Federal Universal Service Fund

The Florida Public Service Commission stripped competitive landline reseller Vilaire Communications of its state operating authority, saying it filed false claims for universal service subsidies. Vilaire was an AT&T reseller specializing in service to low-income customers who qualified for Lifeline and Link Up service. The PSC said it acted because routine audits discovered the Washington-based company"falsely obtained” $1.3 million in federal Lifeline and Link Up subsidies since August 2006 through double- dipping in the federal universal service fund, and was charging customers an E-911 fee 50 percent higher than state law allowed. The PSC said Vilaire would receive resale universal service credit from AT&T for each Lifeline and Link Up customer. The PSC said Vilaire then submitted claims directly to the federal USF for those same customers, in effect getting paid twice for each customer. The PSC said Vilaire also filed subsidy claims for access lines that didn’t exist, and charged a 75 cent E-911 fee when state law caps such fees at 50 cents. The PSC assigned Vilaire’s customers to AT&T until they choose another local provider and said it would refer its universal service findings to federal authorities.

Congress should pass legislation regulating wireless customer service policies to make industry practices uniform, said Verizon Executive Vice President Tom Tauke in a briefing with reporters Monday. He praised broadband mapping legislation that would create a nationwide database measuring the level of broadband deployment throughout the nation. The effort could help increase access in rural areas, he said.

A “deep need for fundamental reform” of the Universal Service Fund should inspire action on the “practical” proposals by the Federal-State Joint Board on Universal Service, FCC Commissioner Deborah Tate said at a Federalist Society forum Tuesday. A USF revamp is an “overarching public policy issue” that isn’t likely to make one of David Letterman’s top ten lists, but it “probably should because it affects everyone,” Tate said. She co-chairs the joint board, which issued recommendation in November. “We just need to get on with it,” she said.

The FCC seeks $338.8 million in its FY 2009 budget, with $25.5 million set for an inspector general’s oversight of the Universal Service Fund, according to budget documents released Monday. The budget also includes $20 million to educate consumers about the 2009 digital transition, money that would be spent on media tours, public service announcements, direct mail campaigns and other public education activities. The commission also is seeking $1 million for a clearinghouse program to expand outreach to police and fire agencies.

The FCC late Tuesday opened three universal service proceedings and asked for public comment, setting in motion a long-awaited effort to reform the Universal Service Fund. The agency wants to distribute universal service subsidies more efficiently and lessen the fund’s growth. The FCC voted last week on the items, whose release was delayed until commissioners could write explanations of their positions. The notices of proposed rulemaking are interconnected so parties can comment on them as a package.

With the outlook increasingly bleak for a minimum required bid to win the 700 MHz D-block license, Commissioner Michael Copps said Tuesday that, no matter what happens, the FCC will have to make certain that public safety has a national, interoperable broadband network. At our deadline, the only bid for the 10 MHz national license was the $472,000 bid made on day one, which is well short of the minimum $1.33 billion. No company has come forward to replace Frontline Wireless, which announced before the auction began that it would not make the down payment required to participate in the auction.

The FCC may release three universal service items for public comment as soon as today (Friday), indicating it may be ready to start moving on long-awaited Universal Service Fund reform. Commissioners already have voted on the three items, which will have the same comment dates so parties can file one set of comments covering all three if they wish, a source said.

FCC action on early termination fees (ETFs) is expected early in 2008, with the commission expected to refocus at least in part on telecommunications issues following a major fight over media consolidation. The Universal Service Fund, 700 MHz auction, future use of the broadcast white spaces, and 800 MHz rebanding also are expected to get agency attention.

FCC Commissioner Robert McDowell on Thursday questioned the need to vote for a proposal to put an interim cap on Universal Service Fund subsidies for competitive telecom companies. The commission already may have acted by default on the interim measure in setting caps as a condition to its approvals this year of several acquisitions, McDowell told reporters at a press event. “The same goal may already have been accomplished,” he said. It might make more sense to move directly to long- term USF reform, he told reporters. Asked if his comments indicate he would vote no on the interim cap, McDowell said, “the question is have we already voted?”

The FCC should move quickly to approve an interim cap on universal service support to competitive rural carriers, so it can address longer-term reform, TracFone Wireless said in an ex parte letter filed Tuesday at the FCC. The company wants an interim cap on both incumbent and competitive carriers, but “time is of the essence” and a cap on competitive carriers might be approved faster, it said. It’s been seven months since the Federal-State Joint Board on Universal Service recommended capping competitive carriers to halt Universal Service Fund growth, TracFone said. By acting now on that proposal, the FCC could stabilize the fund and advance wider reform, it said. TracFone isn’t a facilities- based provider, so it doesn’t get USF support. But it seeks status as an “eligible telecom provider” so it can get universal service money for providing Lifeline service.