Telecom Carriers, PSCs Urge Fix in USF Administration

The FCC should resolve inconsistencies between its rules and USAC internal guidelines, IDT Telecom, a USF contributor, told the Commission. “USAC, in trying to find a way to cope with the enormous responsibilities of managing the USF, has created internal guidelines,” IDT said: “The problem arises when these internal policies begin to affect the way USAC interacts with contributors, especially when USAC begins to make demands of contributors that are not clearly delineated in any FCC rules or regulations. It is at this point that the internal guidelines become de facto policy and USAC begins to exceed the authority granted it by the FCC.” The FCC should amend its rules or issue guidance to make sure USAC rules conform, IDT said. And the Commission should make all USAC internal guidelines public, the firm said. “USAC, as an administrator of the FCC’s rules, is acting in a quasi-governmental fashion and should be held to a higher standard of openness.”

“A radical overhaul or replacement of USAC” isn’t needed, but the FCC rules need clarifying, SBC said. “Inefficiencies and other deficiencies in USF administration and management often result from ambiguities in the rules and policies governing universal service,” SBC said: “By providing more explicit direction to USAC concerning not only the substantive requirements but also the procedural and operational aspects of the Commission’s universal service support mechanisms, the Commission would go a long way towards ensuring efficient and effective administration of its universal service support programs.”

BellSouth urged more USAC “outreach” to contributors and recipients. The FCC and USAC have put “significant time” into educating schools, vendors and others about the E-rate program, and ought to do more of that for other USF programs, the firm said: “Educating stakeholders about the rules and processes for filing applications, submitting contributions, and obtaining universal service support leads to fewer questions, less confusion and greater efficiencies.” USAC should run focus groups on its processes and test new procedures in advance, BellSouth said. A focus group would have minimized problems seen recently when the FCC adopted a revised form for service providers seeking low-income support, BellSouth said. The form sought data most carriers couldn’t provide because they hadn’t programmed their billing systems to capture it, BellSouth said.

“Although E-rate applicants are frustrated over the complexity of the program requirements and the delays in issuing funding commitment decisions letters, most of these frustrations are not directed at USAC per se but rather at the overall E-rate process,” said the State E- rate Coordinators Alliance (SECA). It would be “ill advised” to change the USF administrator because “a program of this size and complexity requires stable management and oversight,” SECA said. The group rejected selecting an administrator by competitive bid, an idea the FCC mentioned in its call for comments. SECA said that doesn’t mean the process can’t be improved by simplifying the application process and speeding disbursements: “The current situation concerning the FCC’s governance of the USF and the USF administrator has become so bureaucratic and administratively cumbersome that the lack of timely policy guidance and decisions has become a major problem that routinely prevents applicants from timely receiving funding decisions and the disbursement of support.”

The FCC asked that comments stick to ways to improve USF administration and not address broader USF policies, but that’s hard to do, some commenters said. “Such an approach is akin to repairing the screens when the leaking roof is in danger of giving way,” said the Del. PSC, which urged the FCC to shrink the fund. “One can hardly be surprised that the Commission has now called for a comprehensive review of the mechanics of the federal USF fund,” the PSC said: “Any federal program that has grown to nearly $5.44 billion in disbursements by 2004 probably carriers within its administration not only inefficiencies but also instances of abuse.” A better course is “not to create more layers of paperwork and bureaucratic control over disbursements but to make a very serious effort to constrain the burgeoning size of the fund.”

Verizon’s observation fit the same mold: “The largest challenge facing the universal service program today is not administrative,” the firm said: “It is the size of the fund, particularly the growing cost of high cost support.” The FCC should control the fund’s size as it improves administration, Verizon said. Among Verizon’s ideas for administrative changes: Speed the application process and distribute E-rate funds directly to applicants rather than via service providers. “There is no policy reason why applicant reimbursement payments should be made through the service provider,” Verizon said.

The Fla. PSC suggested the FCC partner with states to fix USF administration. The FCC would retain oversight and handle rules and guidelines while “the states would be responsible for taking administrative action to reduce waste, fraud and abuse,” the PSC said. “Allowing states to assume certain administrative responsibilities lessens the burden on the FCC and USAC,” the PSC said. States, for example, could approve E-rate applicants’ technology plans, requests for bids and ultimate contracts with vendors, the Fla. regulators said. States then would forward approved documents to USAC.