Fourteen representatives of National Telecom Coop Assn.’s (NTCA) ILECs met Wed. with congressional and FCC officials to discuss universal service, implications of recent bankruptcies on rural telephony, current broadband legislation issues. They expressed concerns about portability of universal service support, redefinition of universal service basis for assessment of contributions. They said, as mentioned in NTCA petition for reconsideration in MAG order, that FCC should suspend “identical support” rule. They said Commission couldn’t block competitive eligible telecom carriers’ (CETCs) use of ICLS funds and couldn’t comply with sufficiency requirements in Sec. 254(e) of 1996 Telecom Act, “so there is the potential for unfair competitive advantage.” Attendees said equal access to long distance carriers should be requirement to receiving universal service support. “Wireless carriers have an unfair advantage,” Valley Telephone Co-op CEO Judy Bruns said: “We serve the customers that no one else can serve… Costs for wireless carriers are different than for wireline.” NTCA said wireless consumers should be able to select long distance carrier for wireless calls, and FCC “should correct this inequity when it reviews equal access and the definition of universal service.” NTCA said existing revenue-based Universal Service Fund (USF) contribution methodology should be modified by eliminating wireless safe harbor percentage and expanding list of contributors to include all interstate service providers, such as cable, satellite and wireless broadband Internet access providers. They said they were considering extending USF to financing broadband services in rural areas. NTCA said it didn’t have “formal position to move in that direction.” However, gen. mgr. of Golden West Companies in S.D. said local carriers were considering that idea, providing they would receive financial support. Said NTCA: “In carrying out… broadband deployment objectives, policymakers must remain cognizant of what the rural carriers have already done and work to ensure that any legislative approach will actually result in additional deployment, will address the lack of consumer demand and will target the highest cost deployment challenges.” As for bankruptcy implications, NTCA said “it is imperative that the courts’ actions do not reward debtors for situations of their own making, while penalizing other segments of the industry, lest they face bankruptcy as well.”
Kan. Corporation Commission opened biennial review of access charges of rural incumbent telcos. Agency is required by state law to reduce rural telcos’ access charges by March 1 of each odd-numbered year as long as amount can be recovered from Kan. Universal Service Fund. KCC said it was opening case (03-GIMT-126-GIT) now in order to allow changes to be included in annual USF support calculation process that begins in Nov. to give IXCs time to figure out how to flow through their access savings to their customers. Telcos must submit proposed access reductions by Sept. 6, with staff comments due Sept 20. Hearings will be Oct. 14 and final decision is due by mid-Nov.
Unicameral Neb. legislature’s Appropriations Committee advanced bill (LB-37) that would allow state treasurer to borrow from state universal service telephone fund if needed to cover general state expenses. Transfers would be allowed up to point where fund’s reserve equaled 60 days of financial obligations. Bill was advanced in special session convened to address state budget crisis. Transfers from state USF would have to be repaid within 30 days or would accrue 5% interest annually. State projects $232 million budget shortfall for 2002-2003 fiscal year, and needs to find minimum of $100 million to meet mandatory financial and legal obligations. Bill now goes to legislature’s floor. Bill is successor to defeated proposal that would have transferred $10 million from USF to state’s general fund.
Md. PSC ruled state didn’t need its own universal service fund. Because of that determination, it ordered Verizon to reduce its intrastate access charges $13.6 million by lowering local switching rate and residual interconnection charges. PSC said local service wasn’t being subsidized so there was no need to maintain access charges above cost. PSC (Case 8745) also ordered amendments in other tariffs to CLECs and retail customers to alter rates and rate components that had been approved to cover potential costs of any state USF. Agency ordered interexchange carriers to pass along their access savings through lower rates. It also ordered Verizon to set aside $5 million for refunds to toll customers for fees they had been paying toward state USF. Method of refund will be determined later. Verizon has until Aug. 16 to file tariff changes. It condemned access cut decision, saying any rate break for long distance customers would be short-lived. Carrier also said that, given investors’ current distaste for telecom industry, access charge cut would hamper its ability to raise network investment capital.
Universal Service Fund (USF) is threatened by mismanagement and confusion of assistance to schools and libraries with traditional function of reaching underserved markets, executives of small telcos said Tues. “There’s a cancer in USF called USAC [Universal Service Administrative Corp.],” said A.J. Passarella of Loretto (Tenn.) Telephone Co. National Exchange Carriers Assn. owns USAC but has no control, said NECA board member Robert Eddy of Sherburne County (Minn.) Telephone Co. “I'm not sure who does.” He said wireless carrier claiming USF payments reported number of lines in county almost equal to population and after being challenged shifted thousands of those lines to another county. Overall, unequal USF burdens and benefits favor wireless carriers and burden rural telcos, said Eddy and Wheat State Telephone’s (Kan.) Archie Macias. Passarella said school districts received USF money for poor schools, shifted purchased resources to rich ones, then got more funds for poor schools.
SAN FRANCISCO -- Internet not only is undercutting rural telcos’ regulatory-based revenue sources, but also is shifting their policy focus away from states, industry conference heard here Mon. As e-mail, instant messaging and Web-based services, along with cell calls, increasingly supplant wireline voice and fax communications, local incumbents’ access revenues plunge correspondingly, compounding regulatory reductions in access rates, Chmn. Robert Riordan told convention of OPASTCO.
Mich. PSC called for comments by Sept. 9 on whether it should create state universal service fund (USF) to supplement federal universal service support. PSC (Case U- 13477) asked parties to comment on: (1) Whether state USF was necessary. (2) Effects of USF on affordability under rate regime of total element long-run incremental cost. (3) Other effects on state and industry if PSC were to create fund. Parties also were asked to make suggestions on how PSC should conduct USF inquiry and timeline it should follow.
Requiring all facilities-based broadband providers to contribute to schools and libraries (e-rate) portion of Universal Service Fund (USF) would create level playing field and broaden the pool’s funding base, Verizon Regulatory Affairs Dir. Scott Randolph told FCC in ex parte filing July 2. Randolph’s letter came after reply comments deadline for broadband wireline proceeding at FCC July 1, in which some cable operators expressed opposition to Verizon’s proposal.
NARUC told Sen. Breaux (D-La.) July 1 that state regulatory agencies still have some jurisdiction over DSL broadband services. NARUC was replying to questions Breaux had for Assn. in May 22 Senate Commerce Committee hearing on broadband. Robert Nelson, vice chmn., NARUC Telecom Committee, and member of Mich. PSC, said Breaux-Nickles broadband bill (S-2430) presumed FCC and courts already had determined scope of state jurisdiction over broadband, which they hadn’t. Comment deadline was Mon. in FCC rulemaking to affirm its tentative decision to classify broadband as information rather than telecommunications service (see separate story in this issue). Ruling broadband is information service would make it exempt from unbundling and regulatory oversight by PUCs, particularly in regard to consumer protection enforcement, NARUC said.
There appeared to be little agreement among regulators or witnesses Fri. at FCC en banc hearing on how to fix current universal service system, whether it needed major overhaul or tweaking and, for that matter, whether it needed fixing at all. FCC scheduled hearing and invited state members of Federal-State Joint Board on Universal Service as best way “to gain input in the shortest time on various views and proposals for reform,” FCC Comr. Abernathy said as she opened hearing. Asked by Comr. Copps if there really was sense of urgency, consultant Kathleen Wallman said that was one of “the first assessments” Joint Board would have to make. “I don’t know if there is a sense of urgency on the part of all parties,” she said. “Some participants may disagree.” Wash. State U. Prof. William Gillis said he didn’t think there was consensus on urgency of reforming universal service because some parties would benefit more from change than others.