Wireless companies that operate in rural areas have formed the Wireless Across America coalition to work for continued Universal Service Fund support for wireless companies. The group plans to “tell Congress to safeguard USF funding for rural wireless service [to assure] the security and economic prosperity of countless rural communities.” The members are the Rural Cellular Corp., Alltel, Dobson, SunComm, Corr Wireless, Rural Cellular Assn. and Bluegrass Cellular.
The Kan. Corporation Commission (KCC) ordered rural incumbent telcos to set their intrastate access charges at their respective interstate levels after concluding the revenue impact would be negligible. State law allows rural telcos to make up access revenue shortfalls from the state universal service fund, up to a specified cap. The KCC said setting intrastate access rates at parity with interstate would mean a mere $40,000 in additional demands on the state USF because only 4 of the 20 rural telcos affected by this decision will see a net reduction in access revenue.
A Fla. state lawmaker whose Miami-Dade district includes a substantial proportion of low-income households urged the PSC to adopt a pending proposal for automatic Lifeline enrollment. Lifeline participation among eligible Fla. households is “profoundly disappointing,” State Rep. Juan Zapata (R), member of the House Business Regulation Committee, said. The state loses $30 million annually in payments to the federal universal service fund “because the Lifeline and LinkUp programs have essentially been permitted to fail,” he said. Automatic enrollment would cut that deficit and provide “deserving and eligible Floridians [with] the services for which more fortunate Floridians have paid,” he said. The proposal by the Office of Public Counsel and AARP would require local exchange providers to work with the PSC and Dept. of Children & Families, automatically enrolling all Fla. households that qualify for public assistance. In a related action, the PSC granted Attorney Gen. Charles Crist’s (R) request to become a formal party to the Lifeline enrollment case. Crist said he supports automatic Lifeline enrollment.
More than a third of the country’s state regulators want the FCC to alter or kill the Missoula Plan for intercarrier compensation reform, according to comments filed late Wed. Most concerned voices speak for one of 2 types of states: (1) “Early adopters” that already implemented access charge reforms, resulting in higher consumer costs -- and don’t want to do so again. (2) “Payer” states where carriers put more into the universal service fund than they get back. They tend to be urban states with fewer rural LECs and see more payouts as unfair.
Debate over net neutrality keeps Congress from addressing 2 issues with more impact on expanding broadband access, ex-FCC Chmn. William Kennard said Sat. in a N.Y. Times op-ed. Instead of focusing on net neutrality, Kennard said, Congress should: (1) Reform the Universal Service Fund (USF) by finding “a new source of revenue” to better support expanded broadband access. The USF should start supporting broadband access, but “the fund in its current form is not an effective way” to do so, he said: “We must find a new source of revenue that does not exclusively tax users of the phone network.” One possibility is a reverse auction, an idea raised by FCC Chmn. Martin, he said. (2) Pass a national franchising law to speed services to consumers. Cable and phone providers are hurrying to offer bundled services but “the legacy of historic regulation puts the telephone companies at a serious disadvantage in quickly deploying video services,” Kennard wrote: “Congress punted on both of these issues this year in large part because of the polarizing net neutrality debate. Now the combatants are set to throw millions more dollars into [the net neutrality debate] when Congress revisits new telecommunications legislation. Policymakers should rise above the net neutrality debate and focus on what America truly requires from the Internet: getting affordable broadband access to those who need it.”
Reverse auctions might rein in burgeoning universal service costs, but there are pitfalls, panelists warned Thurs. in a program sponsored by the D.C. Bar. It’s an “interesting idea” but shouldn’t be the sole solution, said Eric Einhorn, AT&T exec. dir.-federal regulatory. Done right, it could be a “market-oriented” way to downsize the Universal Service Fund (USF) but “the devil is always in the details,” said CTIA Asst. Vp Paul Garnett. It would have to be implemented in a technologically- and competitively- neutral manner, he said.
The FCC’s query about using reverse auctions (CD Oct 12 p6) for universal service support ended up drawing more than 50 comments, with a variety of views. NECA warned that “reverse auctions would effectively end rate of return regulation for rural ILECs, a result not contemplated” by the Federal-State Joint Board, where the proposal originated. Alltel said reverse auctions could be used to set the level of support, similar to “a forward-looking cost methodology,” but any carrier able to provide that price should be allowed to offer service. In other words, “auctions should not be used to select one or a limited number of eligible telecommunications carriers.” Verizon, joined by Verizon Wireless, said reverse auctions could be the solution to the over-extended Universal Service Fund (USF): “With the right design, a simple system of reverse auctions for high cost support could provide consumers, carriers and regulators with substantial benefits.” State regulators appeared to have mixed feelings about the reverse auction concept. The Ia. Utilities Board said it likes that auctions would reduce the number of USF-supported carriers but it’s concerned about the viability of incumbent rural carriers: “On the one hand, rural exchanges may represent the type of service territory where it makes the most economic sense to support only one network and an auction may incent carriers to seek operational efficiencies… On the other hand, existing incumbent networks have been constructed… in reliance upon continued receipt of universal service support. If that support were to suddenly be redirected to another network based on competitive bids, the existing universal service ‘investment’ in the incumbent network would be lost.”
Any USF reform should encourage participation by new technologies, including satellite broadband, the Satellite Industry Assn. told the FCC. The Commission fielded comments Wed. on using reverse auctions to improve USF distribution (CD Oct 12 p6). Reverse auctions could “reveal various providers’ relative cost” of serving rural areas, SIA said, adding that satellite providers can serve rural communities efficiently and cheaply. “Satellite technology is in many respects ideally suited to delivering service to rural and high-cost areas,” SIA said: “A customer in rural Montana can get the same satellite service as a customer in downtown Chicago.” Basing universal service support on technological efficiency would cut the fund’s burden, as variations on the reverse auction have in Chile, Colombia, India, Peru and S. Africa, SIA said. The key to reverse auctions’ success is ensuring that entrants with new technologies -- including satellite providers -- can participate in the program, the satellite group said. To ensure satellite providers can participate effectively in reverse auctions, SIA said, the Commission should: (1) Not award set-asides, credits or other favorable treatments to incumbents. (2) Let satellite providers that provide broadband services on a non-common carrier basis keep that status. (3) Avoid restrictions such as service areas that give certain providers an edge over others. SIA also pushed for targeted USF pilot projects to prove satellite providers’ ability to bring telecom service to remote areas. “Reverse auctions could be used to award contracts to provide service to areas or individuals that currently lack access to any communications services,” SIA said. Pilot projects could focus on specific areas -- some tribal lands, for instance -- historically unserved by traditional telephony, SIA said.
Rural carriers are raising red flags about what could happen to some of the smallest carriers if the FCC institutes reverse auctions to make USF distribution more efficient. Comments varied widely on this and other proposals to restructure the distribution side of USF.
The FCC hastened reimbursement to an Alaskan telecom company for service to rural health clinics to spare the carrier money difficulties. The Wireline Bureau ordered immediate reimbursement under the Rural Health Care (RHC) universal service program, waiving rules requiring Unicom to wait until at least Nov. Unicom delivers broadband to the Yukon-Kuskokwim Health Corp. (YKHC), which runs clinics in small Alaskan villages. RHC reimbursement comes as a credit against a carrier’s Universal Service Fund contributions, so the reimbursement isn’t applied until late in the year, after the carrier’s USF contributions are calculated. But Unicom already has “a substantial credit” against its USF contributions because it paid out so much to support the RHC program, the bureau said. “Unicom would be owed millions of dollars by the time it would be reimbursed in full,” the FCC said: “Unicom is a small carrier but an active participant in the rural health care program and thus has one of the largest differentials between what it pays into and receives from the USF.” Adhering to payment rules would mean hardship for the company and put rural health care in Alaska “at risk by jeopardizing deployment of Unicom’s terrestrial broadband system,” it said. Lack of reimbursement also could put Unicom in breach of contract with the YKHC and subcontractors, the agency said.