Federal Universal Service Fund

Oversight hearings on the broadband stimulus program and the Genachowski FCC are the first order of business in the House Communications Subcommittee as Congress returns. Other matters will have a tough time getting on the agenda as lawmakers resume work on health care and climate change legislation. Few expect major telecom enactments this year, other than must-pass satellite reauthorization legislation and possibly a cybersecurity bill, according to lobbyists, trade associations and Hill sources.

Some small rural phone companies are asking if Google and other content providers should contribute to the Universal Service Fund. In filings and meetings this summer at the FCC, the National Telecommunications Cooperative Association has urged the FCC to open a rulemaking on the subject (CD Aug 31 p9). Content providers impose significant costs on companies’ networks, and charging them for USF would further the FCC’s broadband deployment goals, said NTCA Vice President Dan Mitchell in an interview. But a Google spokesman disputed the credibility of NTCA’s evidence. And some phone companies aren’t sure the proposal can be implemented.

The FCC could cite existing wireless universal service contribution mechanisms to justify requiring interconnected VoIP providers to contribute to state universal service funds based on intrastate revenue (CD Aug 26 p8), said the National Association of Regulatory Utility Commissioners. NARUC Telecom Committee Chairman Ray Baum and General Counsel Brad Ramsay met separately on Tuesday with aides to Commissioner Robert McDowell and FCC General Counsel Austin Schlick, an ex parte said. Commercial mobile radio services are “if anything, more portable” than nomadic VoIP services, and CMRS companies contribute to both federal and state USF, noted NARUC. “This suggests the FCC could cite to existing wireline and CMRS contribution mechanisms to clarify/interpret the existing regulations and specify State mechanisms that, are based on billing addresses, like wireline carriers, that assess no more than the 35.1 percent complement to the federal safe harbor amount -- necessarily do not double recover costs and also therefore necessarily ‘do not burden the federal program.'”

The highest priority in the FCC’s national broadband plan must center on strengthening and preserving universal service policies, the National Telecommunications Cooperative Association said in a commission filing. The $7.2 billion broadband stimulus package and Universal Service Fund support are “woefully insufficient,” it said. The group urged the commission to increase the “high-cost USF support” substantially and include all broadband Internet service providers in the pool of USF contributors. The pool should also include content providers like Google, which impose “tremendous costs” on the broadband providers that make up the public Internet. The group also urged the FCC to define broadband based on high-speed Internet access capabilities during peak-hour or busy-hour load that are generally available in a significant sample of service offerings in urban areas to establish a standard of comparability and affordability in urban and rural areas; include “broadband Internet access service” in the definition of “universal service;” open a proceeding to define and identify “Market Failure Areas” throughout the U.S. and target these areas for future high-cost broadband USF; define a “Market Failure Area” as an area that doesn’t have the population base or economic foundation for any provider to justify broadband facilities build-out and ongoing maintenance without external monetary support. The commission must require interconnected VoIP service to pay intercarrier compensation during comprehensive USF, IC and broadband reform. State commissions should be allowed to voluntarily move intrastate originating and terminating access rates and rate structures. The FCC should adopt an alternative high-cost USF cost recovery mechanism prior to the implementation of USF and IC reform, regulate broadband access service providers under Title II common carrier regulation and apply a Title II earnings review to all broadband providers who voluntarily receive federal high-cost broadband USF support. The regulator should require all vertically integrated Internet backbone and special access transport provider rates to be cost-based and non-discriminatory. The broadband plan should eliminate the identical support rule and base support on competitive eligible telecommunications companies’ actual costs within five years. Meanwhile, enhancing rural health care and offering broadband to low-income consumers should be part of the plan. NCTA also urged the FCC to strive to apply Regulatory Flexibility Act and establish alternative rules to reduce the economic impact on small broadband providers.

The FCC should without delay require interconnected VoIP providers to contribute to state universal service based on intrastate traffic revenue, said the National Association of State Regulatory Utility Commissioners. Brad Ramsay, the association’s general counsel, met last week with an aide to Chairman Julius Genachowski, said an ex parte filing late Monday. Not even Vonage has disagreed with the view that nomadic VoIP providers should contribute to state funds, the association said. Vonage contends that the FCC’s 2004 preemption order concerning the company said the commission was preempting states charging, but this month said the commission is “free to revisit its decision” by opening a rulemaking (CD Aug 18 p4). But the association said there’s “no legal or policy reason to delay issuing the requested declaration.” Without further proceedings, the FCC could clarify that a June 2006 order provided a method for assessing a state USF charge, it said. In that order, the commission created a “safe harbor” for setting federal USF contributions, because of the difficulty of separating intrastate and interstate revenue with VoIP. The FCC said 64.9 percent of VoIP revenue is subject to federal USF contribution. The association asked the FCC to clarify that the order “necessarily assumes a complementary State safe harbor of 35.1 percent without any additional proceedings.”

Affordability, PC ownership issues and lack of broadband content are barriers for broadband adoption among low-income families, children and others, panelists said at the FCC Broadband Workshop late Wednesday.

Eliminating telephone excise and Universal Service Fund taxes are options that the Congressional Budget Office suggests lawmakers consider as they works on future federal budgets, a new report said. The options are two of 188 in a report sent to the House and Senate Budget Committees last week to help Congress set priorities in its annual budgets, said CBO Director Douglas Elmendorf. The ideas in the report aren’t recommendations and they aren’t given in order of priority, he said in the report’s preface.

Residents of northern Mississippi are being surveyed on cellphone access, to help persuade carriers to improve service in that part of the state. Public Service Commissioner Brandon Presley, who represents the region, began a Zap the Gap campaign to pinpoint places where wireless access doesn’t match demand, he said. He isn’t trying to impugn the performance of carriers, he told us. “We just need more input. With the kind of Universal Service Fund money that the companies are getting, you should be able to get a good cell phone signal and not have dropped calls anywhere in Mississippi. The question is, why isn’t service better? Until now we've had to rely totally on the companies to monitor access and service quality, and they're not always right. But consumers know where the problems are, and we hope that by collecting that information and informing the companies we can get them to fix the situation.” He said carriers providing cellphone service in Mississippi have received more than $512 million since 2004 in federal USF payments. Presley said the money is supposed to go toward increasing rural deployment of cellphone services. “Yet we still have many places in the state, especially rural areas of North Mississippi, that don’t have service,” he said. “In today’s world, having reliable, dependable cellphone coverage is an important factor in the safety and quality of life.” The survey is at www.psc.state.ms.us/commissioners/northern/zapthegap.html. Presley said he’s talking up the survey in personal appearances and may produce public service announcements about it.

The FCC’s inspector general is investigating the Universal Service Fund low-income program and plans to submit a report to the commission and Congress, acting Inspector General David Hunt said Tuesday. In a letter to various committee chairmen and ranking members in the House and Senate, he said his office has withdrawn the previous IG’s December finding that all payments by the program were incorrect, because it may not provide a “meaningful and accurate” picture.

Verizon Wireless said it would support legislation or an FCC rule mandating roaming agreements under certain conditions for a minimum of two years. The commitment came in a letter it sent to House Commerce Committee Chairman Henry Waxman, D-Calif., late Wednesday. Waxman didn’t have a response to the letter, a spokeswoman said Thursday. Verizon said its offer came after a “dialogue” with committee staff on in-market roaming arrangements. Waxman wants carriers to expand roaming, he’s made clear at hearings and in past legislation.