LAS VEGAS -- FCC Chairman Kevin Martin told CTIA attendees he expects to move quickly to adopt a cap on payments to competitive eligible telecom carriers (CETCs), now that Commissioner Robert McDowell is a likely third vote in favor (CD April 1 p1). Martin said he still plans an en banc hearing of the commission to look more closely at early termination fees (ETFs) often imposed by wireless carriers and other regulated companies. Martin also said he was starting to circulate an order dismissing a Skype petition seeking Carterfone rules for wireless.
Federal Universal Service Fund
The FCC's Universal Service Fund (USF) was created by the Telecommunications Act of 1996 to fund programs designed to provide universal telecommunications access to all U.S. citizens. All telecommunications providers are required to contribute a percentage of their end-user revenues to the Fund, which the FCC allocates for four core programs: 1. Connect America Fund, which subsidizes telecom providers for the increased costs of offering services to customers in rural and remote areas 2. Lifeline, which directly subsidizes low-income households to help pay for the cost of phone and internet service 3. Rural Health Care, which subsidizes health care providers to offer broadband telehealth services that can connect rural patients and providers with specialists located farther away 4. E-Rate, which subsidizes rural and low-income schools and libraries for internet and telecommunications costs The Universal Service Administrative Company (USAC) administers the USF on behalf of the FCC, but requires Congressional approval for its actions. Many states also operate their own universal service funds, which operate independently from the federal program.
LAS VEGAS -- FCC Commissioner Robert McDowell sent FCC Chairman Kevin Martin a list of edits on an order that would cap Universal Service Fund payments to competitive eligible telecom carriers (CETCs) at end-of-year-2007 levels, agency sources said. McDowell backs a carve-out for tribal lands in all 50 states, including Alaska, but without language specific to Alaska carrier GCI. McDowell proposed language saying that the FCC would make an earnest effort to undertake comprehensive USF reform.
An economic slowdown means opportunity for alternative phone companies, as well as curtains for some VoIP companies, industry officials said in interviews. Meanwhile, former Bell companies and other wireline incumbents dismissed notions that their businesses are vulnerable.
The universal service high-cost fund will “spiral completely out of control” if the FCC grants a Hawaiian Telecom waiver petition, the National Telecommunications Cooperative Association said in reply comments. The carrier disagreed, saying “special circumstances” justify its exemption from usual measurement methods used to set a non- rural local incumbent carrier’s USF support. Even if USF measurement methods need an overhaul, opponents said, it should come in three proposed rulemakings now before the FCC.
A federal court declared it “unlawful” for Nebraska to force Vonage to pay into a state universal service fund. The U.S. District Court for Nebraska slammed the Nebraska PSC with a preliminary injunction, saying the PSC’s “authority to regulate the nomadic interconnected VoIP service provided by [Vonage] is preempted by the FCC, and Vonage need not comply with the [Nebraska USF order].” The order applies only to Nebraska, but will “send a signal” to other states, said Stifel Nicolaus analyst David Kaut.
The Florida Public Service Commission stripped competitive landline reseller Vilaire Communications of its state operating authority, saying it filed false claims for universal service subsidies. Vilaire was an AT&T reseller specializing in service to low-income customers who qualified for Lifeline and Link Up service. The PSC said it acted because routine audits discovered the Washington-based company"falsely obtained” $1.3 million in federal Lifeline and Link Up subsidies since August 2006 through double- dipping in the federal universal service fund, and was charging customers an E-911 fee 50 percent higher than state law allowed. The PSC said Vilaire would receive resale universal service credit from AT&T for each Lifeline and Link Up customer. The PSC said Vilaire then submitted claims directly to the federal USF for those same customers, in effect getting paid twice for each customer. The PSC said Vilaire also filed subsidy claims for access lines that didn’t exist, and charged a 75 cent E-911 fee when state law caps such fees at 50 cents. The PSC assigned Vilaire’s customers to AT&T until they choose another local provider and said it would refer its universal service findings to federal authorities.
Congress should pass legislation regulating wireless customer service policies to make industry practices uniform, said Verizon Executive Vice President Tom Tauke in a briefing with reporters Monday. He praised broadband mapping legislation that would create a nationwide database measuring the level of broadband deployment throughout the nation. The effort could help increase access in rural areas, he said.
A “deep need for fundamental reform” of the Universal Service Fund should inspire action on the “practical” proposals by the Federal-State Joint Board on Universal Service, FCC Commissioner Deborah Tate said at a Federalist Society forum Tuesday. A USF revamp is an “overarching public policy issue” that isn’t likely to make one of David Letterman’s top ten lists, but it “probably should because it affects everyone,” Tate said. She co-chairs the joint board, which issued recommendation in November. “We just need to get on with it,” she said.
The FCC seeks $338.8 million in its FY 2009 budget, with $25.5 million set for an inspector general’s oversight of the Universal Service Fund, according to budget documents released Monday. The budget also includes $20 million to educate consumers about the 2009 digital transition, money that would be spent on media tours, public service announcements, direct mail campaigns and other public education activities. The commission also is seeking $1 million for a clearinghouse program to expand outreach to police and fire agencies.
The FCC late Tuesday opened three universal service proceedings and asked for public comment, setting in motion a long-awaited effort to reform the Universal Service Fund. The agency wants to distribute universal service subsidies more efficiently and lessen the fund’s growth. The FCC voted last week on the items, whose release was delayed until commissioners could write explanations of their positions. The notices of proposed rulemaking are interconnected so parties can comment on them as a package.