AUSTIN, Tex. -- NARUC adopted resolutions Wed. that call for careful federal review of pending telecom mega- mergers, and suggest a general extension or carrier- specific waivers of a year-end FCC deadline for full implementation of handset-based wireless E-911. However, because of a technicality they voted against a proposal that would have urged states and the FCC to consider naked DSL as a pro-competition tool when reviewing mergers or generally making regulations. The measures, approved by NARUC committees earlier this week, were approved by NARUC’s board Wed. as official NARUC policy.
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.
Less than a decade after Congress passed a landmark law expanding the types of companies supporting the federal Universal Service Fund (USF), the fund faces a new financial crisis. The main problem, though, isn’t that the fund will run out of money any time soon. Due to fees the FCC assesses on local, long distance, wireless, paging, pay phone and international carriers alike, the USF now takes in about $6.5 billion a year. That money subsidizes rural and low-income residential phone service and communications links to rural schools, libraries, hospitals and other vital services. If the fund needs more cash, the fees automatically are adjusted upward.
CHICAGO - Federal and state regulators said Wed. they sympathize with concerns about local franchising requirements impeding video competition but doubt the FCC has authority to preempt them. On a panel at the Supercomm show here, FCC Comrs. Abernathy and Adelstein and Cal. PUC regulator Susan Kennedy, considered a maverick who favors federal preemption on some issues, said Congress or state legislatures are better positioned to take such action.
Despite pressures at multiple levels, the universal service fund (USF) may finish 2005 without a legislative overhaul. Senate Commerce Chmn. Stevens (R-Alaska) and ranking member Inouye (D-Hawaii) and House Commerce Committee Chmn. Barton (R-Tex.) want USF reform, as do others. Industry wants USF reform. And the FCC is pursuing reform (see accompanying article).
With universal service fund (USF) charges soaring for wireline and wireless carriers alike, the Bells, long- distance providers, rural phone companies, mobile carriers and cable TV operators are pressing for changes in the funding formula. But that’s where agreement ends.
Rep. Cubin (R-Wyo.) introduced a bill (HR-2533) late Mon. that permanently would exempt the Universal Service Fund (USF) from Antideficiency Act (ADA) accounting standards. The bill is a companion to S-241, introduced by Sens. Snowe (R-Me.) and Rockefeller (D-W.Va.). The ADA bars federal agencies from incurring obligations in advance of appropriations. The FCC last year ruled the ADA applies to the USF, meaning the fund administrator would have to have cash on hand before sending commitment letters to fund recipients. The immediate impact was on the E-rate program, but rural ILECs fear their payments also could be affected. Congress in Dec. passed a bill exempting the USF from the ADA through 2005.
Congress will weigh key technology issues this year. Some bills will stir fierce fights, while industry will get quick wins on others, Rep. Boucher (D-Va.) told the Computer & Communications Industry Assn. (CCIA) Wed. The Congressional Internet Caucus co-founder predicted easy decisions on sweeping patent reform, a hard deadline and subsidy model for DTV transition and Internet-specific Telecom Act updating. But the broadcast flag and digital content reproduction and fair use issues will be more contentious.
More than 100 rural telecom executives hit Capitol Hill Tues. to start 2 days of lobbying for universal service and broadband issues as part of an annual event sponsored by OPASTCO. In a morning briefing, OPASTCO staff told rural ILECs Antideficiency Act (ADA) legislation should top their agendas as they visited representatives and senators from their home states.
Senate Commerce Committee Chmn. Stevens (R-Alaska) said Mon. he fears federal funding for school internet services, rural telephone service and library computers could be threatened temporarily. Stevens said a tight calendar could keep Congress from fixing problems the Anti-Deficiency Act creates for the Universal Service Fund, in turn suspending USF payments.
The FCC defended its management of the E-rate program as consistent with its historical organizational structure but said it could make changes to the administrative structure in light of the Govt. Accountability Office’s (GAO) critical review. On Wed., the GAO presented the House Commerce Oversight & Investigations Subcommittee its report on the FCC’s management of E-rate, which funds Internet and information technology equipment for schools and libraries. The GAO concluded there were structural flaws in the FCC’s management of E-rate, but the FCC said its use of a private organization to manage the program was similar to its establishment of the National Exchange Carrier Assn., which manages the access charge assessments. “Congress was well aware of that practice when it enacted the Telecommunications Act of 1996,” the FCC said in its written response to the GAO report. The FCC said it believes its current management structure of E-rate -- part of the universal service fund -- was consistent with congressional intent. The FCC also disagreed with GAO’s assessment that the FCC never conducted a comprehensive study of federal policies that would apply to E-rate. The FCC cited several separate reviews of policies relating towards USF and E-rate. The FCC acknowledged the GAO’s conclusion that performance measurements for E-rate weren’t comprehensive. It said the FCC has assigned additional staff to review the performance measurements. The FCC also said it has brought on more staff to catch up on back appeals, another flaw cited in GAO’s review. During the hearing, House Commerce Committee Chmn. Barton (R-Tex.) said E-rate fraud, waste and abuse, which has been investigated for nearly 2 years by the Oversight & Investigation Committee, was out of control and Congress must consider a legislative fix. House Commerce Committee ranking Democrat Dingell (Mich.) also agreed, saying he looked forward to joining with Committee leadership to “enact the reforms that the FCC either cannot, or will not, implement.”