FCC Chairman Kevin Martin circulated late Friday changes in an order approving a Universal Service Fund cap that likely mean approval of a cap within days, we've learned. Counting Commissioner Robert McDowell’s support, Martin has three votes for the high-cost fund cap. Commissioner Deborah Tate backed the cap while Commissioner Michael Copps cast a no vote.
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.
U.S. Cellular met with members of the Federal-State Joint Board on Universal Service to argue against a cap on the fund, which is now before FCC commissioners, it said. The carrier said in an FCC filing that it stated at the meeting that “there is no crisis in USF funding,” with the fund down 16 percent last year. It called the cap “the wrong move at the wrong time,” institutionalizing discrimination that exists in the fund. U.S. Cellular pointed out that Mississippi now gets $140 million from the high-cost fund, compared to $2 million in Missouri and $100,000 in Illinois. “Since 1999, Wireless has drawn $3 billion and wireline has drawn $25 billion,” the carrier said.
Subsidy caps and reverse auctions proposed to rein in a rapidly growing Universal Service Fund split wireline carriers by geography, in comments to the FCC. While Verizon urged a high-cost cap and auctions, rural groups said the reforms would undermine broadband deployment efforts. Meanwhile, wireline groups didn’t contest a proposal to kill the identical support rule. Wireline groups also expressed mixed feelings on a Universal Service Joint Board proposal to expand high-cost support to broadband and wireless.
Wireless carriers’ advice to the FCC on Universal Service Fund reform varied sharply, as companies and groups commented on three rulemakings on the universal service fund. A general message was that wireless must play a significant role as the fund is restructured. There was broad support for an advanced mobility fund. But wireless players disagreed on the wisdom of eliminating the identical support rule or launching reverse auctions to shrink the fund. Comments came as the FCC poised to approve a fund cap many in wireless fear will hit their sector the hardest (CD April 1 p1).
LAS VEGAS -- The pending FCC order approving a Universal Service Fund cap does not have a sunset date, as was recommended by the Federal-State Joint Board on Universal Service, sources said Thursday. The order grants more than 40 pending applications for eligible telecom carrier (ETC) status. It also caps the fund at March 31 levels. FCC Chairman Kevin Martin has yet to circulate text of the order, complete with proposed edits, but is expected to do so in days. Sources said the order will likely have at least three votes if it contains expected language, with Martin and Commissioners Robert McDowell and Deborah Tate in support.
LAS VEGAS -- FCC Chairman Kevin Martin told CTIA attendees he expects to move quickly to adopt a cap on payments to competitive eligible telecom carriers (CETCs), now that Commissioner Robert McDowell is a likely third vote in favor (CD April 1 p1). Martin said he still plans an en banc hearing of the commission to look more closely at early termination fees (ETFs) often imposed by wireless carriers and other regulated companies. Martin also said he was starting to circulate an order dismissing a Skype petition seeking Carterfone rules for wireless.
LAS VEGAS -- FCC Commissioner Robert McDowell sent FCC Chairman Kevin Martin a list of edits on an order that would cap Universal Service Fund payments to competitive eligible telecom carriers (CETCs) at end-of-year-2007 levels, agency sources said. McDowell backs a carve-out for tribal lands in all 50 states, including Alaska, but without language specific to Alaska carrier GCI. McDowell proposed language saying that the FCC would make an earnest effort to undertake comprehensive USF reform.
An economic slowdown means opportunity for alternative phone companies, as well as curtains for some VoIP companies, industry officials said in interviews. Meanwhile, former Bell companies and other wireline incumbents dismissed notions that their businesses are vulnerable.
The universal service high-cost fund will “spiral completely out of control” if the FCC grants a Hawaiian Telecom waiver petition, the National Telecommunications Cooperative Association said in reply comments. The carrier disagreed, saying “special circumstances” justify its exemption from usual measurement methods used to set a non- rural local incumbent carrier’s USF support. Even if USF measurement methods need an overhaul, opponents said, it should come in three proposed rulemakings now before the FCC.
A federal court declared it “unlawful” for Nebraska to force Vonage to pay into a state universal service fund. The U.S. District Court for Nebraska slammed the Nebraska PSC with a preliminary injunction, saying the PSC’s “authority to regulate the nomadic interconnected VoIP service provided by [Vonage] is preempted by the FCC, and Vonage need not comply with the [Nebraska USF order].” The order applies only to Nebraska, but will “send a signal” to other states, said Stifel Nicolaus analyst David Kaut.