USF Funding Controversy Likely a Top ‘Lame-Duck’ Issue

Expect to see a strong push for the renomination of FCC Comr. Adelstein, sources said, and last minute efforts to move the spectrum relocation trust fund (HR-1320), E- 911 legislation, the Satellite Home Viewer Improvement Act, the Internet tax moratorium, and broadcast decency. The session begins tomorrow (Tues.), and sources don’t expect it to last any longer than 2 weeks.

Senate Appropriations Chmn. Stevens (R-Alaska) is considering taking action on the accounting problems with USF, industry sources said. The FCC recently ruled that USF must comply with the federal Anti-Deficiency Act (ADA), which could delay millions in E-rate funding and potentially cause USF contribution rates to be raised, according to several industry associations such as USTA, NTCA, OPASTCO and others. But several industry sources said members in both the House and Senate are looking at enacting legislation that would temporarily exempt USF from ADA requirements. One industry source said an exemption would likely last until Sept. 30 or Dec. 31, 2005, enough time to give Congress the ability to study the issue more closely. Also, another source said the Office of Management & Budget (OMB) could also take action to fix the controversy.

There are some potential roadblocks to passage of an ADA exemption, with time being perhaps the most notable. But industry sources said there are questions whether a temporary exemption would get the support of House Commerce Committee Chmn. Barton (R-Tex.) or Senate Commerce Committee Chmn. McCain (R-Ariz.). Barton is continuing to pursue former Committee Chmn. Tauzin’s (R- La.) investigation into fraud at the E-rate program, and some said concerns about abuse of the program might give Barton pause to exempt the ADA requirements.

Most industry sources said they expect the ADA exemption to be pushed through the appropriations process. But one source said there could be time to enact an exemption as stand-alone legislation. With 9 appropriation bills remaining, questions remain as to how Congress will move to wrap up the spending. Most experts have speculated that the bills will be moved in an omnibus spending bill, but one source said some spending bills could be passed as stand-alone bills and that Congress could pass continuing resolutions to fund agencies and programs until next session.

Support for an ADA exemption continued to mount last week. Already, many telecom associations and companies have expressed support, and on Fri. an ad-hoc coalition of 36 groups again urged congressional action, including: USTA, CTIA, OPASTCO, Western Telecom Alliance, Alaska Telephone Assn., Cox and the National Assn. of State Utility Consumer Advocates (NASUCA). The coalition also included several education and local govt. groups, including: National Education Assn., National School Board Assn., U.S. Conference of Mayors and the U.S. Conference of Catholic Bishops. Also, the Coalition for Equitable & Affordable Rural Service (CLEAR Coalition), formed mainly to advocate reform of the USF “non-rural, high-cost” fund, has also expressed support for an exemption. And Qwest said it supports a temporary exemption of USF from ADA.

The Senate could extend Adelstein’s tenure on the FCC this week. If the Senate takes no action before it adjourns, Adelstein will lose his seat on the Commission. After hopes seemed dim for Adelstein after the Republican victory in the election, several sources said he’s likely to be part of a package of nearly 80 nominees, including several judges. It’s unclear how controversial the package may be, as Democrats are generally reluctant to move anti-abortion judges. The Senate Judiciary Committee is scheduled to hold a hearing on judicial nominations on Tues., 8:30 a.m., Rm. 226 Dirksen Bldg. Witnesses will include: Thomas Griffith for U.S. Appeals Court, D.C.; Paul Crotty for U.S. Dist. Court, Southern Dist. of N.Y.; Michael Seabright, U.S. Dist. Court, Hawaii. Also, the Senate Commerce Committee has tentatively scheduled a hearing on nominations for Thurs., 2:30 p.m., Rm. 253 Russell Bldg. Adelstein is tentatively scheduled to appear at the hearing. The White House still hasn’t formally moved his nomination.

Several industry sources said negotiations on the spectrum relocation trust fund (HR-1320) and E-911 legislation have resulted in a compromise and that both bills could move early this week. Industry sources said Stevens will get the emergency alert funding he wanted in the spectrum bill and that a $250 million compromise on annual E-911 funding has been reached. An industry source said House and Senate negotiators had to reach a compromise on E-911 so that both chambers could quickly pass the same legislation and avoid a conference on the bill. Several sources have said that Sen. Sununu (R-N.H.) had a hold place on E-911 but that his concerns have been met.

There’s pressure for Congress to move the Satellite Home Viewer Improvement Act, but it’s unclear if significant compromise has been reached. Both industry and Senate sources said there would be continuing efforts to include the controversial “digital white area” provisions into a SHVIA bill. The Senate Commerce Committee version of the bill does include this provision, but it’s opposed in the House. Several sources said it’s likely that Congress could pass a temporary SHVIA extension and continue to negotiate DBS issues next session.

Clear Channel, one of the more heavily fined broadcast entities, will continue to push for passage of broadcast decency legislation, industry and senate sources said. Sources said Clear Channel is lobbying for the increase in fines because the compromised bill wouldn’t include any “3 strikes” provisions that would require automatic license-revocation hearings. Congress could consider broadcast regulations as part of legislation based on the findings of the 9/11 Commission, which recommends return of the portions of the analog broadcast spectrum reserved for public safety. While the Senate version included language that would require broadcasters in that spectrum to vacate by 2008, the House version included only a resolution vowing action next year. However, reports on Fri. said there was little White House support to overhaul the intelligence system this session, making passage of the legislation unlikely.