Wednesday, January 13, 2016

Hot Springs superintendent appointed to federal board overseeing broadband subsidies

Posted By on Wed, Jan 13, 2016 at 6:30 AM

click to enlarge MIKE HERNANDEZ: Chosen to sit on federal USAC board.
  • MIKE HERNANDEZ: Chosen to sit on federal USAC board.
Mike Hernandez, the superintendent of the Hot Springs School District, was appointed last week to the board of the Universal Service Administrative Company, or USAC, a nonprofit entity that operates under the auspices of the Federal Communications Commission. (He'll keep his job as head of the Hot Springs district.)

USAC plays a significant role in the telecom world. In 2013, it disbursed over $8 billion dollars nationwide to projects meant to expand communications access, including hefty rural broadband infrastructure subsidies and the "Lifeline" program for low-income people (you may know it as the initiative behind the much-maligned "Obamaphone").

The USAC board also oversees the crucial E-rate program that helps low-income and rural schools and libraries gain Internet connectivity, and a similar initiative for rural health care providers.

Hernandez's background in public education is what makes him qualified for the appointment — the FCC requires the board include a representative from a school eligible to receive E-rate discounts. Hernandez was one of six new appointments recently chosen by FCC Chairman Tom Wheeler to occupy the 19-member USAC board.

Before becoming superintendent in Hot Springs last May
, Hernandez served as deputy commissioner of the Arkansas Department of Education, where he devoted much energy to maximizing the amount of E-rate dollars Arkansas received from the feds.

Readers may remember the tangled 2014 fight between the state's telecoms and other powerful business players — including the Walton Family Foundation — regarding the build-out of broadband infrastructure to rural schools. Telecoms, frightened that the public sector might impinge on their market share, wanted to prevent K-12 schools from using a taxpayer-funded fiber optic network originally built for colleges and universities. Among the facts that emerged in the fracas: The state Department of Information Services had been starkly negligent in securing E-rate money, thus leaving tens of millions of federal dollars on the table, according to a report by a legislative consultant at the time.

ADE Commissioner Johnny Key said in a letter to FCC Chairman Wheeler that Hernandez had been instrumental in changing that situation and had helped Arkansas school districts obtain "more than $50 million annually in E-rate funding."

"Dr. Hernandez spearheaded a statewide effort to mobilize superintendents and local communities to better leverage Arkansas’s E-rate funding. Under his leadership, a public-private partnership was established to provide every school district in Arkansas with a state-of-the-art fiber optic connection," Key wrote. A number of other education players also wrote letters to the FCC supporting Hernandez's appointment, including former U.S. Sen. David Pryor.

Even if you've never heard of USAC, you probably pay a small amount into its coffers every month. Take a look at your phone bill and you'll likely see a line labeled something like "Federal Universal Service Fee."

The FCC levies this fee on telecom providers to contribute to the provision of "universal service" — a decidedly optimistic mandate, created by Congress in 1996, that "all Americans should have access to a baseline level of telecommunications services." Among other things, this means extending infrastructure to places where it would otherwise be unprofitable for telecoms to invest — such as areas with low population densities and many miles to cover in fiber optic cables. (Some have criticized the subsidies as a giveaway to telecoms.)

A political point incidental to Hernandez's appointment: It's odd that those inclined to shout about the Lifeline program as a welfare giveaway don't seem to make as much noise about subsidizing internet build-out in rural America, which comprised a much larger share of USAC disbursements in 2014. By the way, Arkansas being a rural, poor state, will get far more money back from the feds than we pay in as consumers. In 2013, Arkansans paid about $62 million into USAC's Universal Service Fund, according to FCC records. That same year, Arkansas received about $138 million in federal dollars from USAC for its various programs.

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