In a surprise, CenturyLink agreed to buy Qwest in a $22.4 billion deal, including a $10.6 billion all-stock transaction and $11.8 billion debt, the companies said Thursday. The deal is expected to close in the first half of 2011. It’s likely to be approved by regulators within a year with attached conditions, such as an obligation to expand broadband access or to provide it at certain prices, analysts said.
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.
The FCC won’t undertake Universal Service Fund reform specifically for the non-rural high cost support mechanism, it said in an order. The commission decided it has met its statutory obligation to provide sufficient support, it said late Friday. The FCC also found that “rural rates are reasonably comparable to urban rates if they fall within a reasonable range of the national average urban rate. … The current non-rural high-cost support mechanism comports with requirements of Section 254” in the Communications Act.
The American Public Communications Council said the FCC should act with care on a seemingly “innocuous” request by Virgin Mobile to be allowed to sign customers up for the federal Lifeline program online or through automated voice response, without talking to a sales representative for the prepaid mobile provider. The District of Columbia’s Public Service Commission expressed similar concerns about risks of Universal Service Fund fraud. Comments on the petition were due at the FCC last week.
The FCC Thursday put forward a list of 64 items for FCC action, along with time lines. The list includes most of what was recommended by the National Broadband Plan, released last month. The FCC had a similar list of items to work from when it implemented the 1996 Telecom Act, said a former FCC official. Eighth floor advisers were briefed on the plan Wednesday.
LAS VEGAS -- Commissioners will next week get a calendar laying out basic timing of the rulemakings and other actions that follow up on the National Broadband Plan, FCC officials said at the spring CTIA meeting. Commissioners won’t vote on the schedule but it’s expected to be discussed at the April 22 meeting.
Some members of Congress may be wary of spending additional money on broadband, said Republican aides at a Broadband Breakfast event Tuesday morning. The FCC’s National Broadband Plan asks Congress for $16 billion for a national public-safety network and $9 billion for a new Universal Service Fund emphasizing high-speed access. Aides from both parties called the plan a step toward broadband for all.
Wireless carriers may get less in the FCC’s National Broadband Plan than meets the eye, commission officials indicated Monday. Although the plan recommends that 300 MHz of spectrum be made available for wireless broadband over the next five years and 500 MHz total over 10 years, FCC officials made clear Monday that not all will be dedicated to licensed use. The plan also provides substantial detail in its recommendations for the Universal Service Fund, including a phase-out of the high-cost fund. The plan will be presented to FCC commissioners Tuesday. They won’t vote on the plan, only on a mission statement setting out goals for U.S. broadband policy.
The Wireless Bureau must play an equal role with the Wireline Bureau in FCC Universal Service Fund “reform” efforts, Rural Carrier Association CEO Steve Berry wrote Chairman Julius Genachowski. “The fact that the wireless industry is underrepresented on USAC’s Board of Directors and on the Universal Service Federal-State Joint Board further underscores the challenges that rural and regional wireless carriers face in having their concerns addressed,” RCA said. “While RCA applauds the FCC’s efforts to overhaul the USF, RCA is greatly concerned that the interests of rural and regional wireless carriers are not adequately represented in the Commission’s deliberative process,” Berry said.
Proposals to overhaul the Universal Service Fund mechanism including eliminating funding for voice-only networks will involve 10 years of transforming the high-cost fund into the Connect America Fund, the FCC said Friday. That’s intended to extend broadband service and provide ongoing support in certain areas without increasing the overall USF $8 billion cap, the agency officials told reporters. The proposed change is an attempt to transition from supporting voice telephone services to using funds to deliver broadband networks, said Omnibus Broadband Initiative Executive Director Blair Levin.
SAN FRANCISCO -- The FCC is making “the hard decision” with the National Broadband Plan to shift universal service money toward broadband from current “less productive” uses, instead of creating a new fund at consumers’ expense as the industry would prefer, said Blair Levin, who runs the commission’s staff work on the plan. Most of the lines that don’t support broadband belong to AT&T, Qwest and Verizon, and under the high-cost USF system, “they have no incentive to upgrade,” he said late Wednesday at a Goldman Sachs conference.