AT&T ‘Heartened’ by FCC’s Proposed Universal Service Overhaul

AT&T is “heartened” the FCC is finally moving forward on a comprehensive overhaul of the Universal Service Fund, Senior Vice President Bob Quinn said Thursday. The company is “disappointed” that the commission has put off the contribution piece (CD Jan 20 p6) but is “going to be very, very supportive of what the FCC is doing here,” he told reporters Thursday on a conference call.

House Republicans have their own designs on universal service. Rep. Lee Terry, R-Neb., continues to press ahead with a bill on USF, a senior aides told us. Terry has had early talks on a USF revamp with Commerce Committee Chairman Fred Upton, R-Mich., and Communications Subcommittee Chairman Greg Walden, R-Ore., the staffer said. The committee leaders’ emphasis early this session is on FCC oversight, and they haven’t worked out a date for a USF hearing, the aide said. A USF overhaul was one of the “key issues” listed in a committee staff memo circulated this month. Senate Commerce Committee Chairman Jay Rockefeller, D-W.Va., this month called revamping USF a priority, but he has previously urged the commission to lead the effort. Given how long it took to gain industry consensus on last year’s USF bill in the House, Terry plans to start with a straight reintroduction, his aide said. The lawmaker wants to introduce a bipartisan bill and is still looking for a new Democratic co-sponsor to replace former Rep. Rick Boucher, D-Va., the staffer said. Terry has been in meetings with Ray Baum, who has joined the committee staff after having been the state chair of the Joint Board on Universal Service (CD Jan 11 p7), but Baum is still settling in, the staffer said.

"I think the contribution is a big part of the mix, and I'm hopeful that they'll recognize that and deal with it,” Quinn said. “I think the FCC really needs to broaden the base -- and broaden the base to include people who aren’t contributing but are benefiting from the system.” At the same time, USF desperately needs fixing and the commission’s proposed rulemaking, scheduled for a vote at the Feb. 8 meeting, is both forward-looking and practical, Quinn said. “It’s almost revolutionary but yet kind of anti-climactic. They're going to end up with bipartisan support for this notion that, at the end of whatever this transition period is, we're going to have broadband everywhere."

The rulemaking notice will not only emphasize support for broadband, but also will focus on download speeds of at least 4 Mbps and upload speeds of 1 Mbps, Quinn said. Universal service is still years from being fixed, but the proposed rulemaking is an important first step, he said. “You really have to start from scratch -- to rethink how we do universal service.” Quinn was joined on the call by AT&T Vice President Hank Hultquist, who called universal service a “house of cards that has become highly destabilized."

Despite the apparent goodwill around a universal service overhaul, accomplishing it won’t be easy, Quinn said. Billions of dollars are at stake, and Quinn said he expects fierce battles over USF now and in the years ahead. “This is going to be, politically, a very difficult issue for them to deal with, because you have a number of different competing interests,” he said of the FCC. Even if the principle of a broadband subsidy can be hammered out, the commission will have to move carefully so it doesn’t “leave any black holes” in voice service, Quinn said.

Satellite broadband has to be “part of the mix” in universal service overhaul but won’t be “the be-all, end-all,” said Quinn. Satellite broadband might get a USF subsidy but won’t get a big chunk and should probably pay up too, he said. Satellite broadband providers differ somewhat on their take on USF reform. Hughes for instance has said satellite broadband shouldn’t have to pay in and doesn’t need to receive any funds to be successful. “Satellite broadband should not be a net payor into a USF system,” said General Counsel Dean Manson. “Our industry has invested billions of dollars in technology for the purpose of connecting the very audience that USF seeks to address, and it would be bad policy to burden satellite broadband customers with extra costs for the purpose of funding terrestrial technology. For this reason, Hughes has suggested that USF not be revamped in a way that imposes a contribution obligation on satellite broadband.”