Federal Universal Service Fund

The 4 proposals to modify the rules governing high- cost universal service support by the FCC’s Joint Board on Universal Service didn’t received much support in comments filed with the FCC Fri.

The Bush Administration chided Congress for “restrictive language” that would prohibit reforms to the Universal Service Fund program in the Commerce-Justice- State appropriations bill, according to a Sept. 8 memo from the Office of Management & Budget. OMB objects to Section 520 of the bill, which the Senate passed 2 weeks ago, that prohibits the FCC from using any funds from the bill to make changes to USF payments implementing last year’s Federal-State Joint Board on Universal Service recommendations on USF payments. OMB said this provision would prevent reforms to improve the “fairness and efficiency of the program and potentially reduce burdens on telephone ratepayers.”

Prepaid wireless carriers likely will get limited access to the Universal Service Fund (USF)in the Gulf Coast region under initiatives FCC Chmn. Martin outlined last meeting (CD Sept 16 p5), said Medley Global Advisors in a research note. Martin proposed to amend eligibility rules for carrier support under the Lifeline and Linkup programs that subsidize phone service to customers with incomes at or below 135% of federal poverty guidelines, Medley said. The proposed changes would mean Lifeline and Linkup eligibility for TracFone, AT&T, U.S. Cellular, Virgin Mobile, Liberty Wireless, Sprint Nextel, Cingular, Alltel, T-Mobile and other prepaid wireless carriers serving low income customers in storm affected areas, the researchers said. “This proposal is modeled off of a recent Commission decision allowing Miami-based TracFone to become eligible for federal Lifeline subsidies once they receive ETC designation in a particular state and offer E-911 service [CD Sept 7 p2],” Medley said.

Expanding the scope of the universal service fund (USF) to broadband networks may be “timely,” the Congressional Research Service (CRS) said Wed. In a 76- page report, CRS analyzed options for telecom reform in Congress and at the FCC, assessing levels of support and dissent among industry players and political constituencies. The report cited 2 main public policy issues: (1) Devising the best regulatory framework for encouraging investment and innovation in the broadband network and applications riding over the network. (2) Deciding whether the govt. should intervene in rural markets by expanding universal service to include access to broadband networks at affordable rates. Despite widespread consensus that today’s statutory and regulatory framework for telecom is ill-suited for the market, there’s disagreement about how to fix it, the report said. A key barrier -- an “administrative and legal morass,” in the authors’ words -- is deciding if an information service is purely an information service or has a telecom component invoking more rigorous regulation. The recent Supreme Court Brand X decision and an Aug. 5 FCC order helped clarify classification of information services, but the Commission has yet to address how to classify and regulate specific service offerings based on the underlying network architecture, the report said. For example, the FCC’s re-classification of DSL service as an information service rather than a telecom service had 2 effects on universal service: It reduced the funding base and limited funding to telecom services. Two other challenges to Congress in tackling a telecom law update: (1) Creating a regulatory framework that market changes won’t render obsolete. (2) Identifying regulatory elements suitable for handling at the state and local level versus those that should be centralized, the report said. It’s also timely for Congress to consider reviewing Title VI regulations to see if it would be in the public interest to streamline franchising by consolidating it at the state or federal level and lessen or eliminate some regulations, the report said. To enhance broadband competition, the report said, intramodal competition will continue to be important, especially for large business markets. It suggests maintaining some current statutory provisions for CLECs to foster that competition, “given the inability of facilities-based CLECs to attain the economics of scale needed to support ubiquitous networks. On the issue of intercarrier compensation (ICC) reform, where there again is widespread agreement on problems but dispute over solutions, the report advises Congress to “use its deliberations” to give the FCC statutory guidance. As for USF reform, congressional action clearly is needed for change, particularly in regard to assessments on providers and recipients of funds. With VoIP service emerging, Congress should consider reviewing Title II requirements on voice services. The FCC is “constrained by current statute” in its ability to provide regulatory parity to competing voice services, the report said, because some services meet the definition of telecom, some are information and some are “ambiguous.” Finally, on DTV transition, the report said Congress should leave multicasting to the FCC to “study and construct recommendations for rules (and, if necessary, statutory changes) to address the potentially related issues of mandatory carriage of multiple broadcast signals and better serving the needs and interest of viewers in different governmental jurisdictions.” This is likely to give momentum to political forces seeking to address the multicasting issue as a “study item” in DTV legislation. - - AV

The wireless industry urged the FCC to ignore ILECs’ request and modify a requirement that wireless ETC applicants submit formal 5-year network improvement plans to the agency to show they can provide the supported services. Wireline incumbents, who want that requirement maintained, said the plans provide target completion dates for each project that receives universal service support and ultimately will lead to a network that provides coverage throughout an ETC-designated area. Calling the requirement “unrealistic” and “overly burdensome,” wireless carriers asked the Commission to shorten the required build-out plan to 18 months or less.

State lawmakers from across the U.S. will tackle telecom and technology issues this week at the National Conference of State Legislatures’ annual conference in Seattle. Proposed state and national telecom law rewrites and wrangles over municipal Wi-Fi are among the hot topics at the 5-day conference, which begins today (Tues.). About 7,000 state legislators, policy experts, advocates, govt. leaders and media are expected to attend.

The FCC voted at its open meeting Fri. to reduce regulation of wireline Internet access service by reclassifying it as an “information service,” in line with the FCC’s treatment of cable modem service. The U.S. Supreme Court in June upheld the agency’s cable modem classification in the Brand X case, triggering action on the wireline companion piece which had been placed on hold during the litigation. DSL is the most common wireline Internet access service.

Analysis of Sen. Ensign’s (R-Nev.) telecom bill (CD July 28 p1) is yielding a common refrain: It’s a good start, but the bill won’t pass as is because of controversial provisions affecting cable, CLECs and municipalities, according to interviews with analysts and lobbyists. Furthermore, Senate Commerce Committee Chmn. Stevens (R-Alaska) is planning his own telecom bill, which he has said he'll unveil in the fall after dealing with DTV legislation. Senate sources said Stevens may gauge the response to the Ensign bill as he drafts his own legislation. Others are pessimistic that there will be time to write an omnibus bill.

Universal service fund (USF) contributions would be applied to all 2-way voice services under a bill introduced late Fri., just before the summer congressional recess. Sponsored by Sens. Smith (R-Ore.), Dorgan (D- N.D.) and Pryor (D-Ark.) , the bill broadens the base of contributors and establishes a separate fund capped at $500 million a year to encourage broadband deployment in rural, “unserved” U.S. areas.

Sen. Ensign (R-Nev.) Wed. introduced a broad telecom update bill that would erase local video franchise requirements, let municipalities invest in broadband networks via competitive bid and set consumer protection standards for carrier service. The bill did not address universal service fund (USF) reform, an issue Ensign said Senate Commerce Committee Chmn. Stevens (R-Alaska) and co- chairman Inouye (D-Hawaii) want to handle separately. A Committee aide confirmed that Stevens plans to address USF this year, separately or in a larger telecom bill.