Congress Unlikely to Rescue FCC on USF Overhaul
Congress is unlikely to move quickly on a Universal Service Fund overhaul, industry and FCC officials said. The commission is scheduled to take up Tuesday a broadly worded rulemaking notice on the high-cost fund and the intercarrier compensation system. Chairman Julius Genachowski and his staff made clear Monday that the commission is taking a long view of the revamp, with a senior FCC official calling it “a multiyear project.”
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"Where USF has changed over the years, it’s too often changed for the worse,” Genachowski said in a speech Monday at the Information Technology and Innovation Foundation. “However well-intentioned, policies have been put in place over the years that today are weighing the program down.” Among the “inefficiencies” that Genachowski pointed to was rate-of-return guarantees. The notice to be voted on Tuesday will “ask some tough questions” about rate of return, he said. The commission will “work with Congress … to accelerate” broadband build-out, Genachowski added.
But the commission doesn’t need congressional authorization to move ahead with its proposals, the senior official said. Rep. Lee Terry, R-Neb., has promised to revive an aborted USF bill this year. But it’s doubtful the bill will make much progress, or much difference, said Bingham telecom lawyer Andy Lipman. With the election defeat of Rep. Rick Boucher, D-Va., and the retirement of Sen. Byron Dorgan, D-N.D., USF overhaul lost its two biggest Hill supporters, Lipman said. “Both of their departures make a congressional solution, near-term, a little more challenging,” he said.
Congress could help the FCC by clarifying the commission’s authority over intrastate intercarrier compensation, said Brendan Kasper, senior regulatory counsel of Vonage. “It might be hard to get the states to go along with the FCC’s reforms, especially in the rural areas,” he said. But Terry’s bill had “very broad support last year,” including from Vonage, and “didn’t go anywhere,” Kasper said.
Industry generally was cautiously upbeat about the coming rulemaking notice. But the Rural Cellular Association said in an ex parte notice published Monday that the reverse auctions proposed as a pilot in the USF overhaul could be anticompetitive. If the commission moves ahead with the pilot, “it should require auction winners to provide automatic voice and data roaming on reasonable rates and terms,” RCA said in the filing.
And voice over Internet protocol providers are “nervous” that the commission may ultimately require VoIP companies to pay special-access charges, Vonage’s Kasper said. The notice “is written in such a way as not to disrupt the current marketplace,” but it asks questions about whether access and intercarrier compensation rules should apply to VoIP, an industry official told us. Those questions, and ones about phantom traffic and traffic pumping, are set on a shorter comment cycle than the other issues in the notice, the official said.
An eighth floor official told us that Genachowski wants as much support from industry and public interest advocates as possible as he moves forward on USF and intercarrier compensation overhaul. Broad agreement will be difficult, Bingham’s Lipman said, because many issues are “zero-sum games.” One way that Genachowski can ensure broader support is to build careful, slow transitions for the most painful changes. That approach seems to be on Genachowski’s mind. “The first focus needs to be on fixing the program and that’s what we're going to begin tomorrow,” he said Monday.