Martin Kills Vote on USF, Intercarrier-Comp Overhaul

The agency still hopes to respond by midnight Wednesday to a court order on the FCC’s ISP-bound traffic compensation regime, an FCC spokesman said. That vote will occur on circulation, because Monday afternoon was too late to add new items to the Tuesday agenda, he said. If the FCC doesn’t respond by midnight, the U.S. Court of Appeals for the District of Columbia will throw out the current regime, an action that, by virtue of a “mirroring rule,” would have repercussions for the entire industry (CD Oct 22 p1).

“I am disappointed that we will miss the opportunity for comprehensive reform,” said FCC Chairman Kevin Martin in a statement. “Instead my colleagues have requested that we once again seek public comment on several proposals. As a result such a notice would make little progress and ask for comment again on the most basic and broad questions about reforming the two programs.” Martin doesn’t believe other commissioners will be ready to do an overhaul Dec. 18, but rather would just seek “another round of comment,” he said.

But Martin’s colleagues blamed him. “Four Commissioners provided the Chairman bi-partisan, constructive and substantive suggestions, and stated that notice and comment should be sought on the proposals, with an understanding that we would all be prepared to vote on December 18. We also have asked the Chairman to narrowly address the ISP-bound traffic remand and the Joint Board’s Recommendation,” said Commissioners Michael Copps, Jonathan Adelstein, Robert McDowell and Deborah Tate. “We therefore are disappointed that the Chairman has withdrawn the fundamental reform item from [Tuesday’s] agenda.”

Meanwhile, Martin has readied a response to proposals by the Federal-State Joint Board on Universal Service to revamp USF distribution, a Stifel Nicolaus report said Monday morning. If adopted, the draft at minimum would impose a new USF cap and reverse auctions, the analysts said. Such a draft order is circulating, but without much momentum, said an FCC official. Martin may set another meeting to vote on the USF item, but that also seems unlikely this month, the source said. The FCC has until Nov. 20 to respond to the Joint Board recommendations.

Martin will have trouble finding support on the USF-only plan, Stifel Nicolaus said. “We're skeptical he will be able to secure a majority for broad use of reverse auctions,” the analysts said. But Martin might have the votes for a new cap, they said. The FCC declined to comment.

AT&T and Verizon called the overhaul’s deletion a missed opportunity. “The failure to update these rules is a lost opportunity for policymakers, and it means that our regulatory regime will remain broken and stuck with a 20th-century economic model designed for the black rotary phone,” said Robert Quinn, senior vice president, in a statement. We urge the FCC to work to resolve the remaining issues and to truly engage to adopt comprehensive reform.”

The National Telecommunications Cooperative Association lauded Tate, Copps, Adelstein and McDowell “for recognizing the importance of due process and in providing all interested parties the opportunity to fully review and comment on the proposal.” NTCA plans to comment formally, it said. Representing mid-sized carriers, Independent Telephone & Telecommunications Alliance President Curt Stamp said “the removal of the item from the agenda is a first step toward restoring fairness to process and consumers in rural America.”

Other rural carriers bemoaned the plan’s deletion. Martin and small rural carriers “had a great plan,” said John Rose, president of the Organization for the Promotion and Advancement of Small Telecommunications Companies. OPASTCO fears the USF-only plan and any other new proposals won’t help rural carriers as much as the one that group worked out with Martin (CD Oct 30 p6), he said. In particular, OPASTCO thinks reverse auctions are a “big mistake,” he said. OPASTCO plans to be vocal at the FCC and on Capitol Hill for the rest of the year, he said.

Associations representing state regulators and consumer advocates applauded the delay. The National Association of State Utility Consumer Advocates is pleased no vote will take place Tuesday, a spokesman said. The National Association of Regulatory Utility Commissioners hopes Martin will open overhaul proposals for public comment, said Ray Baum, NARUC telecom committee chairman. NARUC wants to see a USF and intercarrier compensation revamp this year, he said.