USF Cap Based on Current Funding Levels, Doesn’t Sunset

Martin wouldn’t agree to a hard sunset date for the cap. Instead, it runs until the commission approves comprehensive reform. The danger, one agency source noted, was that the “temporary” cap could become a “permanent” cap.

Martin didn’t mention USF reform when he spoke to the CTIA conference Tuesday (CD April 2 p1). Martin told reporters afterward he could accept proposed edits by McDowell, which call for a carve out for tribal lands in all 50 states, including Alaska native lands, but without language specific to Alaska carrier GCI. McDowell had sought, but Martin did not agree to, a sunset date for the cap, said sources at the CTIA conference.

Members of the association disagree on what course the FCC should follow, so the CTIA board hasn’t adopted a comprehensive position on reform. “Verizon and AT&T are each in different places and Sprint and T-Mobile are in yet a different place,” said a wireless industry source. “The devil is in the details with these things, and so people are still waiting to see the order when it comes out,” said a wireless carrier source at the conference. “AT&T will be happy because that’s what they asked for,” said an attorney active in the USF proceeding. “It’s not going to be very well received by independent wireless companies.” The attorney said basing the cap on current funding levels is a change that had been sought by McDowell and good news for wireless carriers seeking funding. The Joint Board had sought to cap the fund at 2006 levels, the source noted.

An official with a wireless carrier that has a long- standing application for ETC status said if the order did not address that request, several similarly situated carriers were ready to take the FCC to court. “At some point we believe they have a legal requirement to deal with” the application, the source said. “Patience is running out.”

Tony Clark, chairman of the North Dakota Public Service Commission and the NARUC Telecom Committee, told us he hopes a cap won’t be viewed by the FCC as a substitute for broad reform. “You still have to do triage no matter what else you do and clearly there is a problem here,” Clark said. “To the extent that you put a cap on you have to then do something about the funding mechanism itself, make sure that that support is more targeted… Especially on the CETC side, it’s terribly untargeted. We just sort throw money at it and hope that we end up with good results, and that clearly is not working anymore.”

“Any appropriate step forward is a good step forward,” said Larry Landis, a member of the Indiana commission and of the Joint Board: “I think it’s also fair to say that there’s some disappointment that things have not moved faster. Having also said that, [FCC commissioners] are challenged with many other tasks in addition to universal service reform.”

Landis said company-specific caps imposed as part of wireless merger orders already took some pressure off the fund, but a broader cap will apply across the industry. November’s AT&T-Dobson merger, Alltel’s purchase by TPG Capital and Goldman Sachs Capital in late October and the Verizon Wireless-Rural Cellular transaction in July also contained caps. “When you have a situation where 14 or 15 companies are getting funding for one specific area and other areas, with costs that may be significantly higher, receive no funding, there’s a need to redress that situation,” Landis said. “That was what we had hoped to do with the cap.”

North Dakota state Rep. Kim Koppelman (R), chairman of the Council of State Governments, told us a cap should not be seen as a substitute for USF reform. “Policymakers’ concern is that that fund as it is currently designed is sort of antiquated,” he said. “It needs to keep pace with the current economy… where technology is going, and perhaps retool accordingly.” -- Howard Buskirk

CTIA Notebook…

Technology, including wireless, is increasing the amount of information available to voters, former Democratic presidential candidate John Edwards told CTIA Thursday during a closing keynote. Edwards spoke along with Fred Thompson, former Republican candidate for the White House. Edwards said Internet technology, including YouTube, has dramatically changed campaigning since the 1990s. He said previously, there were periods on the campaign trail when a candidate was unreachable, but that’s not the case anymore. Thompson quipped that with wireless and other technologies, “you can’t get away with nothing anymore. Secondly, you are expected to know everything that happened. Being on the bus for 45 minutes is no excuse.” Thompson also praised President Steve Largent’s leadership of CTIA. Edwards said technology has transformed fundraising via Internet campaign contributions. With all three remaining candidates, “the amount of money they are raising online is phenomenal. It’s unlike anything you have ever seen.” Thompson, noting that Republican candidate Mitt Romney spent $40 million of his own money, said to laughter, “I stood on principle and I refused to spend 40 million dollars of my own personal funds.”

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Lack of mobile standards is squeezing software developers’ finances. Rubicon Consulting’s Michael Mace said at CTIA that instead of industry having one or two platforms, “we have an explosion of platforms that are co-existing. It’s not clear that users need to care, but it’s a very important issue to IT managers and, particularly, software developers.” Mace said developers complain of the high cost of having to issue so many versions of a product to fit competing platforms. Mace said developers expected a shakeout that would leave only one or two platforms, as in personal computers. But the opposite has happened, he said: “And now you've got Android coming along that will have its own set of API for developers to use and iPhone is also introducing its own set of APIs.” To deal with their financial issues, developers may start designing “browser-based software and forgetting about platforms” for the mobile space, Mace said. Another issue the industry needs to address, said Symbian General Manager Jerry Panagrossi, is power: “There’s a huge growing gap between battery need and battery improvement. We're looking beyond 16 gigabytes to where smartphones will have to handle terabytes of data.” -- KT

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Correction: CTIA is sharing location-based services guidelines with the FCC but isn’t asking the agency to adopt them (CD April 3 p1).