Sprint will request a refund of all its USF (universal service fund) contributions related to prepaid cards as far back as Jan. 1998, should the FCC grant AT&T’s petition on prepaid cards, Sprint said in a letter to the Universal Service Administrative Co. (USAC) and the FCC last week. In May, AT&T asked the FCC to classify certain prepaid card services whose users heard an advertisement during the call set-up process as “enhanced” or “information” services because of subscriber interaction with stored information. Sprint said although the petition referred to access charges, a “necessary application” was that revenue from such prepaid cards would be the one from “information services,” rather than from telecom services, and therefore was exempt from USF contributions. However, Sprint argued the revenue from such cards constituted telecom service revenue because “users of these cards buy them to make telephone calls, rather than to listen to advertisements from the card issuer… If the FCC grants the AT&T petition, then it will be clear that Sprint’s view… is erroneous and that Sprint has mistakenly been overstating the amount of its revenues that is subject to USF assessments.” Sprint said USAC “may wish” to gather information from other companies on the way they classify and report revenue from prepaid card services to evaluate the potential impact on future funding of the exclusion or inclusion of such revenue in the contribution base. It cited recent FCC data that in 1999-2002, the number of reporting prepaid card providers more than doubled to 37, while the telecom services revenue reported by such entities declined more than 90% to $72 million. “This startling drop” in telecom services revenue, Sprint said, “suggests that AT&T may not be the only entity that is attempting to characterize prepaid card service as an ‘enhanced’ or ‘information’ service.”
Six House members urged colleagues not to sign on as co- sponsors of a universal service bill by Rep. Terry (R-Neb.) In a May 20 letter to other members, they said HR-1582 (CD April 4 p1) was “well-intended” but would address only one category of universal service -- nonrural high cost -- and “does not address many of the real problems that threaten the USF [Universal Service Fund]. “ The letter was signed by Reps. Baca (D-Cal.), Bachus (R-Ala.), Capito (R-W.Va.), Clyburn (D-S.C.), Cramer (D-Ala.) and Pickering (R-Miss.). House Commerce Committee Chmn. Tauzin (R-La.) has said he doesn’t support the bill either.
Intrastate telephone revenue should be included as a revenue source for the Universal Service Fund, several attendees said of a closed-door USF “summit” in the Senate, according to sources who attended the meeting. The sources said intrastate telephone revenues was one area where there appeared to be general consensus among the nearly 20 participants in the summit, sponsored by Senate Communication Subcommittee Chmn. Burns (R-Mont.) “There seemed to be, at the very least, tepid support for including intrastate revenue,” one source said. An industry source said FCC Comr. Abernathy told the summit that for the Commission to collect intrastate revenue, there would have to be authorizing legislation. There also was discussion on broadening the base of contributors to USF, sources said. Qualifications for eligible telecom carriers also received significant attention. Sources said no senators proposed specific legislation or other specific regulatory relief. Several said the tone of the meeting was very good. The meeting was moderated by Bob Rowe of the Mont. PSC. “Everyone had a fair shake. It was a good listening session,” said Don Erickson, OPASTCO legislative dir. USTA Pres. Walter McCormick said: “These important issues must be addressed in a rapidly comprehensive way that examines them in the context of other independent areas, such as regulatory relief and intercarrier compensation.” There will be a follow-up session in about 3 weeks, sources said, and one source suggested there could be several more meetings. Abernathy, Burns, FCC Comr. Adelstein, and Sens. Stevens (R-Alaska), Dorgan (D-N.D.) and Rockefeller (D- W. Va) attended the summit, along with the industry representatives from BellSouth, NTCA, Verizon, NCTA, CenturyTel, Western Wireless, AT&T, Qwest, USTA, E- Copernicus.com, TracFone, OPASTCO, Sprint, MITS, SBC, and the Wireless Independent Group.
The Kan. Corporation Commission (KCC) opened a docket to review its procedures for reporting and recording state universal service fund revenue. All carriers are required to contribute to the plan and must report annually on how much of their contributions have been recovered from customers. The new investigation responds to KCC staff concerns that some carriers with monthly flat-rate calling plans weren’t reporting contribution recovery on a consistent basis. Consumer groups also had raised a question of whether customers were being burdened by overstated fund assessments. The staff also wants repeal of the current USF contribution exemption given to one-way paging services. Intervenors in the proceeding (Case 03-GIMT-932-GIT) must register by May 23. Comments are due July 2 and replies July 29.
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).
Cable operators’ assertion that prices are rising because of programming costs was challenged by some senators in a Commerce Committee hearing Tues. on cable rates and media ownership. In particular, Senate Appropriations Chmn. Stevens (R-Alaska) had tough questions for cable operators and said he doubted that programming costs were driving up cable rates. Senate Commerce Committee Chmn. McCain (R- Ariz.) asked why a la carte pricing or tiering of cable channels wasn’t a common option for consumers.
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 summer months will feature several hearings on telecom issues, House Commerce Committee Chmn. Tauzin (R-La.) told reporters Wed. following the markup of spectrum legislation (see separate story, this issue.). He said the committee would have to focus on Medicare and other issues in May, but would use June and July to focus on telecom issues, including the DTV transition, E-911, the Universal Service Fund (USF), E-rate and broadband deployment. Tauzin said his committee should be able to tackle several telecom issues in a 7-week span during those months. House Telecom Subcommittee Chmn. Upton (R-Mich.) said he would hold a hearing this spring on spectrum usage and its relation to public safety.
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.
The Mich. PSC wrote Senate Communications Subcommittee Chmn. Burns (R-Mont.) to defend itself from what it called “mischaracterizations” presented by Robert Orent of Hiawatha Communications in Mich. at an April 2 hearing on the universal service fund (USF) (CD April 3 p1). The PSC said Orent, who represented rural ILECs, made “vague and unsubstantiated claims” on the role of the agency and other state PUCs in designating eligible telecom carrier (ETC) status for USF. Orent objected to the PSC’s granting ETC status to competitive carriers on the ground that that contravened Congress’s intent in the Telecom Act. “The statutory directives of the [Telecom Act] clearly include both promoting competition and preserving universal service,” the PSC said. “To the extent that competitive carriers help to drive down the costs of deploying telecommunications services that are eligible for support, the burden of the USF can be alleviated.” The agency defended itself for not establishing an intrastate USF, saying it significantly studied the issue and found, through public comment, that there was no need for a statewide USF. It also said Orent’s statement that state PUCs viewed USF as “free money” was “not supported by the facts.” The PSC said Mich. was a “net payer” into the USF, meaning Mich. ratepayers contributed more into USF than Mich. companies received from it. The letter, dated April 22, was signed by all 3 Mich. PSC comrs., including David Svanda, who also is pres. of NARUC, and Robert Nelson, NARUC Telecom Committee chmn.