Tauke Denies Verizon Windfall in USF Order
Verizon Executive Vice President Tom Tauke rejected claims that his company was a net beneficiary of the sweeping changes to the Universal Service Fund and the intercarrier compensation regime. “It’s something of a mixed bag,” he said in an interview on “The Communicators” on C-SPAN that was to have been telecast over the weekend. The company’s wireless division will gain from the FCC’s order, but its wireline division will lose, he said. Analysts and telecom observers had suggested that Verizon and AT&T were the biggest winners from last week’s order (CD Oct 28 p1). “But overall, it’s going to be good for the industry, it’s probably good for our company,” he said.
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Tauke, like many in the rest of industry, gave the FCC high marks for having tackled reform. “Of course there will be a lot of issues that will arise because this is very complex,” he said. “The FCC still has a lot of work to do.” But it was time to reform the system, Tauke said. “It really became almost an embarrassment for government and the industry,” he said of the USF and intercarrier comp regimes. The FCC “did a really good job of balancing the various challenges that they faced,” Tauke said.
FCC General Counsel Austin Schlick said most of the telecom world had “grudging respect for what we've done.” The FCC’s decisions to put the fund on a hard budget, create uniform rates and shift funding to broadband would “radically … benefit” America’s poor and minorities, he said Friday at a panel at Verizon’s Washington headquarters hosted by the Minority Media and Telecom Council. Asked how he characterized public and industry response to the order, Schlick said: “I would say somewhere between wary support and grudging respect. I think everyone recognizes that the system has been broken."
MetroPCS General Counsel Mark Stachiw said on the same panel his company supports the USF overhaul, but he was sure that others would challenge it. “Everyone’s ox was gored,” he said. “There are a lot of companies out there that the revenue streams are going to be affected and they're probably going to do something about it."
Stifel analyst David Kaut remained firm in his belief that AT&T, Verizon and Sprint are net beneficiaries of the reforms, that mid-sized, price cap carriers will find the plan “workable,” that rate-of-return carriers will find it “challenging” and that CLECs will find it “difficult.” It'll be a mixed bag for satellite and USF-dependent wireless carriers, Kaut said Friday: “There is also considerable risk the reform effort could be derailed in court."
WildBlue General Counsel Lisa Scalpone said the FCC’s reforms still fall short. “ViaSat and WildBlue remain firm in their belief that U.S. consumers are best served by a High Cost Fund that awards all funding through a competitive bidding process as the FCC originally proposed. The Connect America Fund does not achieve this result. We urge the FCC to quickly reach the correct decision that satellite will be eligible to bid directly for funding when the wireline incumbents’ right of first refusal expires. While we were heartened to see that remote areas received dedicated funding, we were troubled that our nation’s most difficult and expensive homes to reach were allocated a mere 2% of the fund.
The order was adopted but its precise language was still being tweaked, and most industry observers didn’t expect it to be made public until mid-November.