FCC Needs to Reaffirm Commitment to USF, Dorgan Tells NARUC Meeting

There’s a real danger that the FCC could undermine the concept of universal service, Dorgan told us. Many major issues are missing in the FCC’s USF/ICC NPRM, he said. Dorgan is working with broadband and satellite network company LightSquared to promote the spread of broadband in rural America. He warned that actions taken by the FCC could endanger the ability of small and rural telephone companies to continue to offer existing and advanced services. Dorgan said he’s not surprised that USF/ICC won’t be on the FCC’s August meeting agenda. The revamp needs to be done right, he said.

Some proposals like “reverse auctions and market signals worry me,” Dorgan said in his speech. Regulators need to think about how to keep broadband in rural America, he said, urging regulators not to strand small rural operators as they revamp the USF/ICC regime. It’s critical to have a USF/ICC framework that doesn’t risk existing broadband networks and ensures high quality rural broadband service cab remain available and affordable, he said. State regulators should monitor their rural customers’ broadband experience, express concerns when market-driven service leaves consumers behind, and promote a sustainable state Universal Service Fund, he said. Meanwhile, it’s “nutty” to try to grab money from USF to deal with budget issues, he said. “Let’s keep an eye on their hands."

The USF Federal/State Joint Board has an important role and should continue to play an important role in USF/ICC issues going forward, Dorgan said. He acknowledged that there are “big players with lots at stake.” But the question is who’s left out in the discussion, he said.

Universal broadband wouldn’t happen without wireless solutions and state regulators should recognize that reality, Stephenson said. He said he expects persistent, aggressive demand for mobile broadband. That means regulators need to rethink the legacy regulations, he said. Specifically, they need to think about USF/ICC in the context of new technologies, he said.

The AT&T/T-Mobile merger is a pure private party solution to achieve a public policy goal -- universal broadband, Stephenson said. Greater capacity is critical in driving innovation and economic growth, he said. The combination is in the public interest, he said. The U.S. wireless industry is one of the most competitive markets in the world and would remain so, he claimed. The merger, a combination of two carriers with the same technology platform, would result in better services, more options and better coverage for consumers, he said.

It’s important for state regulators to recognize the convergence of technologies, said Comcast Executive Vice President David Cohen. Many converged services and applications today don’t fit into the traditional regulatory framework, he said. Broadband is an issue for rural areas as well as urban communities, many of which face adoption barriers, he said.

Meanwhile, California Attorney General Kamala Harris is conducting an inquiry into whether the AT&T/T-Mobile merger would violate any federal and/or California state law, she said in a letter to the FCC Monday. In connection with the investigation, Harris is seeking access to documents and information that contain Numbering Resource Utilization and Forecast data and local number portability data pursuant to its subpoena powers under state law. Sprint Nextel already received subpoenas and civil investigation demands from nine states. State attorney general inquiries are normal, designed to understand the impact of the merger on their states, Bob Quinn, AT&T senior vice president, told us. State participation in our merger is not unusual, Quinn said. In fact, in AT&T’s wireline mergers there’s been significantly more state participation, he said. States are struggling to figure out their role in a broadband world, where broadband service is interstate, he noted. There should be ongoing discussions with federal and state regulators as well as the industry on the state’s role in a broadband world, he said.

AT&T would only increase its network by less than 1 percent (less than 3 million people) by adding T-Mobile’s voice networks, Sprint Senior Counsel Ken Schifman told us. It’s a typical horizontal merger and that’s why states are concerned, he said, saying the California Public Utility Commission is conducting a robust review process. Specifically, CPUC is looking strongly into the special access issue, he said. There’s no set of conditions that can fix the deal because of the transformative impact, he said. Looking at previous merger reviews, Sprint’s confident that the merger would be blocked, he said. If the deal goes through, regulators would be forced to regulate the market, he said. The cost of regulation would be higher for Sprint versus larger carriers, he said.