House Commerce Committee Vice-Chmn. Pickering (R- Miss.) speculated Wed. that the House could be done with comprehensive telecom legislation by the end of the year but that action on a Senate counterpart would take longer. Before it tackles telecom reform, Pickering said, the House Commerce Committee would try to move leftover bills that weren’t enacted last year, including those on broadcast decency, junk faxes and spyware.
Chmn. Powell announced Fri. he will leave the FCC in March. With key issues pending for all communications sectors, sources agreed the next chmn. is likely to maintain Powell’s policies in the broadest sense, including an emphasis on competition and on promoting new technologies.
Universal service fund (USF) programs that target low-income households are more effective in addressing USF goals than overly broad subsidies, said a report released Tues. from the Progress & Freedom Foundation (PFF). The report said more residents in so-called “high cost” areas are adopting alternatives to subsidized landline phone service, although USF high-cost spending continues to increase. Through its report, “The Myths and Realities of Universal Service: Revising the Justification for the Current Subsidy Structure,” PFF said it was offering data to lawmakers without offering specific recommendations for USF reform. The report found that rural and urban households had remarkably similar phone use patterns. Nationwide, 51.7% of homes have both wireless and wireline service, while only 6% use just wireless. The report said 45.2% of rural households use both wireline and wireless phones and 5.3% of rural households are strictly wireless. The report said households with annual incomes of only $25,000 have 94% wireline use rate, but 40% of those homes also have a wireless service and 57% have cable TV. The report also found that more service providers are receiving subsidies, including many competitors in the same markets. The high-cost USF program to ensure service in rural areas is growing at an accelerating rate, the report said. From $2.6 billion in 2001, the fund was expected to grow to $3.6 billion in 2004 and surpass $3.9 billion this year. USF charges on telephone bills surpassed 10% for the first time this year, the report said. USF also suffers from inconsistencies from state to state, said Richard Levine, report co-author and researcher for the Law and Economics Consulting Group (LECG). Cal. has self-certification for its distributions of the “lifeline” program for low-income users, he said. Accordingly, Cal. has 3.2 million lifeline subscribers of the 6.6 million nationwide that receive the funding. Levine said Cal. has far more lifeline recipients than Miss., a much poorer state. While the report doesn’t give specific recommendation, co-author Randolph May said USF is “fixable.” Reform can be undertaken without jeopardizing universal service goals, including rural area’s access to reasonably priced telephone service,” said May, PFF senior fellow and dir.-communications policy studies. May said PFF would eventually make specific recommendations to Congress and regulators on USF reform. Another study co-author, Joseph Kramer of LECG, said there was no incentive in the USF program to hold costs down. “The higher the costs, the more money you get,” Kramer said -- www.pff.org/issues-pubs/books/050118usfreport.html.
Rep. Dingell (D-Mich.) urged the FCC to make a decision “expeditiously” on whether AT&T’s enhanced prepaid calling card is subject to intrastate access charges and universal service fund (USF) contributions. Dingell, ranking Democrat of the House Commerce Committee, said if the FCC finds AT&T violated Commission rules by withholding these payments it should require AT&T to make retroactive as well as future payments -- and the retroactive payments should carry interest “to compensate the USF and affected local exchange carriers for the loss of funds that resulted from AT&T’s withholding of payments.” Dingell criticized AT&T for lobbying for a decision against payment by raising concerns about the cost of providing cards to military users: “AT&T’s campaign… seeks to generate opposition to any effort by the FCC to require AT&T to comply with the Commission’s regulations based on concerns that doing so would increase costs to U.S. military personnel… I do not favor increasing the cost of making telephone calls for U.S. forces stationed overseas. [However], if it truly wishes to help the troops, AT&T can offer military personnel pre- paid calling cards at discounted rates or it could offer calling card services to such personnel for free… AT&T’s cynical campaign should in no way cause the FCC to turn a blind eye to AT&T’s unilateral decision to exempt itself from the FCC’s regulations and shortchange universal service.”
The Okla. Corp. Commission amended its telecom rules to permit consumers greater choice and allow providers more freedom to tailor their service packages. The new rules (Case RM 200400014), which must be approved by the state legislature and governor’s office before taking effect, streamline tariff revisions. They also allow service providers to file promotions via a Web-based form, and classify all telecom service bundles as flexibly- priced competitive services. But the rules also require that the components of service packages continue to be offered as individual services. The rules also establish a process for incumbent telcos to opt out of alternative regulation and go back to rate-of-return. And the rules also require wireless phone companies that receive federal universal service funds to offer low-income residents who are enrolled in the Lifeline program unlimited local wireless calls. Chmn. Bob Anthony said the decision was an interim step in an evolution of policy to foster telecom competition. He said the rule changes are intended to provide regulatory parity for all local providers, which will foster further competitive growth and more consumer choice.
The FCC will make improving wireless service quality a top priority in 2005, with a look at ways of eliminating “dead zones” and improving cellular quality underground and indoors, Wireless Bureau Chief John Muleta said Thurs. during a report to the Commission.
CTIA Pres. Steve Largent predicted an active year on Capitol Hill and at the FCC for wireless carriers in 2005. Largent said Tues. that after the battles that ended 2004, including passage of the spectrum transition bill (HR 5419), he sent a warning note to CTIA’s 90 staffers.
Concerns about E-rate funding have “received considerable attention,” FCC Inspector Gen. Walker Feaster told Congress in a report. He said both the Commission and Congress have paid more attention to potential problems in the E-rate grant distribution process, but the IG’s office needs more resources to conduct more comprehensive audits. “Until resources and funding are available to provide adequate independent oversight for the USF program, we are unable to give the Chairman, Congress, and the public an appropriate level of assurance that the program is protected from fraud, waste and abuse,” the report said. There have been 135 E-rate audits, said the report, done by the FCC IG’s office and Universal Service Administrative Co. internal and contract auditors. The audits found that E-rate beneficiaries weren’t compliant in 36% of the cases, leading to recommended fund recoveries of nearly $17 million. The IG reported that in its 5 audits of E-rate recipients, 4 were noncompliant. In one case, the IG said $934,000 could be recovered from the United Talmudical Academy in Brooklyn, N.Y. The school didn’t pay “the entire non-discounted portion of FY 1999 funding on a timely basis,” the IG said. The office also said there was no documentation supporting a competitive bidding process and the school was over-billed for some services. The IG found similar problems with other schools, including the Children’s Storefront School in Harlem, N.Y., where $491,000 in potential recoverable funds were found.
President Bush signed legislation (HR 5419) on Dec. 23 that created a spectrum relocation trust fund that will guarantee that auction revenue can easily be used to move Dept. of Defense and other govt. users off the 1710-1755 MHz parts of the band. The legislation also provides funding for state and local govts. for wireless E911, and resolves accounting issues that had been causing some problems for the universal service fund (USF). Specifically on the last issue, the act provides a one-year exemption from the application of govt. accounting rules to USF programs, including E-rate. The next step on the spectrum trust fund is the transmittal of a letter from the FCC to NTIA asking it to start the process of clearing the spectrum. After the notification is sent, the govt. has 12 months to calculate costs and set a schedule for relocation and must notify the FCC 6 months before an auction.
With the incoming 109th Congress expected to pass telecom reform legislation, wireline and wireless lobbyists see issues of state jurisdiction playing a role in the debate. Edward Merlis, USTA senior vp-govt. and regulatory issues, said state jurisdictional concerns are one reason he believes Congress, not the FCC, is the only body able to make the needed changes to the telecom regulatory regime. Bobby Franklin, CTIA vp-govt. affairs, said the issues raised in the VoIP debate during the last Congress are likely to be raised in other telecom contexts next year, including wireless.