ADELSTEIN URGES MORE CARE IN AWARDING USF SUPPORT TO COMPETITORS
FCC Comr. Adelstein reiterated Thurs. his concern about the pressures on the Universal Service Fund (USF) caused by the growth of competitors seeking support from it, and recommended a new process that could place limits on competitive use of USF support. Speaking at a telecom conference sponsored by FCBA and the Practising Law Institute, Adelstein said the Telecom Act intended multiple carriers to be eligible for support or it wouldn’t have created the eligible telecom carrier (ETC) process for additional carriers to gain funding. However, he said he wondered whether Congress had anticipated the size of the demand that was emerging. “It may come to a choice of financing competition or financing network development in rural areas,” he said.
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Adelstein said he was working to establish a better “template” for the Commission to assure the public interest was weighed when ETC designations were made. For example, he said, the FCC, when considering ETC requests, should “increase oversight to ensure that universal service funds are actually being invested in the network for which the funds are received… and we should also assess the value of the provider’s service offering. We must consider whether the applicant has made a service quality commitment or will provide essential services to the community.”
Adelstein said a member of the Federal-State Joint Board on Universal Service, W.Va. PSC Consumer Advocate Billy Jack Gregg, had recommended “benchmarks” to determine when financing a competitor was “simply not an appropriate use of universal service funds.” The plan, which Adelstein said he supported, would use a 3-level test to determine whether competitors should get funds, Adelstein said: (1) In areas where the incumbent “high-cost” carrier received more than $30 per line, additional funding would be limited to one ETC. (2) In areas where funding was $20-$30 per line, no more than 2 ETCs would be permitted. (3) In areas were high-cost carriers got less than $20 per line, there would be no limit. “Although this proposal needs further discussion, it has a lot of merit,” Adelstein said. “This proposal would help to limit and better control the growth of the fund.”
Adelstein said he disagreed with the suggestion that to control cost funding should be limited to primary phone lines. “Universal service is not about one connection per household,” he said: “Basing support solely on primary lines is likely to reduce network investment [and] could have disastrous results for small businesses that operate in rural areas. There are better options for addressing the growth of the fund.” He also found “artificial” the fact that wireless ETCs receive the same amount of funding as wireline carriers, “without any reference to their cost structure.”
In a separate panel discussion, Telecommunications Industry Assn. (TIA) Vp Grant Seiffert said next year would be “critical” for the telecom equipment market, which is expected finally to start turning around to positive growth. He said TIA would issue a complete outlook in Jan., but the network equipment market was expected to see 2% growth. “I think the shakeout is over,” said Allegiance Telecom CEO Royce Holland, who was on the same wireline panel. To assure the turnaround happens, “I would urge regulators to stay the course,” he said.
Verizon Senior Vp Susanne Guyer said FCC clarification on the UNE broadband rules would improve chances for economic turnaround by encouraging Bell companies to build out broadband facilities. Verizon has proposed a number of clarifications to the UNE Triennial Review Order (TRO) to assure the Bells have relief from sharing requirements that they say the TRO intended. Guyer said Verizon was committed to a project to pass one million homes with broadband, but “we're a little out on the limb” without FCC clarification.
In answer to a question, Rebecca Klein, Tex. PUC chmn., and Christopher Libertelli, aide to FCC Chmn. Powell, said certain regulatory processes would snap into place if a Bell company stopped complying with market-opening requirements now that all of the companies had gained Sec. 271 authority. Klein said reduced compliance would have shown up in the performance measurements enforced by state commissions. Libertelli said the FCC would start seeing data from PUCs, and teams within the agency that monitor Bell compliance would begin taking action, which could range from a fine to loss of Sec. 271 authorization.