Lawmakers Urge Temporary USF Cap on Competitive Carriers
The FCC should impose the proposed temporary cap on subsidies to competitive carriers from the high-cost Universal Service Fund (USF), several members of Congress said in letters to the FCC the past few weeks. The letters came as wireless carriers worked the Hill seeking political support for encouraging the FCC to tweak a May 1 Federal- State Joint Board proposal to place an interim cap on funding for competitive eligible telecommunications carriers (CETC), who mostly are wireless providers. Most lawmakers writing the FCC said consumers will see higher costs without the cap.
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The Commission and Joint Board should work together as closely as possible to overhaul the program “to ensure that reform and strengthening” occur in timely manner, Sen. Charles Grassley (R-Iowa) said. Incumbent carrier funding, capped since 2003, remains flat, members noted. Without a cap, Iowans’ phone bills could rise, given subsidies for competitive carriers in excess of 100 percent, Grassley said. “Consumers are getting stuck with these increases, and many of these consumers are in Iowa’s most rural areas,” he said. If the cap is waived, he suggested the FCC weigh carrier requests case by case until a “permanent reform” plan coalesces.
Grassley’s letter resembled a June 29 missive by New York House Democrats Edolphus Towns and Eliot Engel, and Republican colleague Vito Fossella. “Ultimately, we will face a consumer backlash against a valuable and important program unless its finances are managed prudently,” the lawmakers said. They urged the FCC to impose the interim cap. The same day, Sen. Robert Casey, D-Pa., asked the FCC to impose the temporary cap (CD July 2 p6).
But not everyone was on the same page. Sen. Benjamin Nelson, D-Neb., called the interim cap a “reasonable” step, but urged the Commission to ensure it is “truly an interim solution.” The Joint Board recommendation that the FCC rely on data from the 2006 base period to set the interim cap would “have significant negative consequences for my state,” he said. The FCC instead should calculate capped support using 2007 annualized data, Nelson said. The Nebraska Public Service Commission (PUC) designated Alltel as an eligible telecommunications carrier (ETC) in parts of the state, “most of which previously did not have a designated ETC,” the letter said. In 2007, Alltel again was certified as an ETC for the remaining parts of the state without a wireless carrier.
In arguing for annualized data, the Nelson letter cited state commission arguments that its situation was unique “in that a wireless ETC designation did not exist for all wire centers within the state until 2007.” Because of that, the FCC either should allow use of annualized data or grant waivers so states like Nebraska can show why their support amounts should be changed, the letter said. Nelson said steps are needed to ensure the fund’s long-term stability, urging a “comprehensive approach.”
In a June hearing, Senate Commerce Committee members deemed chances of comprehensive USF reform unrealistic if the Joint Board waits 6 months (CD June 13 p1), given the election cycle. They strongly urged FCC Commissioner Deborah Tate, whose term expired June 30, to make changes as quickly as possible. Tate could face more pressure on the issue at her confirmation hearing; President Bush renominated her for a 5-year term ending June 30, 2012.