Many VoIP providers may have to rely on a proposed 64.9% safe harbor to figure their universal service contributions, rather than being able to use traffic studies such as those the wireless industry uses, VoIP and wireless carrier sources said Fri. To wireless carriers’ relief, the FCC is signaling it will keep allowing traffic studies showing actual call volume as an alternative to using the safe harbor, sources said. Wireless carriers voiced alarm after reports surfaced (CD May 31 p1) the FCC planned to hike their safe harbor to 37.1% from 28.5%.
The House video bill’s passage (CD June 9 Special Report) doesn’t presage smooth Senate approval of franchise reform, including Commerce Committee Chmn. Stevens’ (R- Alaska) telco proposal, said industry and Hill sources. They give low odds on 2006 overhaul because between now and the midterm elections there’s little time to pass Stevens’ bill - - still in draft -- and then reconcile the 2 bills. Differences between House and Senate proposals further complicate the path, they said.
Net neutrality crusaders licked their wounds Fri. and promised to fight hard in the Senate. The House rejected 152-269 a measure sponsored by House Telecom Subcommittee Ranking Member Markey (D-Mass.) and backed by an amalgam of Internet firms, consumer and public interest advocates and religious and family groups (CD June 9 Special Report). While the movement has its supporters in the Senate, like Sens. Snowe (R-Me.) and Dorgan (D-N.D.), Internet players said it’s too soon to tell how they'll fare on the other side of Capitol Hill. Meanwhile, telco and cable hailed their House victory.
At our deadline, the House was expected to endorse a rule allowing a net neutrality amendment to the House video bill (HR-5252), which in turn was set for vote later Thurs. The amendment, by Rep. Markey (D-Mass.), would subject network operators to anti-bias rules and provide for expedited complaint review. It’s among 8 amendments the Rules Committee decided to accept late Wed. after a hearing on about 25 proposed changes to the bill.
FCC Chmn. Martin’s proposal for expanding the universal service fund contribution base is “a good first step to stabilize the… USF,” a rural telecom coalition said Mon. The Commission is considering adding VoIP providers to the contribution base and increasing the amount wireless carriers pay. The Coalition to Keep America Connected said the plan would ease funding concerns while giving the FCC time to craft a more comprehensive plan. “The fact that the FCC recognizes that wireless, VoIP and cable digital voice providers have a responsibility to pay for the network and a social obligation to preserve the USF program should be welcome news not only to rural customers who rely on the fund but for all Americans that benefit from a ubiquitous network,” said Lisa Zaina, exec. dir. of the Independent Telephone & Telecom Alliance, a coalition members.
Verizon backs an FCC proposal to assess VoIP providers for Universal Service Fund contributions, an official there said Wed., commenting on a Communications Daily article on FCC plans (CD May 31 p1). Verizon’s broader goal is a move from the revenue-based contributions process to one based on phone numbers, the official said: “It’s important that all providers contribute in the same way.” Before making so major a change, it would be proper for the FCC to impose interim assessments on VoIP, the executive said: “The FCC should assess VoIP providers under current rules, and has the authority to do it.” In a paper sent the FCC last week, Verizon proposed a “safe harbor” approach to decide how much VoIP provider revenue to subject to USF contributions. Under today’s system, only interstate revenue is subject to USF fees. Verizon’s paper pushed the wireless safe harbor as an alternative -- 28.5% of wireless retail revenue is considered interstate and thus subject to fees. The FCC reportedly is eyeing such a plan as a way to sustain the USF on an interim basis once DSL revenue no longer is subject to contributions. The FCC plans to remove DSL from the contributions base in Aug.
The FCC is poised to impose a mandate on VoIP providers that they pay into the Universal Service Fund (USF) and also may raise significantly the “safe harbor” for wireless carriers. FCC Chmn. Martin began to circulate a USF item last week, timed to the June 15 agenda meeting -- likely the first with new Comr. McDowell.
Addition of Robert McDowell as a 3rd Republican member of the FCC likely will mean Chmn. Martin will move within months on key items on which he needs an extra vote but over which he has been unable or unwilling to negotiate with Democrats. The Senate confirmed McDowell Fri. by unanimous consent after a series of holds were lifted.
House Commerce Committee Chmn. Barton (R-Tex.) will oppose efforts to exempt the E-rate program from Anti- Deficiency Act rules that require funding to be in hand before money can be spent, according to a Commerce Committee staffer. Barton and Senate Commerce Committee Chmn. Stevens (R-Alaska) brokered a deal last year that gave the program a one-year pass, but Barton is “inclined to let the ADA exemption expire,” the aide said.
The FCC can require Universal Service Fund (USF) contributions of interconnected VoIP providers though VoIP’s regulatory classification hasn’t been resolved, Verizon said in a white paper sent Tues. to the FCC. The FCC should create an interim VoIP safe harbor or proxy contributions method pending contributions reform, the firm said. There’s no need to decide if VoIP is a telecom or information carrier before acting, since either way the FCC has authority, Verizon said. “If interconnected VoIP is considered a telecommunications service, then an interconnected VoIP provider is a ’telecommunications carrier’… and thus must contribute,” Verizon said: “If interconnected VoIP providers are considered ‘information service’ providers, the Commission can exercise its discretionary authority under Section 254(d) to compel them to contribute.” That section empowers the FCC to require contributions from “other providers of interstate telecommunications… if the public interest so requires.” One way to assess USF contributions for VoIP providers is to apply the same safe harbor figure used for wireless providers -- 28.5% of retail revenue, Verizon said. The wireless figure was adopted in 1998 because it was hard to discern between intrastate and interstate wireless revenue. USF contributions are based only on interstate revenue.