Federal Universal Service Fund

The FCC broadband team believes private investment is essential and competition drives innovation and better choices, said Blair Levin, the plan coordinator, at the commission’s meeting Wednesday. The U.S. must make better use of “existing assets” such as the Universal Service Fund, spectrum and rights of way, he said. Chairman Julius Genachowski agreed that USF and spectrum are critical areas and said the government can’t afford to put off a thorough USF overhaul much longer.

The FCC tentatively concluded that the timing of the National Broadband Plan makes it impossible to overhaul the Universal Service Fund high-cost support mechanism for non-rural carriers like Qwest “at this time.” The commission had committed to answer a remand by the 10th U.S. Circuit Court of Appeals on the subject by April 16. In a further notice of proposed rulemaking released late Tuesday, the commission sought comment on specific “interim changes” to address the court’s concerns and marketplace changes. While voting for the order, Commissioners Meredith Baker and Robert McDowell expressed some disappointment that the notice didn’t say more.

The FCC needs to make solving the digital divide a high priority for its broadband plan, Commissioner Michael Copps said at a Practising Law Institute conference Thursday. People are starting to realize that the broadband plan is not just “technospeak from broadband geeks” but can lead to policies that improve peoples’ lives, said Copps, who was introduced at the conference by Chairman Julius Genachowski. But if policymakers don’t get it right, the result could be “more and even wider divides in this country,” Copps said.

Health care providers and the telecom industry urged changes to universal service rules, as the FCC collected comment Friday on how broadband helps health care delivery. Some urged more spectrum allocation and renewed calls for a national public safety wireless network. All said broadband is key to providing better health care.

The FCC will soon issue a further notice of proposed rulemaking on Universal Service Fund high-cost support for non-rural carriers like Qwest, said two agency officials. The commission committed to release a rulemaking notice by Dec. 15 and a final order by April 16, as it works toward responding to a 2005 remand by the 10th U.S. Circuit Court of Appeals (CD June 11 p7). In 2005, the court called unlawful the FCC’s current non-rural rules, which address carriers like Qwest that serve high-cost areas with too many lines to be considered “rural” by the statutory definition. FCC Chairman Julius Genachowski last week circulated the notice, which contains tentative conclusions, agency officials said. One described the tentative conclusions as very bare with “not a lot of new ideas,” and said the further rulemaking notice seems designed as a “punt.” Commission spokeswoman Jen Howard declined to comment. Meanwhile, industry meetings with the FCC on a comprehensive USF overhaul have been heating up (CD Nov 27 p5). The impetus seems to be the non-rural support item and an expectation among industry that the regulator will tee up reform in the National Broadband Plan due this February, agency officials said. Monday, Windstream phoned an aide to Genachowski about the agency’s rulemaking notice on the 10th Circuit remand, urging the FCC to seek input on how to better target federal universal service support directly to granular high-cost areas, an ex-parte filing said. Windstream said the FCC should stop distinguishing between rural and non-rural carriers, and kill eligibility requirements based on statewide average costs. President John Rose of the Organization for the Promotion & Advancement of Small Telecommunications Companies met separately Monday with aides to Commissioners Michael Copps, Robert McDowell and Meredith Baker, said an ex-parte filing. The meetings focused on USF and intercarrier compensation reform “in the context of” the plan, OPASTCO said.

CTIA weighed in for the first time on Local Switching Support. The association called for comprehensive changes in the Universal Service Fund and opposed what it called a “backward-looking petition” by the Coalition for Equity in Switching Support. FCC Chairman Julius Genachowski circulated a draft notice of proposed rulemaking that tentatively concluded incumbent local exchange carriers should get additional universal service support under the LSS mechanism if they lose a significant number of access line customers (CD Oct 13 p8). But the commission asked for more data before it makes a final decision.

Alaska’s Regulatory Commission said it made many decisions related to telecom in its fiscal year through June. The commission proposed regulations on access charge and state universal service policies, including whether to provide state universal service funding to local exchange carriers of last resort. In addition to handling several local rate cases, the commission denied a request by the Alaska Exchange Carriers Association for a retroactive increase in access rates to make up for a calculation error of about $678,000. In its annual Universal Service Fund certification to the FCC, the state commission reported that in 2008 Alaska carriers received roughly $160 million from the federal USF. Noting a surplus in the Telecommunications Relay Service fund, the commission cut the universal access surcharge to users in half to $0.05 a line monthly. The commission also opened a docket to figure out how to keep the 907 area code from running out of numbers. Consumer complaints led the commission to investigate a proposal to collect a $2 fee for each collect local call from a state inmate. The proposal was withdrawn, the commission said. Commissioners granted requests by GCI for designation as a wireless eligible telecommunications carrier in the study areas of Copper Valley Telephone, Interior Telephone, Ketchikan Public Utilities and Mukluk Telephone.

The FCC asked how long-pending overhauls for the Universal Service Fund (USF) and intercarrier compensation should fit into the agency’s National Broadband Plan. In its 19th public notice on the plan, released Friday, the commission sought comment on the USF’s size and contribution method, shifting USF money to broadband, the impact of any changes to revenue flows and the competitive landscape, and appropriate oversight of the high-cost fund. The agency also wants comment on establishing broadband Lifeline and Link-Up programs for low-income consumers, an idea discussed at a meeting last week (CD Nov 16 p1). Comments are due Dec. 7. The nine-page public notice shows the regulator recognizes that national broadband goals won’t be realized absent federal support, said Joshua Seidemann, regulatory affairs vice president of the Independent Telephone & Telecommunications Alliance. Some of the FCC’s questions could be interpreted as leaning to one side, but they're generally balanced by other questions tilting the other way, he said.

Draft universal service reform legislation announced Friday would cover broadband, expand the contribution base and cap high-cost support, said House Communications Subcommittee Chairman Rick Boucher D-Va., and Rep. Lee Terry, R-Neb. This is the third round of legislation the two lawmakers have worked on, and comes after months of negotiations among industry and regional regulators. “The Universal Service Fund is broken,” said Boucher and Terry. Consumers will pay more than 14 percent of long-distance revenue into the fund next year, up from 12 percent in 2009, they said. A hearing on the draft is planned for Nov. 17.

The FCC laid the groundwork for an investigation into special access, issuing a public notice late Thursday “on an appropriate analytical framework” for reviewing issues raised in the commission’s long-pending proceeding. Chairman Julius Genachowski announced the notice last month in a letter to Senate Appropriations Committee Chairman Daniel Inouye, D-Hawaii (CD Oct 9 p1). Meanwhile, Sprint Nextel, T-Mobile and others renewed their attack on special access charges in comments at the commission as part of its broadband investigation. Comments were due Wednesday on National Broadband Plan Public Notice No. 11, on the impact of middle- mile access on broadband availability and deployment.