Broadband stimulus efforts may influence debates on the Universal Service Fund and pole-attachment fees, Medley Global Advisors said in a research note. As the FCC develops a national broadband strategy, required by the American Recovery Act, the commission probably will decide whether to expand the USF high-cost fund to cover broadband, Medley said. The effort could face obstacles, however, since it will come “on the heels of a large capital infusion of federal grant and loan money for broadband network investment entering the telecom market.” Meanwhile, the stimulus program could reinvigorate the debate over pole-attachment fees, because rural carriers “will need pole space and possibly more poles installed in rural areas to reach customers.” On the business side, stimulus should be a boon for broadband equipment makers, since the whole communications industry will need to buy gear for new network facilities, Medley said. That should translate into higher sales from Q2 through 2010, it said. Medley expects all sizes of broadband providers to apply for grants, it said. Even large incumbent phone companies will take part, to defend themselves against “cable applicants or municipal entities seeking grant money to build out their existing network footprint,” it said. The big telcos, and possibly large cable companies, “may decide to apply for grant money in certain areas and do so with a public sector partner” to increases their chances of getting an award, it 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, states and cellular carriers should come to terms on early termination fees and remove that “distraction” for good, Nebraska Public Utility Commissioner Ann Boyle said on a panel Tuesday at NARUC’s winter meeting in Washington. The group seeks to draft consumer-protection standards for cellphone users.
FCC Commissioner Robert McDowell, the FCC’s lone Republican, weighed in Tuesday with additional recommendations for FCC reform, starting with a “thorough operational, financial and ethics audit” of the agency. McDowell acknowledged, as interim Chairman Michael Copps and Commissioner Jonathan Adelstein did Monday, the need for basic change now that former Chairman Kevin Martin has left the commission.
AT&T agreed to pay $10,080,600 in a consent decree to end FCC investigations into whether the company violated FCC rules on customer proprietary network information and recovery of universal service fund contributions from customers, the FCC said late Tuesday. AT&T also agreed to develop, within 60 calendar days, plans to ensure future compliance with FCC rules, the FCC said. The investigations related to complaints about AT&T’s CPNI opt-out mechanism, and a voluntary disclosure by AT&T that it had recovered federal USF contribution costs from end users in excess of permitted amounts. “While these were inadvertent errors, we regret that they occurred,” AT&T said in a statement. “To resolve these matters, we have entered into a consent decree, which includes implementing additional internal controls.”
NEW ORLEANS -- State phone regulators see December as a key month, said panelists at the annual NARUC meeting here. Nebraska Public Service Commission member Sue Vanicek said her state’s suit over its power to assess Vonage and other intrastate VoIP providers a 6.95 percent fee to support the state universal service fund will affect USF efforts by other states, as will an FCC ruling expected next month on changing the federal system for ensuring universal phone service and agency controls on intercarrier compensation.
NEW ORLEANS -- Qwest CEO Ed Mueller said the economic crisis shows that regulation has its place. Lauding state regulators for “successfully opening the industry to competition,” Mueller told NARUC telecommunications committee members Monday that state commissions gave his company and other incumbent providers “the flexibility to offer new services, bundles and promotions and adjust pricing to compete effectively and better serve customers.”
The FCC must improve administration of the Universal Service Fund, USF payers and recipients said last week in comments on an October FCC inquiry into how it might strengthen USF management, administration and oversight (CD Sept 15 p7). High error rates cited in a 2007 Inspector General audit worry the FCC. Meanwhile, Universal Service Administrative Co. and parent National Exchange Carrier Association urged the FCC to approve a divestiture of USAC from NECA.
A reply comments deadline could keep the FCC from voting to revamp intercarrier compensation and the Universal Service Fund at its December meeting, FCC spokesman Robert Kenny said Wednesday. Wednesday’s Federal Register said comments on three competing revamp plans are due Nov. 26, with replies due Dec. 3. The FCC usually circulates agenda items three weeks before a meeting. This reply deadline is two weeks and a day before the Dec. 18 meeting. The final circulation period could be less than two weeks, because it likely will take the Wireline Bureau two days to write an order once replies arrive, said an FCC official.
Four members of the FCC pledged to work together on broad intercarrier compensation and Universal Service Fund reform, for a vote at the Dec. 18 FCC meeting. The four cited growing consensus on several issues teed up for decision, in a statement they all signed. But FCC Chairman Kevin Martin questioned whether his colleagues will really be ready to reach a decision in December. The letter was released just before midnight Wednesday, as the FCC responded to a writ of mandamus by the U.S. Court of Appeals for the D.C. Circuit addressing the so-called ISP remand (CD Nov 6 p1).
Failing to win colleagues’ support, FCC Chairman Kevin Martin deleted an overhaul of the Universal Service Fund and intercarrier compensation from Tuesday’s meeting agenda. The order remains on circulation, but the agency will vote on no items related to USF or intercarrier compensation at the meeting, an FCC spokesman said. In a joint statement, the other four commissioners laid the blame on the chairman.