Federal Universal Service Fund

The FCC can expect to be flooded with petitions to reconsider its Universal Service Fund reforms (CD Oct 28 p1), telecom officials said and the public record showed. Petitions were expected from nearly every sector of the telecom industry, from state regulators to rate-of-return carriers, several telecom officials said. The commission is drafting a sua sponte -- of its own accord -- reconsideration in an effort to head off one of the thorniest issues in the docket -- whether local rates on local traffic exchanged between wireless and wireline companies should be subject to bill-and-keep immediately, FCC and telecom officials told us.

The 10th U.S. Circuit Court of Appeals will hear challenges to the FCC’s Universal Service Fund order, it was announced late Wednesday. At least 13 challenges have been filed in various circuits; the 10th in Denver was picked in the judicial lottery to take the case. But even as the case was winding its way through the system, FCC officials on Thursday warned lawyers and lobbyists for wireless companies that the commission was hoping to launch a further rulemaking on reverse auctions as early as next month, with a goal of having the first auctions by the end of Q3 2012.

NTCA held a flurry of last-minute meetings with FCC staff just days before the group filed an appeal of the commission’s Universal Service Fund order (CD Dec 12 p7), records on docket 10-90 showed. NTCA Vice President Michael Romano joined executives from Vantage Point Solutions and TDS in two meetings with Wireline Bureau staff on Wednesday, one meeting addressing the costs of meeting increased speed standards and the second meeting addressing traffic exchanges, according to an ex parte dated Friday and released Monday (http://xrl.us/bmks85). A day later, Romano joined executives from the National Exchange Carrier Association, OPASTCO and TDS Telecom to discuss caps on operating and capital expenses, a separate ex parte notice showed (http://xrl.us/bmktat).

Competitive telcos think the FCC has turned its back on them, CLEC executives and lawyers told us. “I think the commission hasn’t taken any initiatives to promote competition,” said Eckert, Seamans telecom lawyer James Falvey. “There have been a number of issues that the CLECs have brought to the commission and said, ‘We need your help on this to promote competition.’ The commission hasn’t taken any proactive steps.”

The Pennsylvania Public Utility Commission appealed the FCC’s order on Universal Service Fund and intercarrier compensation at the 3rd U.S. Circuit Court of Appeals in Philadelphia. Another appeal from NASUCA is coming, the group’s executive director, Charles Acquard, told us. More appeals might be coming from states, analysts said. The FCC looks forward to “vigorously defending” in court its “unanimous, balanced” USF and ICC reforms, an agency official said.

New FCC ex parte rules were violated at least 11 times since taking effect June 1, a Communications Daily review of all filings and the agency’s own checks found. Some filings were made late -- from a day in many instances to a few weeks -- and others didn’t contain enough information on what was discussed during lobbying meetings. The filings were made by companies and associations big and small. They covered proceedings ranging from changing the Universal Service Fund to pay for broadband deployment to retransmission consent, ISP speeds, disabilities access legislation passed in 2010 and getting low-power TV stations to fully vacate the 700 MHz band for wireless broadband in the small portion they occupy.

NARUC might not appeal the FCC’s order on Universal Service Fund as a single bloc because states have varying views on the order, telecom industry officials told us. Though it’s uncertain if NARUC will appeal, the decision would depend on how much common ground there is among states, John Burke, chair of NARUC’s telecom committee, told us. Meanwhile, the industry has been lobbying at states to prevent appeals, a state official said. Despite a few states’ different views on preemption, NARUC has been consistent with its opposition to state preemption (CD Aug 26 p5).

House Commerce Committee Republicans questioned FCC transparency during the agency’s Universal Service Fund proceeding. “Given the keen interest of Congress in seeing the FCC’s internal procedures subjected to public scrutiny, we are particularly concerned with the Commission’s recent conduct with respect to the universal service item adopted at the Commission’s October open agenda meeting,” Chairman Fred Upton, R-Mich., and Communications Subcommittee Chairman Greg Walden, R-Ore., wrote in a Monday letter to Chairman Julius Genachowski. The chairmen complained of another last-minute “data dump” by the commission. Also, the agency’s “practice of negotiating up to, and sometimes after, the Commission’s open agenda meeting appears to have reached an apex in the universal service proceeding,” they said. The Republicans asked Genachowski to say what changes were made to the USF order between the time it was considered and adopted. Meanwhile, the FCC sought comment Tuesday on additional ways to improve “transparency and efficiency” in Commission proceedings. “In particular, we seek comment on whether we should require commenters to file materials they cite in pleadings submitted in rulemaking proceedings, so that those materials are more easily accessible to all interested parties,” the FCC said. Comments are due 30 days after the notice’s publication in the Federal Register. Replies are due 45 days after publication. The House Commerce Committee marks up FCC process reform legislation Wednesday. Committee Democrats continued to oppose Walden’s HR-3309 in a memo that circulated late Monday.

The FCC will take on the contribution side of Universal Service Fund reform early next year, with an order likely by mid-year, FCC Commissioner Robert McDowell predicted Monday during a question and answer session at an Federal Communications Bar Association lunch. McDowell said he has a commitment from Chairman Julius Genachowski to move forward quickly following the commission’s approval last month of an order reforming the distribution side of the USF (CD Oct 28 p1). “The chairman and I have talked,” he said. “Certainly, we have to do something."

Rep. Lee Terry, R-Neb., has recurring concerns about whether the FCC’s Universal Service Fund order, approved last month, does enough to spur the growth of wireless (CD Oct 28 p1), the vice chairman of the House Communications Subcommittee said Wednesday at a National Journal conference on the future of technology. Spectrum and regulatory reform largely dominated the discussions.