Federal Universal Service Fund

The question of VoIP provoked sharp disagreement. The RLECs of the Iowa Telecom Association (ITA) do “not believe any of the commenters offered any compelling reasons to alter the Board’s precedent that interconnected VoIP is and should remain subject to certain regulatory requirements,” they said (http://bit.ly/15dzMgh). The Iowa Office of Consumer Advocate (OCA) pushed for certain VoIP regulation, running counter to Verizon, AT&T and the Voice on the Net Coalition. “Since virtually all retail rates have been deregulated in Iowa since 2008, the push for preemption or deregulation of VoIP services must be to free VoIP carriers from regulatory oversight of crucial consumer protections,” the consumer advocate said (http://bit.ly/1b5lZez). It pointed to “enforcement of service quality standards, consumer privacy protections, and access to connection to the entire network” and “carriers’ public safety obligations, including providing reliable access to 911 services” as well as the board’s complaint process. Providers are “at times unresponsive to consumer complaints,” it added.

Companies from across the telecom industry urged the FCC last week to reform its rules for assessing regulatory fees. Commenters said change is necessary to ensure no provider is at a competitive disadvantage. An NPRM last month sought comment on several reforms, including changes to the Interstate Telecommunications Service Providers fee category, reallocation of full-time equivalent (FTE) employee fees, and limitations on regulatory fee increases (http://bit.ly/13YxqAR).

Julie Kitka, president of the Alaska Federation of Natives, traveled more than 5,500 miles to get to a hearing on Capitol Hill on the effect of USF reforms on tribal areas. So did Steve Merriam, CEO of an Alaskan telephone cooperative. Alfred LaPaz of the Mescalero Apache Tribe traveled 2,800 miles. Which is why it’s “beyond my imagination,” said Rep. Don Young, R-Alaska, that FCC officials weren’t willing to “travel the mile and a half up the road” to “answer the questions that I would like to ask them.”

FCC Chairman nominee Tom Wheeler outlined his perspectives and priorities Tuesday on the incentive auction and a host of other policy issues facing the commission at his nomination hearing before the Senate Commerce Committee. Wheeler said he would adhere to three governing policies to if confirmed: Consumer protection, competition and predictability. Wheeler said the “ability to know what the rules are, whether the rule is right or wrong ... is far more of an economic incentive.” Wheeler also faced pointed questions from committee members about his views on transaction reviews, USF reform, E-rate modernization, federal spectrum sharing, retransmission consent and net neutrality.

Rural regions will face bigger telecom and broadband funding challenges and states must act accordingly, said the professional services firm Balhoff & Williams in a 45-page white paper (http://bit.ly/1a51Qor) released Tuesday. “State legislators and public service commissions have a short period to affirm their long-standing commitment to terrestrial rural voice and broadband networks, and it will be difficult to recover if the networks fail or falter,” the firm said in a news release (http://bit.ly/ZK3ZBv). “The ultimate concern is the potential damage to local economies, emergency preparedness, and social environments in rural regions.” The paper highlights the importance of state USF funds, pointing to communities’ need for broadband access as well as declining federal support. The paper details the history of support companies receive and lays out the stakes associated with the funding challenges: “States must adjust their approach to funding service in high-cost areas (which historically have accounted for up to 75 percent of the total funding need) or risk leaving thousands of communities and millions of households without adequate broadband and voice services,” the document said, saying states must understand the urgency and many aspects of providing universal service. This challenge makes it more important for states to supplement funding with their own USFs and begin analyses immediately, Balhoff & Williams said. State commissioners Larry Landis of Indiana and Jim Cawley of Pennsylvania praised the paper’s findings, in statements. The paper “underlines the importance of State USF mechanisms for supporting the redefined concept of universal service for all Americans that now includes retail broadband access services, and for meaningfully sustaining the carrier of last resort (COLR) obligations of wireline ILECs in general and rural ILECs in particular,” Cawley said.

Google Fiber sees a future profit, but many options should be on the table for local officials, a company executive told community stakeholders last week. The Fiber to the Home Council Americas attracted more than 400 people to its meeting on advanced broadband networks in Kansas City, Mo., it said (http://bit.ly/13qTP8o). The council emphasized ways municipalities can welcome such advanced network services and how its behavior can influence that timeline, a process highlighted in the council’s community toolkit (CD Jan 25 p9). Google is pioneering one of the many options for faster broadband that stakeholders discussed at that meeting, with an emphasis on the role of municipalities.

The Texas Public Utility Commission will give money from the Texas universal service fund to help Hill Country Telephone Cooperative make up for federal high-cost support money lost to the FCC’s November 2011 USF order. The approval was expected (CD April 4 p5). The PUC issued its final order last week (http://bit.ly/14IJfLi) and recounted the proceeding that started last fall. Due to the FCC’s order, Hill Country lost $551,601 in 2012, $399,614 in 2013, and $271,221 in 2014 due to prices that fell below new federal benchmarks, the order said. But the PUC, the telco and others worked together to permit Hill Country to hike its prices, which will allow it to recover much of the lost revenue for 2012, the PUC said. Hill Country will recover $181,799 from the Texas USF for that year. The hikes, however, will help avoid federal revenue losses for future years, the order said: “The increases in revenue realized by Hill Country are anticipated to fully replace the current projected 2013 and 2014 reduction of FUSF revenues by Hill Country.”

Several Texas telcos have sought recovery of millions of dollars’ worth of lost federal support money from the state’s USF (CD April 4 p5). “We commend Texas for creating a process to address any unique concerns for carriers in the state of Texas as a result of recent universal service reforms,” the order said. “We consider these efforts to be a positive development for federal-state coordination and partnership, and encourage other states to consider similar approaches as states may be best positioned to address any unique circumstances for carriers in their state."

The 2011 FCC USF order has spurred multiple Texas telcos to seek recovery of millions of dollars worth of lost federal support money from the state’s USF. Valley Telephone Cooperative petitioned the Texas PUC on Friday to allow it to hike rates and recover $613,903.69 from the Texas USF, citing the destructive impact of FCC reform. Valley is the latest among many companies that want state USF money for that reason. Valley and other telcos have asked to recover a total of more than $2.6 million in federal support losses from the Texas USF fund, with more companies potentially following suit despite some opposition.

FCC Chairman Julius Genachowski said Friday he will leave the FCC in a matter of weeks. Industry officials told us they expect an announcement from the White House as early as this week on a replacement, with former CTIA and NCTA President Tom Wheeler still considered the likely front runner. In the interim, industry and government officials expect the White House to designate Commissioner Mignon Clyburn as the first woman to chair the commission, until a new permanent chairman is confirmed and in place.