Federal Universal Service Fund

The adoption of the America’s Broadband Connectivity Plan (ABC Plan) for Universal Service Fund and intercarrier compensation revamp would “send us to the nearest federal court of appeals,” James Cawley, state chairman of the USF Federal/State Joint Board, told us. Most of the state commissions that filed with the FCC on the agreement oppose preemption of state role in determining USF eligibility. But Wisconsin regulators support some limited preemption of state authority and unified access charge rates.

Building a national wireless broadband network for public safety is the top telecom priority this fall for the Senate Commerce Committee, committee aides said. House Democratic and Republican staff, meanwhile, have continued discussions on spectrum legislation through the August recess, House officials said. Senate Commerce Committee Chairman Jay Rockefeller, D-W.Va., also is closely watching the FCC as it attempts to overhaul the Universal Service Fund and the committee may have a hearing on the AT&T/T-Mobile deal, his spokeswoman said. Senate Republicans, meanwhile, are poised to move their Congressional Review Act rebuke of the FCC’s net neutrality order.

The longer the FCC delays in providing VoIP providers with legal certainty and consistency across their multi-state operations, the more difficult it will be to replace the “growing body of disparate state regulation with a single coherent national regime,” telecom groups said. The VON Coalition, TechAmerica, National Association of Manufacturers, Telecom Industry Association and Information Technology Council wrote the FCC Wednesday. They cited growing state efforts to regulate VoIP.

The House sponsors of last year’s Universal Service Fund overhaul bill support the FCC acting on the industry USF agreement brokered by USTelecom. Rep. Lee Terry, R-Neb., no longer plans to move USF legislation, aide Brad Schweer told us Wednesday. He said that Terry “will now be encouraging the FCC to produce details that reflect suggestions” proposed by the industry group. Terry’s former co-sponsor Rick Boucher agreed that the commission should move forward on its own.

Rural Cellular Association President Steve Berry sharply criticized the Universal Service Fund/intercarrier compensation proposal formally filed by a U.S. Telecom-organized group of carriers at the FCC Friday (CD Aug 1 p1). He argued it’s a wireline-centric plan that largely leaves wireless in the cold. Berry called the proposal “a joke.” RCA represents small to mid-sized carriers. Satellite broadband companies, who also were not part of negotiations on the proposal, also criticized it Monday. Consumer groups and states’ rights advocates expressed concerns, while executives representing small and mid-sized cable operators expressed support for elements of the plan.

"The odds favor” the FCC adopting the USTelecom-brokered agreement on the Universal Service Fund and intercarrier compensation regime reforms, MF Global analyst Paul Gallant said Thursday. The so-called framework could be filed as early as Friday (CD July 28 p8). It “would be a neutral-to-positive” for publicly-owned, mid-sized rural carriers such as Frontier, CenturyLink and Windstream, Gallant said. “We also believe the plan would be a boost for AT&T and Verizon by reducing their overall payments into the federal and state subsidy mechanisms.” Despite some opposition, he expects the commission to adopt the USTelecom-brokered deal more or less as-is because FCC Chairman Julius Genachowski has made USF and intercarrier comp reforms “a centerpiece of his National Broadband Plan” and the framework “would redirect federal subsidies from voice to broadband buildout, which is what the Broadband Plan called for.” Also, he said the proposal “has the support of a strong coalition” and Gallant “would not be surprised if it gained additional support” in the next few weeks, and “key legislators have indicated that the FCC is better suited than Congress to reform USF/ICC because of the level of detail required for reform. Congress’s key asks are that rural and urban interests are both clearly recognized, and that the overall USF … not grow larger -- and ideally shrink over time. We think the FCC’s final rules this Fall are likely to satisfy those criteria."

The FCC wouldn’t distribute Universal Service Fund cash for broadband in areas where any ISP already sells Internet service, under a USTelecom-brokered industry agreement that could be made public as early Friday (CD July 22 p3), industry and FCC officials told us. Talks are still going on, they said Monday. Under the agreement, which USTelecom has been calling a “framework,” VoIP wouldn’t be classified either as telecom or information service, and VoIP carriers would be required to pay interstate access rates for all non-local calls, the officials said. Comcast and other major cable operators continue to evaluate the USTelecom proposal, and it’s possible they'll join it, industry officials said.

Invitations to serve on the FCC’s diversity committee will be made shortly, as work on the Universal Service Fund “soon” will culminate in a comprehensive order, Chief of Staff Eddie Lazarus told minority and women communications entrepreneurs Friday. A day earlier, Commissioner Robert McDowell told the Minority Media and Telecom Council conference (CD July 22 p7) he worried about delays in changing USF to also fund broadband and in rejuvenating the Committee on Diversity for Communications in the Digital Age. Chairman Julius Genachowski’s staff told the Federal State USF Joint Board last week that the order on USF and intercarrier compensation (ICC) will be ready for the October meeting, an FCC official told us.

LOS ANGELES -- The FCC needs to recommit to the principles of Universal Service and revamp the system in a manner that won’t weaken the system that has helped connect rural America for decades, former Sen. Byron Dorgan, D-N.D., said during NARUC’s summer meeting Tuesday. Meanwhile, AT&T CEO Randall Stephenson emphasized wireless is essential for universal broadband. The AT&T/T-Mobile merger, which is getting a closer look from the California Attorney General, is a private party solution to achieve universal broadband, Stephenson said.

LOS ANGELES -- Panelists at NARUC’s summer meeting urged the FCC to address the missing pieces in the Universal Service Fund and intercarrier compensation revamp. Those are contribution, speed and roles for small and rural phone companies, speakers said Sunday. Meanwhile, FCC Chairman Julius Genachowski was expected to meet with the NARUC Telecom Committee and the Federal/State Joint Board at NARUC’s summer meeting late Monday.