclusion, and accessibility; empowering consumers; enhancing public safety and national security; advancing America’s global competitiveness; overseeing new policies and programs; addressing privacy related issues; improving data governance; supporting IT related needs and services; supporting personnel security; improving risk management; aligning external reporting requirements with Treasury’s Fiscal Service requirements and other stakeholders; and supporting acquisitions, program management, and human resources operations. Some of the funds may also be used to enhance/implement paid internship programs in critical mission operational areas. This would enable the Commission to attract a more diverse applicant pool and create a pipeline of candidates for future positions at the Commission as part of its efforts to promote diversity, equity, and inclusion. PIRATE Act ($5,000,000) In January 2020, the Preventing Illegal Radio Abuse Through Enforcement Act (PIRATE Act), P.L. 106-109, was signed into law. The PIRATE Act demonstrates that Congress views enforcement against pirate radio broadcasting as a priority. In addition to increasing the potential penalties for pirate broadcasting, the PIRATE Act imposes significant new responsibilities on the Commission. Among other things, the PIRATE Act requires the Commission to: (1) conduct annual enforcement 15 sweeps in the top five radio markets; (2) conduct follow-up monitoring to determine whether pirate broadcasters identified in the sweeps are still on the air; (3) publish a pirate radio broadcasting database that clearly identifies all licensed broadcasters operating in the AM and FM bands and all pirate radio broadcasters; and (4) submit an annual report to Congress summarizing the Commission’s implementation of the PIRATE Act and enforcement activities in the prior fiscal year. Additionally, the PIRATE Act specifically provides that the Commission must conduct the annual sweeps without decreasing or diminishing its regular pirate radio enforcement efforts. The budget includes an increase of $5,000,000 to the base for the implementation of this legislation, which includes hiring 15 FTEs. Virtual Desktop Infrastructure (VDI) Support ($2,500,000) The Commission recently migrated to a Virtual Desktop Infrastructure (VDI) solution to provide approximately 2000 users a more secure, stable and robust virtual desktop capability. The new capability supports critical Information Technology (IT) requirements of users in the traditional office environment, by replacing aging desktop solutions, as well as those of a remote workforce. The current single-session solution is ideal in full desktop environments. With the shift from working on premises as well as in remote locations, a multi-session architecture change will provide an efficient, scalable, and effective solution for delivering applications in a web browser for easier access while providing data security and consistency to the end users. Additional funding is required to support an optimized multisession technical design, increased Virtual Machine (VM) resource consumption, increased shared file storage utilization, and implementation and integration of a VM power management capability. This enhanced capability provides needed functionality benefits in support of the growing and evolving communication requirements of Commission staff. Regulatory IT and Cyber Security Compliance ($2,226,000) The Commission requires additional resources to address Executive Order 14028, “Improving the Nation’s Cybersecurity,” and for regulatory and federal mandates surrounding IT and cybersecurity. This request will help the FCC comply with OMB mandates, DHS Binding Operational Directives, and Emergency Directives. Without a continuous budget to specifically support cybersecurity, the FCC will continue to react to threats verses taking active measure to protect against them. The threat landscape is constantly shifting and the tools, capabilities and training needed to combat these threats continuously evolves. This increase will ensure FCC staff have appropriate tools and knowledge to address threats and continue to help achieve the FCC's mission and strategic objectives. Data & Fraud Detection Tool ($2,025,000) The Commission seeks to develop and implement a robust analytical and fraud predictive tool. The tool would allow analysts and investigators to identify potentially fraudulent activities and improper payments in Commission programs by identifying outliers and hotspots by incorporating data visualizations, such as heatmaps, bubble charts, and scatter plot charts. This investment will also enhance, optimize and redesign existing applications for improved user experience, faster performance, and extended functionality. 16 Application Development Teams ($1,040,000) The Commission requires new resources to support four to five IT development teams. This will enable the FCC IT Group to be more agile and responsive to development efforts requested by the Commission’s Bureaus and Offices. These development teams will minimize the ramp-up time required to begin each new IT development project and enable FCC IT to support concurrent development initiatives. Further, this approach will result in significant time-savings associated with initiating and executing contract modifications. Office of Inspector General ($200,000) This base increase for the Office of Inspector General’s (OIG) will allow the OIG to hire additional contractors. An increase in contractual services is needed because of added requirements, which will increase investigations, audits, and related services. One-Time Requests for New Investments ($1,080,000) Critical Infrastructure Upgrade ($1,080,000) In accordance with Executive Order 14028, “Improving the Nations Cybersecurity,” FCC requires an enterprise-wide application performance monitoring capability and replacement of old end user equipment. FCC needs a capability to proactively monitor, predict, report and alert on the performance and health of business systems and applications. Capability remediates observability issues experienced by FCC system and application owners as well as operations, security, and application development personnel. 17 Office of Inspector General Narrative The Office of the Inspector General’s (OIG or the Office) workload continues to increase in all mission-critical areas. The Office continues to focus on increasing mission responsibilities and ensuring appropriate staff levels to keep pace with the workload. OIG has increased its Full-Time Equivalent (FTE) staff over the past few budget years and this recruitment effort has permitted the Office to engage in a greater number of, and more complex, audits and investigations. We anticipate further growth in 2023. We plan to hire at least two 1811 criminal investigators in FY 2023 to support an expanded program of proactive investigations into E-rate and Lifeline providers and recipients and to provide additional law-enforcement capabilities we currently lack. We also plan to fill three staff level audit positions, two investigative attorney positions, and a data analyst position that are currently vacant. We continually gauge the relative merits of any audit and investigation prior to expending valuable resources. The OIG FY 2023 budget request of $12,131,000 reflects an $804,000 net increase over the FY 2022 annualized level of $11,327,000. The net increase is attributable to a 4.6 percent increase in salary and benefits, non-salary inflation, and $200,000 in additional contract costs. We anticipate an increase in contractual services is needed because of added requirements, which will drive additional investigations, audits, and related services. OIG Office of Audit (OA) conducts and contracts for the performance of independent and objective audits, inspections, evaluations, and related projects, designed to promote economy, effectiveness and efficiency in FCC programs and operations, and to prevent and detect fraud waste and abuse. As of September 30, 2021, OA had completed three projects and an additional seven projects were in process. OA plans to complete more than 50 audits, inspections, and evaluations over the next five years, not including the mandated audits of the COVID 19 Emergency Broadband Benefit Program, and any unforeseen special projects and Congressional requests. OIG Office of Investigation (OI) matters cover a wide range of topics touching on myriad aspects of the FCC’s mission and programs. Most significantly, our investigations often address allegations of criminal misconduct or civil fraud in the Commission’s Universal Service programs. We deal with complex investigations, large criminal conspiracies, and matters involving complex financial transactions throughout the United States and its territories. As of September 30, 2021, OI had 42 open cases. Working with the Department of Justice, in recent years, OI has recovered tens of millions of dollars of government funds and saved the government hundreds of millions of additional dollars, resulting from criminal and civil fraud cases that have been successfully prosecuted or settled. In the upcoming year, in addition to our ongoing activities, we also expect to conduct investigations to fulfill our mandate to deter and detect fraud, waste and abuse in the COVID 19 Telehealth program, the Emergency Broadband Benefit Program and the Emergency Connectivity Fund Program and other matters that are a direct result of changes to the FCC’s subsidy programs in response to the coronavirus pandemic. In compliance with the IG Reform Act of 2008, this FCC OIG FY 2023 budget request includes: ▪ A fair share ratio in the amount of $42,080 for contribution to the Council of the Inspectors General on Integrity and Efficiency (CIGIE), ▪ Funds to support IGNet Management Services, and ▪ Training funds in the amount of $90,638. 18 Universal Service Fund Activities and Costs The Commission is responsible for the overall management, oversight, and administration of the Universal Service Fund (USF). The Commission develops policies for the USF, and the Universal Service Administrative Company (USAC) collects and delivers funding through four programs – Schools and Libraries (E-Rate), Rural Health Care, Lifeline, and High Cost – focused on places where broadband and connectivity needs are critical. These programs serve people in rural, underserved, and difficult-to-reach areas. The Commission works with USAC, as administrator of the USF, to review USAC’s administrative expenses and also to oversee the effectiveness of USAC’s internal controls around USAC’s program management, procurements, information technology projects, and personnel processes. The descriptions below provide additional information about how the Commission’s various Bureaus and Offices work together as the agency carries out its USF management and oversight responsibilities. Office of Managing Director. The Office of Managing Director (OMD) is responsible for all USF management and administrative activities, including finance, accounting, procurement, information technology, and audits of beneficiaries and contributors. OMD provides instruction and oversight to USAC on these issues. Wireline Competition Bureau. The Wireline Competition Bureau (WCB) oversees USF policy and provides guidance on the applicability and interpretation of the Commission’s USF rules, orders, and directives to USAC and to stakeholders. WCB also is primarily responsible for USF rulemaking proceedings, appeals of USAC decisions, requests for waivers of the Commission’s USF rules, petitions for USF declaratory rulings, interactions with the Federal-State Joint Board on Universal Service, and preparation and publication of USF information in the Universal Service Monitoring Report. Wireless Telecommunications Bureau. The Wireless Telecommunications Bureau (WTB), in coordination with WCB, develops policy and procedures concerning the Mobility Fund and proposed 5G Fund, which represent universal service support mechanisms dedicated exclusively to mobile wireless services. Office of Economics and Analytics. The Office of Economics and Analytics (OEA), in coordination with WCB, oversees reverse auctions policy and implementation for distributing high-cost universal service support. Office of General Counsel. The Office of General Counsel (OGC) oversees issues relating to litigation and settlements and serves as the Commission’s chief legal advisor, including on issues pertaining to USF matters. Enforcement Bureau. If USAC or a Commission Bureau or Office identifies a possible violation of the Communications Act or a Commission rule, order, or directive, the matter is referred to the Enforcement Bureau (EB) for possible investigation and administrative enforcement action, including issuing forfeitures. EB pursues potential investigations of USF-related matters from other sources of information as well. In addition, EB is authorized to suspend and debar persons from participating in the universal service mechanisms upon a criminal conviction of or civil judgment for fraud against a USF program. 19 Office of Inspector General. The Office of Inspector General (OIG) conducts audits, evaluations, and inspections of USF programs and operations, as well as program service providers and beneficiaries designed to prevent and detect fraud, waste, and abuse. These oversight activities and related initiatives help promote economy, effectiveness, and efficiency of the USF. USF Activities The Commission’s continued budgetary and programmatic focus for the universal services programs includes: (1) promoting policies to help bring affordable, reliable, high-speed broadband to 100 percent of the country, (2) eliminating waste, fraud and abuse, and (3) promoting efficiency, accountability, and fiscal responsibility. With these priorities in mind, the Commission targets support to deliver, expand and maintain voice and broadband service to high cost and rural areas, low-income consumers, schools and libraries. On February 23, 2017, the Commission adopted rules for allocating nearly $2 billion, through a reverse auction, from the Connect America Fund, which aims to advance fixed broadband service to unserved and underserved areas across the country. Through an auction mechanism, the Commission sought the best deal for the American people with the available funds and, as of November 2020, has authorized $1.476 billion in support over 10 years to 193 winning bidders to provide fixed broadband and voice services to over 700,000 locations in 45 states. On December 7, 2020, the Commission announced that its Rural Digital Opportunity Fund auction (Auction 904) had closed, and up to $9.23 billion in support will be distributed over 10 years to approximately 180 winning bidders to provide fixed broadband and voice service to up to 5.22 million locations in 49 states, subject to approval of the long form applications for winning bidders. In October 2020, the Commission adopted the 5G Fund for Rural America to replace Mobility Fund Phase II. The 5G Fund Phase I auction will award up to $8 billion over 10 years to deploy 5G service in areas otherwise unlikely to receive timely 5G deployment. The 5G Fund Phase II auction budget is presently set at $1 billion plus the remainder of the Phase I budget. In the Lifeline program, the Commission’s goals are to: (1) continue implementation of the modernization of the Lifeline program to support affordable, high-speed internet access for our nation’s poorest families; and (2) ensure fiscal responsibility and combat waste, fraud, and abuse so Lifeline USF dollars spent reach the consumers Lifeline was created to help. Actions to accomplish these goals include using a unified interface to independently process eligibility verification and recertification of Lifeline subscribers, as well as interconnected verification with other agency and state eligibility databases to improve program controls. In the E-rate program, the Commission is committed to enhancing access to broadband and telecommunications services in eligible elementary and secondary schools and libraries. The E- rate program has a current cap of $4.46 billion per funding year, adjusted annually for inflation. Finally, under the Rural Healthcare program, the Commission remains committed to ensuring all Americans have access to advanced medicine and health care services no matter where they live. The Rural Healthcare program has a current cap of $612.02 million per funding year, adjusted annually for inflation. 20 The chart below shows the estimated costs that the Commission will incur in overseeing USF activities, which includes costs incurred by the OIG. (Dollars in Thousands) Fiscal Years FY 2021 FY 2022 FY 2023 FCC's USF Activities Cost1 $21,189 $21,613 $22,045 Full-Time Equivalent (FTEs) 104 104 104 1 Amount shown are projections based on actual cost. The chart below shows the total number of Commission FTEs working on USF activities by bureau and office for FY 2021 based on extrapolated data. Number of FCC FTEs Working On USF Activities By Bureau and Office FTEs Wireline Competition Bureau 54 Office of Economics & Analytics 20 Office of Inspector General 10 Enforcement Bureau 9 Wireless Telecommunications Bureau 3 Office of General Counsel 4 Office of the Managing Director 2 Media Bureau 1 Public Safety and Homeland Security Bureau 1 Total FTEs 104 Crosswalk of USF Outlays to FCC Strategic Goals In FY 2021, USF made outlays totaling $8.795 billion. These outlays were allocated to the following FY 2021 strategic goals: (Dollars in Millions) Applicable FY 2021 Strategic Goals Outlay Amount Percent Closing the Digitial Divide $7,539 85.7% Promoting Innovation $1,256 14.3% Total $8,795 100.0% As of September 30, 2021 21 Overall Status of Audit Recommendations The chart below shows the number of audit recommendations outstanding from various audits conducted by FCC’s Office of Inspector General (OIG) and the Government Accountability Office (GAO) at the end of each fiscal year. The numbers shown below exclude those recommendations for which the Commission has already submitted information to GAO and OIG requesting closure of the recommendation. The count also excludes those recommendations that the Commission has determined to close as not implemented. Outstanding Audit Recommendations 300 255 250 50 189 200 150 100 90 103 90 100 205 81 159 75 47 32 57 45 50 39 48 53 58 42 30 46 27 45 0 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 (12/31/21) OIG GAO 22 SPECTRUM AUCTIONS 23 This page is intentionally left blank 24 Spectrum Auctions Program - Explanation of Requested Change The Federal Communications Commission requests $132,231,000 for the Spectrum Auctions Program for FY 2023, which is a decrease of $2,264,000 from FY 2022 annualized CR level of $134,495,000, as detailed below. This level of funding will enable the Commission to continue its efforts to make more spectrum available for 5G, to continue the implementation of the Infrastructure Investment and Jobs Act of 2021, the Spectrum Pipeline Act of 2015 and certain provisions of the RAY BAUM’S Act, including the MOBILE NOW Act, as well as the Consolidated Appropriations Act of 2021; to continue the post-broadcast incentive auction (BIA) work related to displacement, repacking, and reimbursing from the TV Broadcaster Relocation Fund to broadcasters (TVBRF), multichannel video programming distributors (MVPDs), Low Power TV (LPTV), TV translator stations, and FM broadcast stations for reasonable relocation costs incurred because of the Commission’s broadcast incentive auction, and to upgrade and improve Commission’s auction infrastructure in preparation for future auctions. (Dollars in Thousands) FY 2022 FY 2023 TOTAL NET CHANGE Annualized CR Congressional Amount Percent Amount Request Spectrum Auctions Program Cost Recovery $134,495 $132,231 -$2,264 -1.7% Explanation of Changes FY 2022 Annualized CR Amount $134,495 FY 2022 One-Time Reductions: New Headquarters Rent Savings -$378 Contract Cost Reduction -$8,300 Total - FY 2022 One-Time Reductions -$8,678 -6.5% FY 2023 Base Before Adjustments $125,817 FY 2023 Base Adjustments (Inflationary Increases): Personnel Compensation $2,602 Non-Salary Inflationary $3,812 Subtotal - FY 2023 Base Adjustments $6,414 FY 2023 Total Request $132,231 TOTAL NET CHANGE -$2,264 -1.7% 25 Spectrum Auctions Program The Omnibus Budget Reconciliation Act of 1993, P.L. 103-66 (Act), required the Commission to auction licenses for portions of the electromagnetic spectrum used for certain services, replacing the former lottery process. The Act further requires the Commission to ensure that small businesses, women, minorities, and rural telephone companies have an opportunity to participate in the competitive bidding process. The Commission initiated regulations implementing the spectrum auction authority granted by the legislation and conducted its first round of auctions in July 1994. As of January 2022, the total amount generated for broader government use and deficit reduction since 1994 exceeds $233 billion. The original spectrum auction authority was scheduled to expire in FY 1998; however, it was extended through FY 2007 in the Balanced Budget Act of 1997, P.L. 105-33; extended through FY 2011 by the Deficit Reduction Act of 2005, P.L. 109-171; extended through FY 2012 by the DTV Delay Act (2012), P.L. 111-4; and extended through FY 2022 by the Middle Class Tax Relief and Job Creation Act of 2012, P.L. 112-96. The Commission’s authority to conduct new auctions and grant a license or permit under section 309(j) of the Communications Act expires September 30, 2022, except that, with respect to the electromagnetic spectrum identified under section 1004(a) of the Spectrum Pipeline Act of 2015, such authority shall expire on September 30, 2025, and with respect to the electromagnetic spectrum identified under section 90008(b)(2)(A)(ii) of the Infrastructure Investment and Jobs Act (P.L. 117- 58), such authority shall expire on the date that is 7 years after the date of enactment of that Act. The Commission is authorized to retain funds from auction revenues to develop, implement, and maintain the auctions program. These funds cover the personnel and administrative costs required to plan and execute spectrum auctions; operational costs to manage payments and collections activities; development, implementation, and maintenance of all information technology systems necessary for auctions operations, including development of a combinatorial bidding system; and a proportional share of the general administrative costs of the Commission. This budget submission assumes that the auctions program will continue to recover the costs of conducting auction activities from spectrum license auction receipts as the Commission continues to use auctions as a licensing mechanism for spectrum-based communications services. The Commission’s FY 2022 annualized CR capped the auctions program obligations at $134,495,000. The Commission’s request of $132,131,000 for FY 2023 is a decrease of $2,264,000 or 1.7 percent. This is partly due to one-time reductions of $8,678,000 for contract and rent savings, offset in part by an estimated 4.6 percent increase in salary costs and an inflationary increase in non-salary costs. Funding at this level will enable the Commission to: • implement the Infrastructure Investment and Jobs Act (Infrastructure Act) by taking steps toward the potential auction of licenses in the 3.1-3.45 GHz band; • implement the Spectrum Pipeline Act of 2015 by, for example, taking steps to auction 30 megahertz identified pursuant to the Act and continuing the steps necessary to promote use of the 3.5 GHz band; • implement the Consolidated Appropriations Act of 2021 for 5G Act of 2020 by supporting the transition of the 3.45 GHz band and the relocation of secondary radiolocation users; 26 • continue ongoing activities and taking other steps necessary to implement the RAY BAUM’S Act, including the Making Opportunities for Broadband Investment and Limiting Excessive and Needless Obstacles to Wireless Act (MOBILE NOW Act) provisions regarding identifying, making licenses available through auction, and transitioning spectrum for mobile and fixed wireless broadband use in, among other bands, the 3.7 GHz-4.2 GHz range; • continue and close out post-BIA work related to displacement, repacking, and reimbursing from the TVBRF to broadcasters and MVPDs for their costs to implement the results of the BIA; and • upgrade and improve its auctions program infrastructure and security posture in preparation for future auctions authorized by the Infrastructure Act and the Spectrum Pipeline Act. In addition, as the demand for spectrum for new technologies extends to spectrum bands previously assigned for legacy applications, creative approaches must be found to accommodate existing licensees and operations while expanding opportunities for access by new users. Spectrum Pipeline Act of 2015, RAY BAUM’S Act, and Other Auction Program Improvements The Spectrum Pipeline Act of 2015 (Pipeline Act) requires the Commission to auction 30 megahertz of spectrum identified by the Secretary of Commerce for reallocation from Federal use to non- Federal use, shared use, or a combination thereof. The Pipeline Act also appropriates funds from the Spectrum Relocation Fund to support activities by Federal entities to improve the efficiency and effectiveness of Federal use of spectrum in order to make Federal spectrum available for non- Federal use, shared use, or a combination thereof. The Pipeline Act requires the FCC, as part of its role on the interagency Technical Panel established within the National Telecommunications and Information Administration (NTIA), to review Federal entities’ proposals for funds for these purposes. Additionally, the Pipeline Act requires the Commission to submit four reports to Congress. In November 2018, the Commission submitted a first report with an analysis of its new rules for the innovative Citizens Broadband Radio Service in the 3550-3700 MHz band. That same month, the Commission submitted a second report analyzing proposals to promote and identify additional bands that can be shared under such rules and identifying at least 1 gigahertz of spectrum between 6 GHz and 57 GHz for such use. By January 1, 2024, in coordination with the Assistant Secretary of Commerce for Communications and Information, the Commission must submit a third report that identifies at least an additional 50 megahertz of spectrum below 6 GHz for potential auction. Also, a fourth report which identifies at least another additional 50 megahertz of additional spectrum below 6 gigahertz for potential auction must be submitted by January 1, 2024 as well. The latter two reports must contain an assessment of the Federal operations in such spectrum, an estimated timeline for the competitive bidding process, and a proposed plan for balance between unlicensed and licensed use. The RAY BAUM’S Act amended the Pipeline Act to require notice and comment for certain Pipeline Act reports and to direct the Commission to undertake numerous rulemakings and initiatives related to potential repurposing, reallocation, sharing, or auction of spectrum bands. The latter directive included a requirement that the Commission work with NTIA to id entify an additional 255 megahertz of spectrum for mobile and fixed wireless use by 2022. 27 To fulfill these statutory requirements and enhance the Commission’s ability to execute upcoming auctions, auctions funding will also be used for the following that entail extensive work to be performed during FY 2023: • 3.5 GHz Auction and Post-Auction Implementation – In 2018, the Commission updated its service rules for licenses in the 3550-3650 MHz portion of the 3.5 GHz band, which were licensed through an auction. Bidding in Auction 105 began on July 23, 2020 and concluded on August 25, 2020. On September 2, 2020, the Commission announced that 228 bidders won a total of 20,625 licenses, for $4.5 billion in net bids. Due to the characteristics of and use cases for licenses in this band, bidding in this auction had a novel set of requirements that required the Commission to develop new auction procedures and software. In addition, the nature of the licenses required significant software changes to accommodate the post-auction licensing process. Much of the work took place in FY 2020, but statutorily required work will by necessity continue through FY 2022 and may continue into FY 2023. Long-form license applications were filed just before the end of FY 2020. Since then, Commission staff have undertaken the statutorily required process to evaluate and grant such applications, where warranted; such work may extend into FY 2023 because of the large number of winning bidders that require careful review. In addition, the Commission will have an ongoing need to interface with the Spectrum Access System Administrators (SASs), which manage the dynamic spectrum sharing environment in the 3.5 GHz band, as well as the Environmental Sensing Capability (ESC) operators, which facilitate federal incumbent protection in the band. The Commission also will have an ongoing need to test and verify the operational capabilities of current and future SASs and ESCs, as discussed below. Successful implementation of the unique sharing model adopted in the band will provide the American consumer with access to additional spectrum resources. • 3.7-4.2 GHz Auction and Post-Auction Implementation – Bidding in Auction 107, an auction of flexible-use licenses for 280 megahertz of spectrum in this band, began on December 8, 2020 and concluded on February 17, 2021. On February 24, 2021, the Commission announced that the auction raised a total of $81.1 billion in net bids and $81.2 billion in gross bids, with 21 bidders winning all 5,684 licenses offered in the auction. Winning bidders were required to file post-auction long-form applications by March 10, 2021. Since then, Commission staff have undertaken the statutorily required process to evaluate and grant such applications, where warranted. The Commission will oversee the process of transitioning incumbent Fixed Satellite Services (FSS) out of the 280 megahertz that has been auctioned in order to enable new flexible- use licensees to deploy. Under the transition process adopted by the Commission, overseeing this process will involve Commission staff resources in FY 2022 and FY 2023. • 3.1-3.45 GHz Band – The Infrastructure Investment and Jobs Act of 2021 (P.L. 117-58), among other things, requires the Commission, in consultation with the Assistant Secretary of Commerce for Communications and Information, to begin a system of competitive bidding for frequencies within 3.1-3.45 GHz band identified for shared use by federal and non-federal users by the Departments of Commerce and Defense no sooner than November 30, 2024. The development of the auction and related work will require Commission staff resources in FY 2022 and FY 2023. 28 • 3.45-3.55 GHz Band – In a March 2021 Second Report and Order, the Commission reallocated the top portion of the band (3.45-3.55 GHz) to make 100 megahertz of spectrum available for flexible use and adopted a framework for the 3.45 GHz band that will enable robust commercial use by an array of service providers, while also ensuring that federal incumbents are still protected from harmful interference where and when they require continued access to the band. Pursuant to the requirements of the Commercial Spectrum Enhancement Act, the Commission commenced bidding in Auction 110—an auction of licenses in the 3.45 GHz band—on October 5, 2021. The Commission announced the conclusion of the auction and winning bidders on January 14, 2022. Performing post-auction activities, including transitioning incumbent secondary users, will require Commission staff resources in FY 2022 and potentially in FY 2023. • 2.5 GHz Band (2496-2690 MHz) – On July 10, 2019, the Commission released a Report and Order modernizing the 2.5 GHz band and making additional spectrum available for 5G and other advanced wireless services. To this end, the Commission eliminated the legacy Educational Broadband Service (EBS) eligibility requirements, educational use requirements, and leasing restrictions in the band. The Commission also established a priority filing window providing Tribal Nations with a one-time licensing opportunity for unassigned 2.5 GHz spectrum over their rural Tribal lands. The Commission has so far issued 335 licenses to eligible Tribal entities enabling them to address the communications needs of their communities. Finally, the Commission decided that any unassigned spectrum remaining post-window would be made available via competitive bidding in a future auction. On January 13, 2021, the Commission sought comment on procedures for this proposed auction; comments were due May 3, 2021, and reply comments were due May 27, 2021. On February 9, 2022, the Commission sought further comment on auction formats for this proposed auction; comments were due February 23, 2022. On March 21, 2022, the Commission adopted auction procedures and announced that bidding will begin on July 29, 2022. The auction is likely to conclude before the end of FY 2022, and certain post-auction activities requiring Commission staff resources, including those related to the Rural Tribal Priority Window, may continue into FY 2023. • Full Power Television Construction Permits – On November 19, 2021, the Commission sought comment on procedures for an auction of 27 construction permits for full power television stations. Comments and reply comments were due December 13 and 23, respectively. The auction will begin on June 7, 2022, and is likely to conclude in FY 2022. Conducting the auction and performing post-auction activities will require Commission staff resources in FY 2022 and potentially in FY 2023. • Other Auction Development and Implementation – The Commission needs to make additional changes to the auction bidding and licensing systems to prepare for auctions of spectrum bands that may become available for licensing based on spectrum planning currently underway, including other bands identified by the Mobile Now Act and the 30 megahertz required by the Pipeline Act. The Commission and its federal partners, including NTIA and the Department of Defense, are currently collaborating to explore additional mid-band 5G opportunities, including ongoing work streams in NTIA’s Policy and Plans Steering Group (PPSG). The PPSG provides a forum for the Commission and its federal partners to address spectrum policy issues that affect the use of spectrum by non-federal and federal users. The PPSG is exploring other bands that 29 could potentially be made available for commercial 5G use, including on a shared basis, consistent with statutory directives. This work has continued into FY 2021 and FY 2022 and the Commission expects activity will extend into FY 2023 as well. • SAS/ESC Testing for 3.5 GHz – The Spectrum Access System (SAS)/Environmental Sensing Capability (ESC) are necessary components to facilitate additional non-federal access to spectrum in the 3.5 GHz band and are necessary to protect incumbent Federal operations. Six SASs have been authorized for full commercial use in the 3.5 GHz band for five-year terms, and sensor deployment and coverage plans of four ESC operators have been approved. With SAS and ESC actions in FY 2021, the Commission has enabled commercial deployments in the 3550-3560 MHz band segment in Puerto Rico and American Samoa for the first time. The Commission will continue to monitor and analyze the operations of approved SASs and ESCs to ensure compliance with the rules. Several other entities have applied to be SAS administrators and ESC operators, and three SAS administrators are operating under conditional approval. The Commission will need to test and evaluate these new SASs and ESCs prior to approving them for use in the 3.5 GHz band. The Commission may also need to perform additional testing on existing SASs and ESCs to ensure that any future system upgrades or modifications comply with the rules. The Commission will also engage in additional research (e.g., spectrum monitoring) to refine its understanding of the spectral environment and facilitate more robust and efficient use of spectrum resources. This work will continue into FY 2023. • Optimization for New Spectrum Opportunities – The optimization team will help the Commission analyze and study options for using complex mathematical optimization techniques for making new spectrum licenses available through new auction formats including overlay licenses, transitioning incumbents out of repurposed spectrum bands while assuring continued service to their customers, and other ways to implement spectrum sharing scenarios, to ensure we are maximizing the amount of useful commercial spectrum. They will develop optimal band plans accommodating incumbent uses and demonstrate the value of additional clearing or sharing as necessary. This research will also provide statistical and technical computation, analysis, simulation, and modeling, including geographic data and mapping, related to auctions. • Spectrum Visualization Tools – Public Facing and Internal –The Commission continues to develop spectrum visualization tools to provide the public and government agencies with insights into how spectrum utilization could be modified to meet growing demand for wireless broadband services, including through licenses assigned by auction. These tools will help satisfy the public’s significant interest in understanding who has licensed rights to different spectrum bands at different locations and provide the ability to manipulate and analyze this data. Federal agencies also would benefit from this information as they consider sharing/relocation options. Additionally, it is critical for internal Commission teams to have robust data, including mapping, to understand coverage and operations across the country. For example, anticipation of the upcoming auction of overlay licenses in the 2.5 GHz band (Auction 108), on March 21, 2022, the Commission announced the launch of a mapping tool at can be used by potential bidders to help assess whether and to what extent there is unassigned 2.5 GHz spectrum available in any U.S. county. This work will continue in FY 2023. 30 • Auction Application System (formerly known as Integrated Spectrum Auctions System (ISAS)) Enhancement/Modernization – The Commission must modify the application forms for participation in each auction in response to the auction’s unique requirements. Work to modernize the auction application system will provide the foundation for new implementations of the primary auctions application software, including providing the ability to customize the form to support future auctions based on novel license eligibility requirements and auction formats, while improving security. This work, including updates to implement new spectrum and auction policies will continue through FY 2022 and FY 2023. • Universal Licensing System (ULS) Modernization – In FY 2019 the Commission determined that it must modernize its licensing database and infrastructure to implement complex new service rules, as well as replace outdated technology to improve reliability, security, and access to data. The modernized system would enable the FCC to better support new auctions, inventory existing auction licenses, and re-auction spectrum. Early in FY 2020, the Commission initiated a multi-year, multi-million-dollar project to modernize ULS. The initial contract began development of market-based licensing and identification of requirements for the site-based and personal radio services. Focused on Short Term Authorizations for market- based licenses, the first incremental version of the system is planned for release in FY 2022. Modernization will continue under the follow-on contract in FY 2023 and FY 2024, working towards completion of market-based licensing, and delivery of site-based and personal radio service functionality. Post-Broadcast Incentive Auction Transition Work In the Incentive Auction Closing and Channel Reassignment Public Notice, released on April 13, 2017, the Commission announced the completion of the first-ever spectrum incentive auction and publicly released the results of the reverse auction, the forward auction, the assignment phase, and the channel reassignments for full power and Class A television stations that were required to change their TV channels during the 39-month relocation process that commenced as of the release of that Public Notice. The licensing process for the winning bidders for new flexible-use wireless spectrum licenses also commenced with the release of that public notice. The BIA made available 84 megahertz of low-band spectrum for commercial and unlicensed wireless use by repurposing a portion of the broadcast TV band. The total net winning bids of the auction were $19.3 billion. The auction proceeds from winning bidders of new spectrum licenses were used, among other things, to pay winning broadcast bidders in the reverse auction and, as directed in the Middle Class Tax Relief and Job Creation Act of 2012 and the Reimbursement Expansion Act of 2018 (REA), to fund $1.75 billion of the $2.7 billion TVBRF to reimburse full power, Class A, low power and translator television and FM radio broadcast stations and MVPDs for their reasonable expenses incurred as a result of stations being involuntarily relocated to new channels. All of the repacked broadcast TV stations transitioned off of their pre-auction channels as of September 2020, though not all had completed construction of their permanent facilities. The REA permits the Commission to continue the reimbursement program until July 3, 2023. Because of the complex nature of the post-BIA transition, including displacement of low power and TV translator stations, and the inclusion of low power and translator TV stations and FM stations as categories of broadcast stations eligible for reimbursement for the first time in the 2018 REA, 31 the Commission will continue to engage in a significant amount of post-auction activity. For example, the results of the BIA required 987 full-power and Class A broadcasters nationwide to relocate to create contiguous spectrum in the 600 MHz band that has been repurposed and auctioned for flexible wireless uses, and 957 of those stations are eligible for reimbursement from the TVBRF.3 In addition to these stations, on December 8, 2019, the Incentive Auction Task Force and Media Bureau announced that 87 FM stations and, on March 26, 2020, that 844 low power and translator TV stations (LPTV/translator stations), had also satisfied the eligibility requirements to participate in the TVBRF. As of February 15, 2021, 1824 full power and Class A stations had not completed construction of final facilities and therefore remained on interim facilities. This work will also require some MVPDs to modify their facilities to continue to carry the station’s signals and some FM stations to modify their facilities to allow for completion of the repack construction work. In addition, some repacked stations, who have already vacated their pre-auction channel, have ongoing construction to remove old antennas and equipment and take other follow-up efforts, the reasonable costs of which are also reimbursable from the TVBRF. The Commission established procedures necessary to bring each entity’s participation in the TVBRF to a close that involves two steps: an interim stage and a final stage, Final invoice filing deadlines for reimbursement from the TVBRF were set for October 8, 2021, for repacked full power and Class A TV stations assigned transition completion dates in the first half of the 39-month post-incentive auction transition schedule; March 22, 2022, for repacked full power and Class A TV stations assigned completion dates in the second half of the 39-month post-incentive auction transition schedule; and September 5, 2022, for LPTV/translator stations, FM stations, and MVPDs. The deadlines help ensure that all eligible invoices are processed, entities are able to complete the TVBRF close-out procedures, and close-out review and, as appropriate, verification and audit processes, can take place prior to July 3, 2023, when any unobligated amounts will be rescinded and deposited into the U.S. Treasury. The following are a list of highlights from the many activities that will continue to take place in FY 2023. • Licensing for Broadcasters Being Relocated – The Commission will continue to process applications and licenses to cover, as well as possible technical modifications determined to be necessary once the stations transition and test their new facilities, as described in more detail below. Certain full power and class A stations are using interim facilities while still in the process of completing construction of their permanent facilities. In such cases, stations met their phase deadline to cease operation on their pre-auction channel but not yet have fully transitioned to their new facilities. Construction of those new facilities, and the related Media Bureau consideration of all related applications and waivers, as well as submission of reimbursement invoices, is continuing for some of those stations beyond the end of the 39-month phase schedule. 3 As a result of the BIA, 987 full-power and Class A broadcast stations were assigned new channels and must be relocated during the 39-month transition period. Of those, 30 full-power stations were winning bidders in the reverse auction and are not eligible for reimbursement of relocation costs, but they nevertheless must file applications, licenses to cover, and/or waivers that will require processing by the Commission. The remaining 957 full-power and Class A stations that are being relocated are eligible for reimbursement from the TVBRF. 32 The process will therefore require Commission staff to continue to monitor broadcaster progress, identify and resolve transition-related problems and challenges, process applications, and review and verify information in FY 2023. Concluding the post-auction transition will also continue to require software, cloud computing resources, and assistance from skilled computer scientists, software engineers, and technology experts. • Displaced LPTV and TV Translator Station Licensing – A Special Displacement Window closed on June 15, 2018, for operating LPTV/translator stations displaced due to the new 600 MHz wireless band and the post-auction repacking process for full power and Class A stations. More than 2,000 applications were granted. Broadcast licensing for LPTV/translator stations is performed in two steps: (1) application review and grant of a CP and (2) application review and grant of a license to cover. The Commission will continue to process such applications as they are filed. • FM Station Licensing – FM radio spectrum was not subject to the post-Incentive Auction repacking process. Some FM stations with antennas on or near a tower supporting a repacked TV antenna may be affected if, for example, the FM antenna must be moved, temporarily or permanently, to make it possible for the co-located TV station to complete its construction of facilities on the tower. In such situations some FM stations must apply for a construction permit or special temporary authority to operate on an interim basis during a construction project on the station’s tower. • Reimbursements to Eligible TV and FM Stations and MVPDs – Reimbursements to eligible full power and Class A broadcasters and MVPDs started in FY 2018. In 2019, in response to the REA, the Commission expanded its reimbursement process to include LPTV/translator and FM stations pursuant to the REA and approved applications by stations in those categories for reimbursement in 2020 and 2019, respectively. o Fund Administration – The Commission has engaged a contractor (Fund Administrator) to assist in administering the TVBRF. The Fund Administrator has extensive experience in television broadcast engineering and federal funds management to review cost estimates. The Fund Administrator reviews the initial reimbursement estimates and the accompanying supporting documentation submitted by eligible entities to validate that the estimates reflect costs that may be reasonably incurred to relocate television service from a station’s original channel to its reassigned channel or, in the case of MVPDs, to continue to carry the broadcast signal of a reassigned broadcast station. Requests for additional information are sent to entities where reasonableness cannot be determined, where necessary documentation appears to be missing, or where the requested reimbursement appears to be excessive. o Reimbursement Process – The reimbursement process has two major components: (1) cost estimates and fund allocation and (2) invoice reimbursement processing. ▪ Cost Estimates and Fund Allocation – The Fund Administrator and Media Bureau review the initial reimbursement estimates, and the eligibility showings of the submitting entities, and the accompanying supporting documentation submitted to validate that the estimates reflect costs that may be reasonably incurred to relocate television service from a station’s original channel to its reassigned channel or, in the 33 case of FM stations, to reasonably minimize disruption of service during the repack, or in the case of MVPDs to continue to carry the signal of a repacked station. Based upon that review, an initial allocation based on such verified estimates is issued to stations found to be eligible for reimbursement. Once the initial allocation is made, the Fund Administrator reviews invoices for actual costs incurred by broadcasters and MVPDs and makes recommendations to the Commission as to their reasonableness. The Commission reviews and verifies those recommendations and pays approved invoices submitted by eligible stations and MVPDs. On February 24, 2022, the Commission announced a final allocation to increase the allocation for each participant from 92.5% to 100% of each entity’s verified estimates. As of March 15, 2022, the Commission had allocated a total of over $2.13 billion to broadcasters and MVPDs. ▪ Invoice Reimbursement Processing – Eligible TV and FM radio stations and MVPDs may only draw upon their allocated funds upon submission of actual invoices and other supporting documentation. The Fund Administrator reviews invoices for actual costs incurred by broadcasters and MVPDs and makes recommendations to the Commission as to their reasonableness. The Commission reviews those recommendations and pays approved invoices submitted by broadcasters and MVPDs. Reimbursement payments to all of these categories of recipients will continue in FY 2023 as reimbursement - eligible entities continue to submit their invoices. • Close Out Procedures for TV and FM Broadcasters and MVPDs – In February 2019, the Commission announced a two-step close out procedure and receive two close-out letters from the Media Bureau, including (1) an “interim close-out letter” when the station has submitted evidence of all incurred costs: and (2) a “final close-out letter” after all or nearly all entities eligible for reimbursement from the Fund have entered the close-out process. The final account close-out for each entity will occur no later than July 3, 2023, the statutory end of the reimbursement period, when all entities eligible for reimbursement from the Fund must have submitted all actually incurred costs. When the Commission announced the final allocation in February 2022, it announced a streamlined close-out procedure. Entities that had already completed the interim close-out process were permitted to enter the final close-out phase. Entities that initiate the close-out process after the final allocation proceed through a single-step close-out process, resulting in a resource savings for both the entities and the Commission. When an entity completes its construction project it will submit all remaining supporting documentation and requests for reimbursement to the Commission and inform the Commission that the submissions are complete. The entity will receive a financial reconciliation statement from the Fund Administrator that specifies verified, estimated amounts; allocated amounts; amounts requested for reimbursement; amounts disbursed by the Commission; and information outlining any additional amounts payable by the Commission to the entity or owed to the Commission by the entity. If an overpayment is discovered, the entity will be required to return the excess amount to the Commission and detailed instructions for prompt submission of such overpayments will be provided to the entity by the Commission. Each station will review the financial reconciliation statement for accuracy and completeness and, upon concurrence, return an executed version of the financial reconciliation statement to the Fund Administrator. The 34 Bureau will then provide the station with a close-out letter and issue any payments currently due, subject to the station’s available allocation. The close-out letter will serve as the official notice of account close-out, include a summary of any financial changes that occurred during the interim closing period, and remind entities of their ongoing document retention requirements. • Post-Implementation Site Visit Program. In 2014 the Commission stated its intent to conduct site visits to confirm the existence and proper use of equipment paid for from the TVBRF. Such review procedures are essential in preventing fraud, waste, and abuse, and thereby maximize the amount of money available for reimbursement. The post-implementation site visits to facilities of certain TVBRF participants to validate the existence and operational status of post- transition equipment for which the entity received reimbursement, and to ensure that such equipment is being used by the fund participant for its intended purpose. The Fund Administrator will visit a randomly selected, statistically valid sample of TVBRF participants and may select additional participants for site visits based on specific facts or circumstances. Site visits are expected to continue throughout 2022. Based on the results of these site visits, additional work may be required in FY 2023 until the expiration of the fund on July 3, 2023. • Audits, Data Validations, and Disbursement Validations – Audits, data validations, and site visits are essential tools in preventing waste, fraud, and abuse, and use of these measures will maximize the amount of money available for reimbursement. Throughout the reimbursement period, the Media Bureau together with the Fund Administrator performs disbursement validations in order to confirm that entities receiving reimbursement funding for third party services have in fact disbursed monies received from the Fund in a manner consistent with representations made to the Commission in the Reimbursement Form. Also, a third-party audit firm acting on behalf of the Commission may conduct audits of entities receiving disbursements from the Reimbursement Fund, and these audits may occur both during and following the Reimbursement Period. The Commission has determined that Commission staff and/or a third - party auditor will continue to validate expenses after the reimbursement period ends, consistent with the Commission’s obligation to recover improper payments, including after the close-out period. • Submission of Banking Information – The Commission requires all eligible entities who will receive TVBRF payments to provide detailed banking information that is both notarized on paper form and submitted in a secure electronic system. The Commission reviews this information prior to making any payments. Eligible entities may revise their banking information throughout the reimbursement period. FCC Obligations in Support of the Auctions Program Pursuant to 47 U.S.C. §309(a), the Commission must provide its authorizing and appropriations committees in Congress with a detailed report of the FCC’s obligations in support of the auctions program for each fiscal year of operation. The following table shows available auction cash for recent fiscal years. 35 Spectrum Auctions Activities Summary of Distribution of Resources - Spectrum Auctions Program SPECTRUM AUCTIONS COST RECOVERY REIMBURSABLE AUTHORITY INCLUDING OFFICE OF INSPECTOR GENERAL (Dollars in Thousands) FY 2022 FY 2023 FY 2021 Annualized Congressional Object Classification Description Actuals CR Amount Request Personnel Compensation & Benefits: Full-time & Other than full-time Permanent (11.1 & 11.3) $28,880 $31,871 $33,913 Personnel benefits (12.0) 9,890 10,153 10,756 Subtotal - Personnel Compensation & Benefits $38,770 $42,024 $44,669 Other Expenses: Benefits for former personnel (13.0) $8 $9 $8 Travel & transportation of persons (21.0) 0 285 297 Transportation of things (22.0) 2 9 9 Rent payments to GSA (23.1) 3,316 4,598 4,225 Communications, utilities, & misc. charges (23.3) 1,993 1,851 2,043 Printing and reproduction (24.0) 177 284 296 Other services from non-Federal sources (25.2) 18,603 38,577 31,842 Other goods & services from Federal sources (25.3) 1,295 797 830 Operation & maintenance of equipment (25.7) 59,581 45,822 47,747 Supplies and materials (26.0) 66 111 116 Equipment (31.0) 211 113 118 Insurance claims & interest (40.0) 6 15 31 Subtotal - Other Expenses $85,258 $92,471 $87,562 Total - Auctions Cost Recovery Reimbursable Authority $124,028 $134,495 $132,231 36 Spectrum Auctions Expenditures Report Section 309(j) of the Communications Act permits the Commission to use funds raised from auctions to fund its auctions program, including contracts for services and costs related to personnel performing work in support of Commission auctions authorized under that section. The FCC’s Office of General Counsel (OGC) and Office of Managing Director (OMD) provide direction to FCC employees attributing hours for this purpose. The House of Representatives and Senate Appropriations Committees review and set a yearly cap for the spectrum auctions program. The requested cap level for FY 2023 is $132,231,000 to fund the following activities: further the objective of making more spectrum available for commercial use; continue implementation of the Spectrum Pipeline Act of 2015 and certain provisions of the RAY BAUM’S Act, including the MOBILE NOW Act, as well as the Consolidated Appropriations Act of 2021, and the Infrastructure Investment and Jobs Act; continue post-BIA work to include the new additional requirements from the REA related to the TVBRF; and upgrade and improve auctions infrastructure in preparation for future actions. In addition, as the demand for spectrum for new technologies extends to spectrum bands previously assigned for legacy applications, creative approaches must be found to accommodate existing licensees and operations while expanding opportunities for access by new users. The Commission’s spectrum auctions program supports efficient licensing while also contributing significant funds to the U.S. Treasury for deficit reduction and providing direct support to other government programs. As of January 2022, the Commission had generated over $233 billion in auctions revenues since initiating the auctions program in 1994. During this period, auctions program expenses have been less than 1% of the Commission’s total auctions revenues. Spectrum auction planning, development, and implementation is performed agency-wide and is very information technology (IT) intensive, as reflected in our Auction Expenditure Justification Reports. For example, the Incentive Auction Task Force as well as the teams that implemented the auction and continue to transition that repurposed 280 megahertz of spectrum in the 3.7 GHz band from incumbent uses (including fixed satellite service) to flexible use, draw upon the resources and expertise of staff from across the Commission, including the Wireless Telecommunications Bureau, Media Bureau, International Bureau, Bureau of Consumer and Governmental Affairs, Office of Economics and Analytics, Office of Engineering and Technology, OMD, and OGC. Auctions funds also cover the program’s share of Commission operating expenses. The Commission uses these funds to enable successful auctions and expends them in a manner consistent with statutory requirements. Every auction is different and has specific requirements, which require careful attention to detail and planning. Since auction activities are performed agency-wide and are unique, allocating the appropriate amount of cost and overhead related to the auctions program is a challenge. In addition, the complexity of spectrum auctions has increased steadily as the Commission works through more difficult technical and policy issues related to the scarcity of vacant spectrum. Preparation for spectrum auctions generally requires sufficient time to design, develop, and implement secure, reliable, and effective auction application, bidding, and post-auction licensing systems. In the practice of cost accounting, costs are identified as one of the following: (1) direct cost, (2) indirect cost, or (3) generally allocated cost. The methodology for deriving the proportional share of generally allocated administrative costs to be charged to the auctions program is based on 37 the Commission’s time reporting system and Generally Accepted Accounting Principles. The allocation is based on the percentage of actual hours that employees worked to support the auction program plus the same proportional share of the employee’s indirect hours (leave hours). This full time equivalent (FTE) rate is applied to costs that benefit the Commission as a whole. The items that are allocated by the FTE rate include Commission-wide IT systems, guard service, administrative facility services, supplies, furniture, equipment, and human resources training activities. The FCC has maintained an average of 14 percent for this purpose, with minor deviations. The Commission continues to plan for future auctions, most notably auction for overlay licenses for white spaces in the 2.5 GHz band; reallocating and auctioning frequencies within 3.1-3.45 GHz band identified for shared use by federal and non-federal users by the Departments of Commerce and Defense; reallocating bands made available in the Spectrum Frontiers proceeding to terrestrial wireless use; auction of the spectrum required by the Spectrum Pipeline Act of 2015, and an auction of full power television construction permits. Other auctions that may continue to be a focus for the Commission in FY 2023 include re-auctions of certain licenses previously offered and not won or returned to the Commission. Commission staff will also oversee the reimbursement process and the work of a Relocation Payment Clearinghouse in the 3.45 GHz band. The Commission will also continue to leverage auctions expertise and infrastructure to support reverse auctions that allocate Universal Service funding in an efficient and effective manner. Specifically, the Commission adopted rules to make available through reverse auctions up to $20.4 billion in the Rural Digital Opportunity Fund to bring fixed broadband to unserved locations and has concluded the first auction under these rules. The first phase of the two-phase auction was completed in November 2020, awarding $9.2 billion in support. The Commission has also adopted rules to make available through reverse auctions up to $9 billion in the 5G Fund to support deployment of mobile broadband in unserved areas. In addition, the Commission is continually working to update and modernize its auction bidding and application systems to improve their speed, flexibility, reliability, and security to support timely new auctions when additional spectrum that could be made available is identified. In FY 2023, the Commission will continue implementation of the RAY BAUM’S Act, including working with NTIA to identify 255 megahertz of additional spectrum (subject to certain frequency and use requirements) for mobile and fixed broadband use; preparing annual reports on upcoming systems of competitive bidding; and coordinating with the Departments of Commerce and Defense on initiatives related to shared spectrum allocations, bidirectional sharing, and commercial wireless use in the 3100-3550 MHz bands; and monitoring post-auction operations in bands subject to spectrum sharing and/or transition to new flexible uses. In addition, a significant Commission auction focus in FY 2023 will be to continue post-broadcast incentive auction implementation. The auction required that 987 full power and Class A television stations be repacked into a new, smaller TV band, which involved reorganizing and assigning channels to the remaining broadcast television stations to create contiguous blocks of cleared spectrum suitable for flexible wireless use. The scope of the repacking component of this auction has made it a unique and computationally complex challenge that will continue to require substantial resources and engagement from the Commission until all stations are operating on their permanent facilities and the reimbursement process has been completed. Such active oversight of the process will continue to require Commission staff resources to coordinate with broadcasters to monitor broadcaster progress, identify and resolve transition-related problems and challenges, 38 process applications, review and verify information, undertake and complete the ongoing reimbursement program and, as appropriate, conduct subsequent verifications and audits of the reimbursements. For example, we will continue to make disbursements from the TVBRF to repacked full power and Class A TV stations and MVPDs, and, pursuant to the REA, to LPTV/translator stations and FM stations impacted by the post-auction repack that have become eligible for reimbursement as a result of the REA. In addition, although the repacked full power and Class A television stations were required to vacate their pre-auction channels by July 2020, there will be continuing application processing and license to cover filings and other transition processing required after that time for both full power and Class A stations, MVPDs, and LPTV/translator and FM stations. For example, LPTV/translator stations are not subject to the same construction deadlines as full power and Class A Stations, and a number of the full power and Class A stations that vacate their pre-auction channels are still operating on interim facilities while they continue to construct their permanent facilities. The post-auction transition also requires continued engagement of the Fund Administrator, which is overseen by Commission staff, to administer the reimbursement of up to $2.7 billion to the eligible broadcasters, MVPDs, LPTV/translator stations, and FM stations by reviewing cost estimates and invoices to prevent waste, fraud, and abuse. The reimbursement period for costs associated with the repack of full power and Class A stations and MVPDs, and the reimbursement of LPTV/translator stations and FM stations, is authorized by Congress to extend up to July 3, 2023. Finally, the Commission will continue to devote significant resources in FY 2023 towards implementation efforts to transition a 280-megahertz block of spectrum in the 3.7-4.0 GHz band, plus a 20-megahertz guard band, from incumbent use to new flexible-use now that the related auction is complete. All eligible incumbent space station operators elected to clear according to the following accelerated timeline: (1) clearing 120 megahertz (3.7-3.82 GHz) by December 5, 2021, and (2) clearing the remaining 180 megahertz (3.82-4.0 GHz) by December 5, 2023. If these deadlines are met, the incumbent space station operators will be eligible for accelerated relocation payments of up to $9.7 billion, to be paid by the new flexible-use licensees. Incumbent fixed- satellite service (FSS) and fixed service (FS) licensees, as well as incumbent earth station operators, may also seek reimbursement of reasonable relocation costs paid by flexible-use licensees as a condition on their license. Commission staff will establish a process for reviewing certifications by the incumbent space station operators who elected accelerated relocation to determine whether they have met their clearing deadlines and qualify for the accelerated relocation payments. Commission staff will also oversee the reimbursement process and the work of a Relocation Payment Clearinghouse, who will manage the intake, payout, and auditing of relocation funds, serve in an administrative role to mediate disputes related to such costs, and provide progress reports to the Commission. Likewise, Commission staff will oversee technical aspects of the transition being managed by an external Relocation Coordinator, who is tasked with establishing a timeline and taking actions necessary to migrate and filter incumbent earth stations to ensure continued, uninterrupted service during and following the transition. Should the Relocation Coordinator receive notice of any substantive transition disputes between space station and earth station operators, it must notify Commission staff who will resolve such disputes. Commission staff will also handle any appeals of disputes mediated by the Relocation Payment Clearinghouse in the first instance. 39 The actual and estimated FTE levels for the spectrum auctions program for FYs 2021 through 2023 are shown below. The following two schedules provide some details of the spectrum auctions program since its inception in 1994. These schedules also provide some perspective into how much money was collected/generated for the U.S. Treasury or for broader government use and the total cost for running the Commission’s spectrum auctions program. 40 Spectrum Auctions and Cash Collected/Generated Fiscal Years 1994 through January 2022 Spectrum Auctions Program – Cash Collected/Generated vs. Expenditures Fiscal Years 1994 through January 2022 41 This page is intentionally left blank 42 New Budget Authorities Already Provided In fiscal years 2020, 2021, and 2022, the President and Congress provided new budget authorities to the Commission from the Coronavirus Aid, Relief, and Economic Security (CARES) Act (P.L. 116- 136), the Consolidated Appropriations Act, 2021 (P.L. 116-260), the American Rescue Plan Act of 2021 (P.L. 117-2), and the Infrastructure Investment and Jobs Act (P.L. 117-58). The programs outlined below are a summary and status of these new budget authorities. COVID-19 Telehealth Program Due to the ongoing novel coronavirus 2019 disease (COVID-19) pandemic, the Commission established the COVID-19 Telehealth Program through a Report and Order released on April 2, 2020. The COVID-19 Telehealth Program is funded through a $200 million Congressional appropriation as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, to immediately support eligible health care providers responding to the pandemic by providing funding for telecommunications services, information services, and connected devices necessary to provide critical connected care services whether for treatment of the COVID-19 disease or other health conditions during the COVID-19 pandemic. The COVID-19 Telehealth Program is an emergency funding program that is designed to provide flexibility for eligible health care providers that apply for and receive funding commitments, and then request reimbursement for eligible expenses that they have purchased and received from their service providers or vendors under the COVID-19 Telehealth Program. In order to seek funding under the CARES Act (Round 1), eligible health care providers were required to submit an application to the Commission, including information on the costs of the services and/or connected devices for which they plan to seek reimbursement. The Wireline Competition Bureau (Bureau), in consultation with the FCC’s Connect2Health Task Force, reviewed the COVID-19 Telehealth Program applications, as outlined in the Report and Order, selected participants, and made funding awards on a rolling basis to eligible applicants based on the estimated costs of the eligible items they intended to purchase with the COVID-19 Telehealth Program funds. Selected funding recipients received a funding commitment letter providing their award amount and additional information about certain COVID-19 Telehealth Program requirements and procedures. Consistent with the Report and Order, applications from areas that were hardest hit by COVID-19 and where funding had the most impact on addressing a community’s health care needs, were prioritized. In order to ensure as many applicants as possible received available funding under the CARES Act, the Bureau did not award more than $1 million to any single applicant. The Commission stopped accepting applications for Round 1 funding under the COVID-19 Telehealth Program on June 25, 2020. Awards were made until the appropriated Round 1 funding under the COVID-19 Telehealth Program was exhausted, which occurred on July 8, 2020. The Bureau issued $200 million in total COVID-19 Telehealth Program Round 1 funding commitments for 539 applications. After paying for and receiving the eligible services and/or connected devices from the service provider or vendor, funding recipients must submit to the Commission: a request seeking reimbursement; invoice documentation sufficient to identify the eligible items that were purchased and received, and the price paid; and, if applicable, a Letter of Authorization for those applicants that received a funding commitment on behalf of other eligible health care provider sites. Under Round 1 of the COVID-19 Telehealth Program, the Commission reimburses funding recipients the 43 full cost of the eligible services and/or connected devices received so long as the invoice submissions are accompanied by the required supporting documentation. After the reimbursement request is approved by the Commission, payment is issued by the U.S. Department of Treasury electronically to the bank account on file associated with the funding recipient. On December 27, 2020, the Consolidated Appropriations Act, 2021 was signed into law, which appropriated an additional $249.95 million to the Commission’s COVID-19 Telehealth Program (Round 2). This additional funding allowed the Commission to continue its efforts to expand telehealth and connected care throughout the country and enable patients to access necessary health care services while helping slow the spread of the disease. Per congressional directive, the Commission was required to seek comment on various ideas related to committing the new funding, including the criteria to use to evaluate applications and how to treat pending applications from Round 1. The Commission released a Public Notice seeking comment on these issues on January 6, 2021. On February 2, 2021, the Commission adopted a Report and Order finding that it was in the public interest to use the Universal Service Administrative Company (USAC) to administer the COVID-19 Telehealth Program going forward. On March 30, 2021, the Commission released a Report and Order and Order on Reconsideration setting forth additional details about the policies and procedures that would apply during Round 2. On April 15, 2021, the Bureau released a Public Notice announcing the duration of the Round 2 application filing window, which opened on April 29, 2021 and closed on May 6, 2021. On August 26, 2021, the Bureau released a Public Notice announcing the first group of funding to 62 awardees totaling $41.98 million for Round 2 of its COVID-19 Telehealth Program. Health care providers in each state, territory, and the District of Columbia, including those previously unfunded in Round 1, will use this funding to provide telehealth services during the coronavirus pandemic. The Bureau then released three additional Public Notices, on September 29, October 21, and November 9, committing over $150 million. Consistent with the Consolidated Appropriations Act, 2021, applicants who had not previously received a funding commitment had ten days to supplement their applications with any additional information that had not previously been included. That period began on November 9 and ended on November 19, and the Public Notice released on November 9 provided additional guidance for applicants who wanted to supplement their applications. After the 10-day supplemental period ended on November 19, 2021, applications were re-ranked, and funding was awarded to the highest-scoring remaining applications. On December 21, 2021 the Bureau released a Public Notice committing funding to an additional 68 applicants. On January 26, 2022, the Bureau released its sixth and final Public Notice, which committed funding to 100 applicants. In total, 447 awardees received over $256 million in funding commitments as part of Round 2 of the Program. Broadband Deployment Accuracy and Technological Availability (Broadband DATA) Act and Broadband Deployment Locations Map The Commission has long recognized that precise, granular data on the availability of fixed and mobile broadband are vital to bringing digital opportunity to all Americans, no matter where they live, work, or travel. On March 23, 2020, the Broadband Deployment Accuracy and Technological Availability Act (Broadband DATA Act) was signed into law requiring the Commission to create a 44 new set of broadband availability maps. Among other things, the Broadband DATA Act requires the Commission to collect standardized, granular data on the availability and quality of both fixed and mobile broadband Internet access services, to create a common dataset of all locations where fixed broadband Internet access service can be installed (the Broadband Serviceable Location Fabric or Fabric), and to create publicly available coverage maps. The Act further requires the Commission to establish processes for members of the public and other entities to (1) provide verified data for use in the coverage maps; (2) challenge the coverage maps, the broadband availability data submitted by service providers, and the Fabric; and (3) submit specific crowdsource information about the development and availability of broadband service. In July 2020, the Commission adopted a Second Report and Order and Third Further Notice of Proposed Rulemaking that took steps to implement requirements of the Broadband DATA Act, including the adoption of rules for the collection and verification of improved, more precise data on both fixed and mobile broadband availability. In January 2021, the Commission adopted a Third Report and Order that took key additional steps to ensure that both the new data collection itself, and the measures for verifying the accuracy of the data collected, will yield a robust and reliable data resource for the Commission, Congress, federal and state policymakers, and consumers to evaluate the status of broadband deployment throughout the United States. On December 27, 2020, the Consolidated Appropriations Act, 2021 was signed into law appropriating $98 million in funding for the implementation of the Broadband DATA Act. After receiving this funding, the Chairwoman established the Broadband Data Task Force (Task Force) in February 2021 to lead the cross-agency effort to implement the Act. Since then, the Task Force, working closely with multiple Commission Bureaus and Offices, has moved ahead with the complex and interrelated workstreams that must be accomplished as expeditiously as possible to enable the Commission to produce precise and consistent maps of broadband availability and thereby to assure that federal and state funding efforts can be predicated on such accurate information. In February 2021, the Commission retained an expert data architect to work with the Commission’s own data and IT systems specialists to design and build a prototype of a data flow structure and system for the Broadband Data Collection (BDC), and on July 2, 2021 awarded a contract to build that data platform. The Commission will rely on this platform to accept broadband availability coverage data submissions from service providers and other entities, map that data and make it public, receive, track, and resolve challenges to submitted data, and incorporate crowdsourced data from the FCC Speed Test app and other sources. The decision to contract with the same firm to build the IT platform and systems permitted development to begin immediately once the architecture was decided upon and IT system development and testing is moving ahead on schedule. On March 4, 2022, the Commission published detailed technical specifications for the submission of subscription, availability and supporting data into the BDC filing platform. In March 2021, the Commission issued a Request for Information and, in June 2021, a subsequent Request for Proposal (RFP) to seek vendors capable of building the Fabric. Vendor proposals were due on July 1, 2021; however, the Commission received a pre-award protest filed with the U.S. Government Accountability Office (GAO) following the RFP response deadline, which the agency worked to quickly resolve by issuing a revised RFP to all offerors on August 13. Revised proposals were due on August 26 and, after expeditiously reviewing these highly technical and detailed responses in a manner consistent with government solicitation practices, the Commission awarded the contract for Fabric development on November 9. Since that time, a post-award protest was filed with GAO and Fabric development was stayed until a decision from GAO was issued on February 24, 2022, resolving the protest in the Commission’s favor. The Commission immediately lifted the 45 stop work order and is working with the contractor to finalize the Fabric in advance of the planned June 30, 2022, opening of the filing window for the BDC, which was announced by the Commission on February 22, 2022. Broadband availability data as of June 30, 2022, must be filed by all fixed and mobile providers no later than September 1, 2022. The Commission is also working to address the remaining legal and policy issues associated with implementing the challenge, crowdsource and verification processes. This framework will empower consumers, state, local, and Tribal governments, and other parties to challenge, and thereby improve, the accuracy of the maps by sharing data with the Commission. On March 9, 2022, the Task Force, Wireless Telecommunications Bureau, Office of Economics and Analytics, and Office of Engineering and Technology released a detailed order, technical appendix, rules and technical data specifications setting forth technical requirements and specifications for the mobile challenge, verification, and crowdsource processes required by the Act. Individual consumers will also be able to submit mobile challenge and crowdsource data using mobile speed test apps, such as the FCC Speed Test app. To this end, in September 2021, the Commission executed a contract modification with the FCC Speed Test app developer to develop the additional functionality for the mobile challenge and crowdsource processes, and on March 9, published detailed technical specifications for the submission of mobile speed test data into the BDC. The Commission is also preparing stakeholders, including state, local, and Tribal government entities, to participate in the data collection, challenge, and verification process. In addition to engaging directly in discussions with a number of state and other governmental partners, on December 8, 2021, the Task Force, in conjunction with the FCC’s Office of Native Affairs and Policy, hosted an initial workshop for Tribal governments to provide information about the BDC program and technical assistance on the procedures that Tribes will use to submit primary availability data to the Commission. In addition, the Commission is engaged in additional procurement efforts to retain outside resources to assist in providing technical assistance to small internet service providers as well as to participants in the challenge process, as required under the Broadband DATA Act. On November 15, 2021, the Infrastructure Investment and Jobs Act (the IIJA) was signed into law. The IIJA amended the Broadband DATA Act to require the Commission to resolve challenges no later than 90 days after the date on which a final response by a provider to a challenge is complete, and to implement this new requirement as soon as possible after the date of enactment of the IIJA. The IIJA also appropriated $10 million to the Commission, in consultation with all relevant Federal agencies, for the creation of a Broadband Deployment Locations Map, a public resource that will show the locations of broadband infrastructure projects funded by the Federal Government. The Commission is working expeditiously to implement these and other relevant provisions of the IIJA. Secure & Trusted Communications Network Reimbursement Program On March 12, 2020, the Secure and Trusted Communications Networks Act of 2019 (Secure Networks Act) was signed into law. The Secure Networks Act, among other measures, directed the Commission to establish the Secure and Trusted Communications Networks Reimbursement Program (Reimbursement Program) to fund the removal, replacement, and disposal of covered communications equipment or services that pose an unacceptable risk to the national security of the United States or the security and safety of U.S. persons from the networks of providers of advanced communications service. 46 On December 10, 2020, the Commission adopted a Second Report and Order implementing the Secure Networks Act by establishing rules for the Reimbursement Program. The Reimbursement Program will provide funding allocations to eligible providers based on their estimated costs. Reimbursement Program recipients can then obtain funding disbursements from their allocation upon showing of actual expenses incurred. Reimbursement Program recipients will have one year from the initial disbursement to complete the permanent removal, replacement, and disposal of covered communications equipment or services with the potential for a general and individual extensions of time. Recipients of Reimbursement Program funds shall use these funds solely to: (1) permanently remove covered communications equipment and services from their networks; (2) replace the covered communications equipment and services with non-covered equipment or services; and (3) dispose of the covered communications equipment and services in accordance with the Secure Networks Act. On December 27, 2020, the Consolidated Appropriations Act, 2021 (Consolidated Appropriations Act), was signed into law. The legislation, among other things, appropriated $1.9 billion to “carry out” the Reimbursement Program. In addition, the legislation amended the Secure Networks Act, expanding program eligibility from providers of advanced communications service with two million or fewer customers to providers with ten million or fewer customers. The Consolidated Appropriations Act also amended the definition of a provider of advanced communications service to specifically include certain non-commercial education institutions and added a method for prioritizing funding that differs from the approach adopted by the Commission in the Second Report and Order. The Commission released a Third Report and Order, on July 14, 2021, implementing the changes required by the Consolidated Appropriations Act and making additional clarifications about the Reimbursement Program. Most notably, the Commission stated that the Reimbursement Program is limited to reimbursing the costs of removal, replacement, and disposal to communications equipment and service produced or provided by Huawei Technologies Company and ZTE Corporation that was obtained on or before June 30, 2020. On April 28, 2021, the Commission’s Wireline Competition Bureau (Bureau) announced the selection of a contractor as the Reimbursement Program Fund Administrator to assist with processing applications and administering the Reimbursement Program. On August 3, 2021, the Bureau released a public notice adopting final procedures for and providing eligible providers of advanced communications services with additional guidance regarding, the application filing and reimbursement process for the Reimbursement Program. The Bureau also finalized the information fields on the new FCC Form 5640, which participants must submit to request funding allocations and disbursements from the Reimbursement Program, as well as the procedures governing the submission of and any modifications made to that form. The filing window to accept applications to participate in the Reimbursement Program opened on October 29, 2021 and closed on January 28, 2022. The Commission received 181 applications. The deadline by which the Bureau must either approve or deny the applications is June 15, 2022. Emergency Broadband Connectivity Fund-Emergency Broadband Benefit Program and Affordable Connectivity Fund-Affordable Connectivity Program On December 27, 2020, the Consolidated Appropriations Act, 2021 (Consolidated Appropriations Act), was signed into law. In the Consolidated Appropriations Act, Congress appropriated $3.2 billion for the Emergency Broadband Connectivity Fund for fiscal year 2021, to remain available 47 until expended or six months after the end of the public health emergency. The Consolidated Appropriations Act directed the Commission to use that funding to establish the Emergency Broadband Benefit (EBB) Program, under which eligible low-income households may receive a discount off the cost of broadband service and certain connected devices during an emergency period relating to the COVID-19 pandemic, and participating providers can receive a reimbursement for such discounts. Enrollments in the EBB Program ceased on December 30, 2021 and the successor program, the Affordable Connectivity Program (ACP) began on December 31, 2021. On November 15, 2021, the Infrastructure Investment and Jobs Act , 2021 (Infrastructure Act), was signed into law. In the Infrastructure Act, Congress appropriated $14.2 billion for the Affordable Connectivity Fund, to remain available until expended. The Infrastructure Act directed the Commission to use that funding to establish the ACP, under which eligible low-income households may receive a discount off of the cost of broadband service and certain connected devices, and participating providers can receive a reimbursement for passing such discounts on to eligible households. To participate in the ACP, a provider must elect to participate, and either be designated as an eligible telecommunications carrier or be approved by the Commission. Participating providers make available to eligible households a monthly discount off the cost of an Internet service offering and associated equipment, up to $30.00 per month. On Tribal lands, the monthly discount may be up to $75.00 per month. Participating providers receive reimbursement from the ACP for the discounts provided. Participating providers that also supply an eligible household with a laptop, desktop computer, or tablet (connected device) may receive a single reimbursement of up to $100.00 for the connected device, if the charge to and payment from the eligible household for that device is more than $10.00 but less than $50.00. A participating provider may receive reimbursement for only one supported device per eligible household. Providers must submit certain certifications to the Commission to receive reimbursement from the ACP, and the Commission is required to adopt audit requirements to ensure provider compliance and prevent waste, fraud, and abuse. In implementing the ACP, the Infrastructure Act permits the Commission to apply rules contained in part 54 of the Commission’s rules, including those governing the Lifeline program. The Infrastructure Act further permits the Commission to avail itself of the Universal Service Administrative Company (USAC)’s, the administrator of the universal service support programs, services to administer the ACP. Specifically, the Infrastructure Act required the Commission to adopt rules implementing the ACP by January 14, 2022. Consistent with the Infrastructure Act, the Commission adopted a Report and Order on January 14, 2022 adopting the rules and policies creating and governing the ACP. The Commission has established processes and systems to administer the ACP, including approval and election processes for broadband providers to participate, consumer application and enrollment processes, and provider reimbursement processes. Consumers can apply for the ACP through the National Verifier at acpbenefit.org or through service providers’ alternative verification processes. As of February 28, 2022 over 10.3 million households were participating in the in the ACP. The Commission will release enrollment data to inform its evolving awareness efforts, increase transparency in the ACP, and empower its outreach partners to better target awareness and enrollment efforts. 48 Emergency Connectivity Fund To help schools and libraries provide connected devices, such as a laptop, tablet, or similar end-user devices, and broadband connectivity to students, school staff, and library patrons during the coronavirus disease (COVID-19) emergency period, Congress established a $7.171 billion Emergency Connectivity Fund (the Fund) to remain available until September 30, 2030, as part of the American Rescue Plan Act of 2021 (American Rescue Plan Act) signed into law on March 11, 2021. Per congressional directive, the Commission was required to promulgate rules providing for the distribution of funding from the Emergency Connectivity Fund to eligible schools and libraries for the purchase of eligible equipment and/or advanced telecommunications and information services for use by students, school staff, and library patrons at locations other than a school or library within 60 days from the date of enactment. Consistent with this congressional directive, on March 16, 2021, the Wireline Competition Bureau sought comment on the provision of support from the Emergency Connectivity Fund consistent with section 7402 of the American Rescue Plan Act. Subsequently, on May 10, 2021, the Commission established the Emergency Connectivity Fund Program and promulgated rules for the distribution of funding from the Fund. The initial Emergency Connectivity Fund Program application filing window opened on June 29, 2021 and closed on August 13, 2021. During the initial application filing window, eligible schools, libraries, and consortia of eligible schools and libraries, submitted requests for funding to purchase eligible equipment and services between July 1, 2021 and June 30, 2022 for use by students, school staff and library patrons who would otherwise lack sufficient access to connected devices and/or broadband connectivity to engage in remote learning during the COVID-19 emergency period. On August 25, 2021, the Commission announced that it received requests for $5.137 billion to fund 9.1 million connected devices and 5.4 million broadband connections during the first application filing window. The first application filing window attracted applications from all 50 states, American Samoa, Guam, Northern Mariana Islands, Puerto Rico, U.S. Virgin Islands and the District of Columbia – including schools and libraries in both rural and urban communities seeking funding for eligible equipment and services received or delivered between July 1, 2021 and June 30, 2022. In view of outstanding demand and the recent spike in coronavirus cases, the FCC opened a second application filing window for schools and libraries to request funding for connected devices and broadband connections for off-campus to meet the unmet needs of students, school staff, and library patrons during the current school year (i.e., July 1, 2021 through June 30, 2022). The second Emergency Connectivity Fund Program application filing window opened on September 28 and closed on October 13, 2021. On October 25, 2021, the Commission announced that it received requests for nearly $1.3 billion during the second application filing window to fund nearly 2.4 million connected devices and over 564,000 broadband connections. Over $6.4 billion was requested by eligible schools, libraries, and consortia of eligible schools and libraries during the first two Emergency Connectivity Fund application filing windows. As of February 23, 2022, the Commission has issued ten waves of funding commitments totaling over $4.6 billion since the program was launched on June 29, 2021. Total commitments are supporting over 11,000 schools, 900 libraries, and 130 consortia for over 10.0 million connected devices and nearly 5 million broadband connections for students, school staff, and library patrons located in all 50 states, the District of Columbia, Guam, Northern Mariana Islands, Puerto Rico and the U.S. Virgin Islands. 49 Summary Activities for New Budget Authorities Received in FY 2020 and FY 2022 50