NOTEBAERT URGES USF REFORM, SAYS FUND IS BASICALLY A TAX
Congress should “redefine” the purpose of the Universal Service Fund (USF) and what kind of “tax” should be used to support it, Qwest CEO Dick Notebaert said Wed. at a Progress & Freedom Foundation lunch. Policy-makers should decide what they really want to fund through the USF -- for example, low income households or expanding broadband coverage -- he said. Then they can define how the money is raised because “there are better ways to do it,” he said. Regulators keep adding uses for USF and “never say, ‘We've done it, let’s move on,'” Notebaert said. USF is a tax now, whether regulators care to call it that or not, he said: “We ought to call a tax a tax.”
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Answering a question, Notebaert said he’s “not pushing for legislation” to rewrite the Telecom Act and “not optimistic” about near-term prospects for enacting it. It took 6-8 years for the Telecom Act to gain passage, he said. But if Congress embarked on new legislation, USF reform would be on top of his agenda, along with language to reduce wireline regulation, he said. On the latter, Congress should define a level of competition that, once reached, allows regulators to “get out of the way,” he said.
Notebaert expressed strong views on several issues in answer to questions posed by a panel of analysts and by the audience after his speech: (1) On why Qwest dropped out of USTA, he said “for the amount of dues, we didn’t see the value in being a member.” Notebaert said he wondered how USTA could speak for small rural telcos as well as Bells. A USTA source said Qwest didn’t drop out -- it was asked to leave because it didn’t pay its bills. “The industry’s most successful companies see effectiveness in USTA,” he said: “Every day Qwest benefits from our effective advocacy, most recently in USTA’s successful challenge of the FCC’s Triennial Review Order.” (2) Consumer groups said prices would go up if Bells were given Sec. 271 authority to offer long distance service, and instead the prices have gone down, he said. “It’s nuts to think it would raise prices,” Notebaert said. “People who talk this way think there still is a monopoly,” and their warnings “slowed down” competition, he said.
(3) Some parties may harm efforts to commercially negotiate interconnection contracts through their regulatory stance, Notebaert said. They've “held out the safety net” to competitors that if negotiations fail, an appeal will be made to the U.S. Supreme Court to overturn the U.S. Appeals Court, D.C., ruling that vacated the FCC’s UNE-P rules, he said. FCC Comr. Martin has “provided a ray of hope that the status quo can be maintained,” he said. “It can’t. We've been in court 3 times. It’s over.” Notebaert said Qwest began open negotiations in Wed. in Denver with as many as 40 CLECs. “We will talk about our phased-in approach to moderate increases” in prices for interconnection, he said.