Satellite policy will be spurred another year of mergers in 2007, several industry sources said. But this year consolidation won’t be between fixed satellite services (FSS) giants, regulatory attorneys said: It will involve just about everybody else. Expect to see a merger push by XM and Sirius, a mobile satellite services (MSS) shakeout, and possibly an end-run by Liberty-controlled DirecTV and EchoStar, they said.
Action on universal service contributions reform doesn’t appear to be a front-burner issue at the FCC, judging from comments that FCC Chmn. Martin made in response to a question at a news conference Wed. The Commission will “have to see the results of changes last summer” to the contributions methodology before determining how quickly the agency should move on broader reform, he said. “We will have to see if [the USF] starts to creep up” again, he added. The FCC in June placed universal service obligations on VoIP providers and raised the wireless safe harbor -- both actions billed as interim measures until the FCC can institute broader reform of the way carriers contribute to the USF. Rising demand for USF subsidies has been taxing the fund and placing increasing pressure on the carriers that contribute to it.
BPL companies are girding to fight HR-462 by Rep. Ross (D-Ark.), which would order a new FCC study of interference to licensed radio operations by BPL. Similar language in a 2006 telecom bill passed the House, startling the industry. ARRL expects Ross to have new clout as a majority member of the House Telecom Subcommittee, said CEO Dave Sumner.
AT&T’s anticipated move of D.C. representation for its wireless and wireline operations into one office doesn’t mean it will march in lockstep with traditional Bell positions, sources said. AT&T announced Fri. the Cingular brand will start to disappear this week as it launches what is expected to be a massive rebranding campaign.
Lawmakers introduced several telecom measures Thurs. on the opening day of Congress -- some of which didn’t make it last Congress. Senate Commerce Committee Ranking Member Stevens (R-Alaska) introduced 5 measures, including a bill that would reform the Universal Service Fund (USF) program that Senate Minority Whip Lott (R-Miss.) is co-sponsoring. Stevens also is introducing a measure that would address FCC and FTC roles in policing pretexting -- impersonating someone else’s identity to illegally gain access to private phone records. A Judiciary bill was enacted last Congress.
“High-cost” rural telecom companies got 58.7% of $6.5 billion disbursed by the Universal Service Fund in 2005, the FCC said. High cost support totaled $3.8 billion, compared with about $3.5 billion in 2004 -- a rise the report traced to growth in support for competitive carriers from $0.3 billion in 2004 to $0.6 billion in 2005. The E-rate program for schools and libraries accounted for 28.6% of the USF, about $2 billion. Support for low-income consumers accounted for 12.4% or about $804 million, up from 2004’s $763 million. The rural health care program drew about 0.4% or $25 million, the report said. In a snapshot of telecom industry revenue, the report showed the USF funded by charges levied on $234 billion, up from 2004’s $233 billion. Bell company access lines declined from about 136 million in 2004 to 127 million in 2005.
CenturyTel said Mon. it agreed to acquire Madison River Communications in a deal valued at $830 million. Glen Post, CEO of CenturyTel, said on a conference call that regulatory issues, including uncertainty over USF and intercarrier compensation reform, figured in the company’s evaluation of the merger, but there’s little risk of Madison River’s revenue dropping because of rule changes. “Nothing major has changed in the regulatory arena,” Post said in response to an analyst’s question: “We still believe that we'll see progress in the next 18 months to eliminate some of the regulatory uncertainty.”
Prospects for a comprehensive telecom bill are dim, considering the unresolved net neutrality arguments going into the next Congress, congressional aides said Thurs. on a Practising Law Institute panel. The neutrality debate doomed telecom legislation in the 109th Congress, Republicans and Democrats agreed, and though the issue is less politicized now that elections are over, it’s still misunderstood. Congress’s role in franchising is uncertain, with FCC action coming soon, and so is the path to dealing with net neutrality, they said.
The FCC should consider Cingular’s application to be designated as an ETC in Va. only on its merits and not use the proceeding to focus on broader USF issues, Cingular said in reply comments. “The primary arguments in the comments opposing Cingular’s petition actually have nothing to do with Cingular’s petition itself,” Cingular said: “Instead, these commenters seek to use Cingular’s petition as a vehicle to advance their positions in larger ongoing universal service rulemaking proceedings. Those issues should be addressed in the broader rulemaking proceedings, however, and not in the context of Cingular’s petition. Grant of Cingular’s petition in Virginia will in no way prejudice the Commission’s consideration of universal service reform.” Any claims it’s not deserving of ETC status are groundless, Cingular said: “Many areas are simply uneconomic to serve without support, either because of low population density, difficult topography, or both. This is true in the wireless as well as the wireline context.”
The FCC should “act swiftly” to keep the Universal Service Fund (USF) program running after Dec. 31 by redirecting unused funds, 31 House lawmakers wrote in a letter to Chmn. Martin last week. The program will be imperiled by the Dec. 31 expiration of its exemption from Antideficiency Act (ADA) accounting rules. ADA rules bar agency spending unless cash is in hand, a hobble for the USF program. A Commerce-State-Justice appropriations bill that includes a permanent exemption from ADA rules for the USF E- rate program has been deferred to the next Congress. House lawmakers told the FCC they will keep working toward a “more lasting solution to protect consumers from disruptions to USF programs and increased USF phone bill charges.” In the short run, the FCC should direct USAC to apply unused money to 2007 commitments while remaining ADA-compliant, they said.