Rural ILECs Press Congress for ADA Relief, USF Reform

The goal is to gain support for S-241, which would permanently exempt the Universal Service Fund (USF) from the ADA, staff told OPASTCO members. The ADA bars federal agencies from incurring obligations in advance of appropriations. The FCC last year ruled the ADA applies to the USF, meaning the fund administrator would have to have cash on hand before sending commitment letters for USF funding. Last year’s immediate impact of applying the ADA was on the E-rate program but rural ILECs fear their payments also could be affected. Under it, for example, the FCC might have to suspend new High Cost Fund commitments to rural telephone companies until it accumulates cash to meet ADA requirements, staff members said. As a result, rural ILECs would have difficulty repaying loans and see possible rises in consumer rates and delays in making capital improvements, staff said. Congress in Dec. passed a bill exempting the USF from the ADA through 2005.

Other issues being pushed by rural ILEC executives: (1) Legislation permitting the FCC to base carrier contributions to the universal service fund on intrastate as well as interstate revenue. (2) Requiring all facilities-based broadband Internet access providers to contribute to the USF. A background sheet given OPASTCO members said this would broaden the contribution base and correct the inequity of DSL providers having to contribute while providers of cable modem and other platforms don’t. (3) Congressional support for an FCC rule change to distribute USF payments to competitive rural carriers based on their own costs rather than on costs of rural ILECs in the same territory. (4) Requiring providers of VoIP and other new services to help pay for the underlying telecom networks. “Congressional hearings that consider these issues should examine the ramifications that any changes to the current intercarrier compensation rules will have on rural consumers and the local networks they rely on,” the briefing paper said. (5) Retaining the “pooling” option for rural ILECs if DSL is reclassified as an information service. Small ILECs participate in optional revenue pools to set their tariff rates and there’s concern this option could be eliminated for DSL service if it’s no longer considered a telecom service, OPASTCO staff said.

In a speech before the group left for the Hill, Rep. Gutknecht (R-Minn.), co-chmn. of the Congressional Rural Caucus’s Telecom Task Force, said the task force was formed to give rural telecom companies “a seat at the table.” Rural telcos in Minn. support the broadband needs of major research laboratories, he said. “You've got to have big pipes,” he told OPASTCO members. “I don’t think there will be another telecom bill we aren’t at least prepared to comment on,” he said. “If and when we have another telecom bill it will be balanced and fair” as a result of the task force’s input, he said.

“Tell members of Congress what you are doing in broadband and the challenges that make it more expensive,” OPASTCO staffer Steve Pastorkovich told ILEC executives. Many in Congress are “in love with VoIP,” he told them, but ILECs should emphasize that “no technology, including VoIP, should be permitted to ride on your networks for free.” Make the point that the goal of encouraging new technology can’t be met if underlying networks aren’t supported, he said.

An audience member questioned OPASTCO’s support for adding intrastate revenue to the federal USF contributions base, saying it makes him “nervous” to see the federal govt. expanding into what seems to be state territory. Staff members said interstate revenues are shrinking because of changes in the marketplace and no longer suffice to support the fund.