Federal Universal Service Fund

“Regulators must resist the urge to regulate [voice- over-Internet-protocol -- VoIP] unless and until there are compelling reasons to do so,” Richard Whitt, WorldCom dir.- federal law & public policy, said at an FCBA lunch Wed. in Washington. He said telecom service regulatory policies, in particular the current intercarrier compensation regime, were “bloated, untenable and inequitable and harm the public interest in numerous ways… The worst thing to do is to extend this bloated mess to nascent, innovative IP-based technologies such as VoIP.”

The most important part of the FCC decision issued Mon. on what services are eligible for universal service support (CD July 15 p1) is what the Commission chose not to do, observers said, as did the Commissioners themselves in separate statements issued as part of the order. The FCC voted to defer action on whether “equal access” should be on the list of eligible services. Placing it on the list would have required competitors, such as those that provide wireless service in rural areas, to offer equal access service before they could be eligible for universal service, a move they opposed but rural ILECs supported.

Low-volume, low-income consumers who depend on “lifeline” phone services will have to pay a “disproportionate” amount into the Universal Service Fund (USF) if the FCC adopts a connection-based contribution methodology, a new report by the New Millennium Research Council (NMRC) said. “A per-line charge would be harmful to the very population the fund seeks to help,” as low-volume long distance service callers, who represent 40% of consumers, would be “required to pay the bulk” of the universal service funding, said Jeffrey Kramer, senior legislative representative for AARP.

The National Telecom Co-op. Assn. (NTCA) urged the Federal-State Joint Board on Universal Service to recommend that all pending eligible telecom carrier (ETC) designation applications before the Commission “be stayed until new portability rules and ETC guidelines are adopted and implemented.” It said the stay would give the Commission time to develop new universal service rules that would “remedy the flaws in the identical support rule” and establish new ETC guidelines that would “strengthen the public interest determination in rural areas, without increasing the size of the universal service fund [USF] through the granting pending ETC designations based on the current inequitable portability rules and insufficient ETC designation procedures.” The NTCA also recommended that the board make its own recommendation, instead of creating an industry task force that would “unduly delay the proceeding and create further uncertainty.” However, Western Wireless said there was a “need” for a competitive universal service task force process, analogous to the Rural Task Force (RTF): “Such a task force would create the possibility of an open discussion of the difficult issues, among open-minded people who certainly will disagree, but at least will listen to one another.” It said a task force also would help “fully inform members of Congress, the Joint Board and the FCC about the underlying facts of the universal service system as well as the optimal means for reform.”

Senate Communications Subcommittee Chmn. Burns (R-Mont.) said Tues. that Congress would further examine the Universal Service Fund (USF) through a “summit.” He said officials of the FCC, the Federal-State Joint Board on USF, industry and members of Congress would meet in an effort to find solutions to problems encroaching on USF. The event hasn’t yet been scheduled. Burns first proposed the idea of a summit at an April Senate Communications Subcommittee hearing (CD April 3 p1).

Rural ILECs and their competitors agreed in comments filed Mon. at the FCC that the advent of competition in rural areas was placing a strain on the universal service program but they offered widely divergent ways of fixing the problem. The comments responded to a variety of questions and recommendations by the FCC and the Federal State-Joint Board on Universal Service, generally about the process for designating competitors as eligible telecommunications carriers (ETCs) and the concept of portability.

The Federal-State Joint Board on Universal Service is likely to consider the FCC’s ability to assess contributions based on intrastate revenue in addition to the interstate, Matthew Brill, senior legal adviser to FCC Comr. Abernathy said at a “Webinar” sponsored by the USTA Wed. “This limited authority of the FCC is one of the reasons why the contribution rate based on interstate revenue is that high” (1.9%.) He said if the contributions were assessed based on total carrier revenue, the rate would be 2.7%, and “obviously, it would spread the burden out and put less hardship on consumers.”

The House Commerce Committee issued a subpoena to the Universal Service Administrative Co. (USAC) to obtain nonredacted copies of documents the committee had requested in March. USAC administers the Universal Service Fund (USF) for the FCC, including the E-rate program, which Committee Chmn. Tauzin (R-La.) suspects is riddled with fraud (CD March 14 p6). Committee spokesman Ken Johnson described the subpoena as “friendly” and said USAC had been “fully cooperative” with the committee’s investigation. The committee is seeking information on companies and individuals for potential e-rate fraud, which could include IBM.

If there’s to be a universal service fund (USF) summit, then industry groups should be included, several rural telephone associations said in a letter to Senate Communications Subcommittee Chmn. Burns (R-Mont.) In an April 2 hearing on USF, Burns suggested a summit involving the FCC, Congress and the Federal-State Joint Board on Universal Service (CD April 3 p1). In the letter, dated April 15, the groups said industry also should be part of any meeting. The letter was signed by the Independent Telephone & Telecom Alliance, National Rural Telecom Assn., NTCA, OPASTCO and Western Alliance. “We believe it would be important to have industry representation at such a summit, which would speed the effort of identifying the best possible solution for ensuring the future of the program,” the letter said. In the hearing, Burns had expressed concerns about the length of time needed for the FCC to review USF. He suggested a summit as a method in which vested parties could discuss the issue and determine where potential legislation might be needed.

Comments to the FCC on the “definition” of universal service, one of the several universal service proceedings now under way, turned into a debate on whether wireless rural competitors should be required to offer equal access in order to get universal service support. “The debate is not really about equal access,” Western Wireless said in its comments: “The real debate here is about whether universal service support can coexist with intermodal competition.” Equal access was a 1980s requirement that local telephone companies had to provide connections to any long distance companies -- in other words, giving customers the ability to preselect long distance companies to handle their calls automatically.