Martin USF Proposals Panned by Many Wireless Carriers
As details emerge, wireless carriers generally see little to like in Universal Service Fund proposals circulated last week by FCC Chairman Kevin Martin for a vote at the Nov. 4 meeting, industry officials said. The proposal’s implementation would be hardest on small wireless carriers trying to qualify as eligible telecommunications carriers to receive USF monies, they said.
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“If you talk to several wireless guys, you'll probably find pretty uniformly that they [see] the universal service side of it as bad for wireless,” said an attorney representing small wireless carriers. “There’s nothing neutral about this proposal,” said a wireless industry official. A CTIA conference call last week addressed the Martin proposals, which he circulated Tuesday and discussed Wednesday. Typical for this area, wireless carriers are staking out disparate positions with no industry consensus, a wireless industry official said.
As proposed, the rules would make it difficult for most wireless carriers to make a “cost showing” to the FCC that demonstrates they should receive support, agency and industry officials said. At a Wednesday press conference, Martin said wireless carriers would have to prove they meet the “same benchmark standards” as wireline carriers requesting USF support, but gave no details. It wasn’t clear how wireless carriers would calculate their costs, especially whether they could factor in spectrum license costs that raise their expenses relative to wireline competitors’.
Under the Martin proposal, wireless carriers would not be allowed to include spectrum costs in calculating the cost of providing service, we've learned. Wireless carriers would determine per line costs by dividing total costs in a service area by the number of LEC lines in service in that area. A person familiar with the Martin proposal said it would be “very difficult” for wireless carriers to meet the benchmarks and qualify for USF support.
“That’s the biggest negative,” said a wireless lawyer active in the proceedings. “If what gets adopted is similar to the NPRM that was circulated in February, we're basically talking about zeroing out, or pretty close to zeroing out, support for wireless carriers. … That proposal carried burdens of proof that wireless carriers will never, ever be able to meet.” Wireless carriers must not be required to base their calculations on wire centers, the attorney added: “No one keeps their accounts, nobody keeps their books, based on wire centers. … It’s impossible. It would be an exercise in arbitrary line drawing.”
Also on USF overhaul, wireless carriers fear that the numbers-based USF contribution plan pitched by Martin does not offer relief for customers with multiple lines on family plans. As written, family plan customers would get no break and would have to pay a separate charge per line. The Martin proposal rejects special treatment for customers with family plans, said agency officials. Wireless carrier sources back changes proposed by Martin that would drive down access charges, but see his reported proposal of a four to 10 year timeframe as too lengthy, they said.
“It seems like that’s way too long and so many things can happen between now and then,” said a wireless industry official. “The benefits don’t come until 10 years from now and the whole world could look different.” An lawyer who represents small wireless carriers said, “The idea that it’s taking 10 years to get there is unbelievable and then you get there and it’s still not bill and keep.”
Meanwhile, Sprint Nextel is concerned how the FCC will handle transport traffic moving between networks, the carrier said in a Friday letter to the FCC. Sprint supports a low uniform rate for terminating access traffic, as Verizon and AT&T have suggested, but is worried separate interstate and intrastate access charges would still apply to transport traffic at “bottleneck” tandem facilities, it said. Verizon and AT&T are the primary suppliers of tandems, Sprint said. “The Commission should not make the mistake of addressing one bottleneck (the terminating monopoly) held by all carriers, while ignoring a bottleneck that is owned almost entirely by Verizon and AT&T.”
Sprint backs the application of reciprocal compensation to all transit and transport services, in addition to a low uniform rate for termination, the carrier said. However, state proceedings to determine those rates will take time, it said. On an interim basis, the FCC should adopt TELRIC pricing, the company said.