Joint Board Says Wireless, Broadband Deserve USF Support

For wireless carriers in particular, the message’s signals were mixed, if mostly positive. The statement marks the first time the board explicitly has said the fund should support broadband. “It’s important that broadband is included,” said a regulatory source. “That’s been an idea that has grown over time to now where I think you can say there is bipartisan consensus that it should be part of the fund. A year ago, there were few people, largely Democrats, who were saying broadband should part of the mission.”

“It’s pretty much a continuation of everything that we've been hearing for the past few weeks, and I suspect all sides will read into the principles what they want to read into it,” said an industry analyst. “Yes, explicit recognition of mobility focus is helpful to wireless, but cost control and elimination of the equal-support rule have to be of some concern.”

The statement comes as the FCC takes up an item that may cap USF subsidies to competitive rural carriers. The cap was endorsed by the joint board as an interim measure to slow fund growth. But the recommendation to apply it only to competitive eligible telecom carriers (CETCs), which generally are wireless carriers, has split rural carriers.

Chairman Kevin Martin and Commissioners Michael Copps and Deborah Tate serve on the joint board, whose statement, less than 100 words long, said that in the future support mechanisms should focus on voice, broadband and mobility. It also said high-cost USF support should hew to the principles of cost control, accountability, state participation and infrastructure build out in unserved areas. The statement also said, “The equal support rule will not be part of future support mechanisms.”

An attorney representing rural carriers voiced surprise that the board would issue a policy statement so late in the process. “After many months of filing thousands of pages of comments, and conducting meetings with the joint board, and the public sessions at NARUC and other venues, we get an outline,” he said. “This is progress?”

“It is a significant statement, but we have to place it in context,” said a wireless carrier source. “The FCC will be the one to decide ultimately what reform measures will be implemented. We will have to wait to see what the FCC chooses to do.”

Killing the equal support rule would mean the wireless industry has to prepare cost studies, the source said. “But we will have to see the details in order to understand what the joint board means and whether the inclusion of mobility will broadly benefit wireless carriers, or only a few, maybe just those who got there first.”

“This statement is quite good news because it carves in stone the idea of mobility as part of USF and there’s nothing in there about restricting support to one ETC, or a limited number, per geographic area,” said a second wireless carrier source. “It’s not clear, however, whether technological neutrality and portability of support, something upon which there is a long line of validating decisions by the FCC, remain governing principles.”

A regulatory source said the effect on wireless carriers of eliminating the equal support rule is unclear. “A lot of this very much depends on the details,” the source said. “The board decided to take sort of a higher view as a first step forward.”

Billy Jack Gregg, member of the board and director of the Consumer Advocate Division of the West Virginia Public Service Commission, pushed hard to have the board draft and release a statement, sources said. Gregg said the statement establishes clear principles.

“The reforms to be recommended by the joint board are going to focus on the services that Americans actually want -- reliable voice in their homes and businesses, mobility and broadband -- and are going to address the availability of these services directly, rather than indirectly as in the past,” Gregg told us Friday. “It also indicates that the future high-cost support system will be a true federal-state joint effort, and will be based on cost control and accountability for how USF funds are used… The reforms we recommend will lead to a more equitable distribution of support among the states, and more effective application of that support to achieve the goals of universal service, namely comparable services at comparable prices in all areas of the nation.”

Copps stressed the importance of including support for broadband. “At long last we are starting down the road of making broadband the central focus of universal service for the 21st century,” he said. “High speed, high value broadband isn’t a luxury any more -- it’s a necessity, and universal service ought to be driving its deployment into every house and business in America.”

Two Month Delay

One question unanswered Friday is why the FCC did not release for two months the statement, which was approved in July at the National Association of Regulatory Utility Commissioners summer meetings. Sources said Friday there was widespread speculation Martin would respond to Senate pressure and the FCC would make a number of USF decisions based on the record already established, independent of the joint board.

“This policy statement makes it pretty clear that the joint board still feels it owns this issue,” said an attorney active in the USF debate. “I think the chairman was thinking, ‘What if I just push through an order on a cap or on identical support or on some of those other things before we put this out so that we make sure that we are distinguishing between interim and long term?’ The fact that this has gone out preempts any strike like that.”

Martin wasn’t at the joint board meeting in July so the board held off releasing the statement, a regulatory source said. Board members “expected it would take a day or two, but nothing was forthcoming until yesterday,” the source said. It was “probably just normal bureaucratic inertia,” a third source said. “The important thing is that it’s out now.”

Not surprisingly, statements Friday on the paper were positive. “Wireless carriers are the best positioned to deliver to rural consumers one stop voice, mobile, and broadband services at the least cost. Therefore, we are pleased by the joint board’s statement and look forward to working with them to achieve their stated goals,” said Paul Garnett, assistant vice president at CTIA.

“Universal service is a critical part of the nation’s communications system,” said Jon Banks, senior vice president of law and policy at USTelecom. “We look forward to seeing the details of their proposal to ensure the stability of the system.”

AT&T has described a solution the commission should adopt, it said. “AT&T has proposed broadband and wireless pilot programs designed specifically to promote network investment in rural and unserved areas to achieve the Joint Board and the FCC’s universal service goals,” the carrier said. “Addressing these issues through separate funds is the best way to satisfy these policy goals, as well as enabling the FCC to more readily meet its goal of reforming the existing USF system.”