FCC Rules Against Redistributing ETC Money in Corr Case
Competitive eligible telecommunications carriers won’t be able to help themselves to money left over from the surrender of Verizon Wireless’s and Sprint Nextel’s high-cost universal service funds, the FCC said. In an order and rulemaking notice released late Friday, the commission said the money should be kept “as a potential down payment on proposed broadband universal service reforms … including to index the E-rate funding cap to inflation.” The commission sought comment on whether it should amend its rules permanently “to facilitate efficient use of reclaimed excess high-cost support” and on a proposed rule change that would “reclaim legacy support surrendered by a competitive ETC when it relinquishes ETC status in a particular state."
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The FCC order accepted Corr Wireless’s argument that the Universal Service Administrative Co. can’t modify the interim cap by taking out contributions from Verizon and Sprint, but rejected Corr’s argument that other ETCs should get a slice of the leftover pie. “As long as Verizon Wireless and Sprint Nextel remain eligible for a given level of support -- regardless of whether they actually receive that support -- that support will be included when USAC calculates proportional payments to competitive ETCs under the interim cap,” the order said.
Chairman Julius Genachowski said the action “is one step to help ensure the [universal service] fund will have the needed resources without increasing its rate of growth.” His written added: “An essential part of reform will be driving greater and greater efficiency through USF, ensuring that the funds are spent wisely, and continuing to employ caps and other incentive structures to maximize the return on USF’s investment and limit the financial burden on consumers."
Commissioner Michael Copps “welcomed” Friday’s action but lamented the use of “an illusory band-aid -- an ‘interim, emergency cap,'” he said. He’s not “totally pleased with today’s outcome,” Copps said. “These funds are needed in circulation now,” he said. “Yet universal service reform is still, at best, many months off. … I genuinely dislike holding on to ratepayers’ contributions when those funds could and should be distributed immediately for services in areas that urgently need them."
Verizon spokesman David Fish called the decision “the first step … to fix this broken system. The Commission is heading in the right direction by phasing out this irrational system and replacing it with one that targets universal service funding to areas without service. The next step is for the Commission to extend this phase-out of support to all competitive carriers, as it proposed to do in its recent notice of proposed rulemaking.”
Independent Telephone and Telecommunications Alliance lobbyist Joshua Seidemann was gratified by the FCC’s decision. “We fought hard because we believed that the interim cap order was the right first step toward reining in growth,” he said. “What the FCC is doing now, it’s continuing to take good steps toward fixing the CETC funding mechanism. I think it is a rational and logical progression of the interim cap order.” Comments on the proposal are due 21 days after it’s posted in the Federal Register, replies 14 days later.