FCC TO SEEK COMMENTS ON JOINT BOARD USF PROPOSAL IN ‘MONTH OR 2’

At a spirited panel Thurs. sponsored by FCBA’s Common Carrier Practice Committee, FCC Comr. Abernathy’s wireline advisor Matt Brill said the Commission wants to first vote on a somewhat routine order to refer an issue to the joint board for more review. That order is on circulation and once voting is completed, the agency can move to a notice of proposed rulemaking (NPRM) on the main proposal, he said. The referral order deals with whether to maintain separate support mechanisms for rural and non-rural carriers. The rural regime is based on embedded costs while non-rural support is forward-looking. The Joint Board’s Feb. 27 proposal included a recommendation that the FCC refer the so- called rural/non-rural issue to it. In answer to a question, Brill said the Wireline Bureau is still working on the NPRM.

Panelists Karen Brinkmann, who represents rural ILECs, and David Sieradzki, who represents their wireless competitors, clashed a few times over how competitive carriers should be treated. At one point, Sieradzki asked Brinkmann if universal service was meant “to keep-whole people who have given a lot of money to Senate election campaigns.”

Brinkmann said her clients liked some things, but not others, about the Joint Board’s recommendation. She said they liked the emphasis on public interest analysis in making funding decisions because the universal service fund “is not to promote competition” but to make sure all Americans get service for comparable rates, she said.

Brinkmann also suggested the FCC could adopt mandatory standards for states to use when deciding whether to designate a competitor as an eligible telecom carrier (ETC), rather than accepting the Joint Board’s recommendation for permissive guidelines. This could be done “by rule or by example,” meaning the FCC could set an example in ETC decisions it handles such as the recent Virginia Cellular decision. She said her clients would prefer hard rules not just recommendations to the states.

Sieradzki said he didn’t think decisions for federal funding could be made by the states without guidance by the FCC. He said he found it “outrageous” that some have suggested the states can act on their own now without waiting for the FCC to act on the Joint Board recommendations: “I don’t think the criteria should be vague and states can do what they want.” Brill said “as a legal matter” it should be made clear that it’s a “red herring” to say the FCC shouldn’t “delegate” to the states on this issue because the Telecom Act gives the states the primary authority.

Brinkmann and Sieradzki were in accord in dislike for the board’s recommendation to limit funding to customers’ primary lines, though Sieradzki noted their opposition stemmed from different viewpoints. He said for competitive ETCs “it’s a potential departure from competitive neutrality” but argued for ILECs it stems from cost recovery in their rate of return structure. Brinkmann said her clients will urge the FCC to allow broader funding because for some rural customers the only way to get advanced services is through a 2nd line.

Sieradzki urged panelists to remember that only about 5% of universal service funding is going to competitive ETCs and the amount of funding is growing for ILECs as well as competitors. Among concerns of his clients is the designation criteria that concentrate on competitive ETCs but omit how they apply to rural ILECs, he said.

AT&T Vp Joel Lubin said the FCC ought to look at these issues based on how their costs would look on customers’ bills. He said the separate “contributions” debate about how to fund universal service “highlights the question” of what priorities should be set. Since carrier contributions to universal service show up as line items on their customers’ bills, the debate should be more “pragmatic,” he said. “By virtue of putting [the costs] on customer bills, it puts a magnifying glass on [the decisions made by the FCC],” he said. AT&T is one of the biggest contributors to the universal service fund.