ORLANDO -- If the FCC imposes a cap on competitive eligible telecom carrier (CETC) participation in the USF program it will likely be short-term, said 2 members of the Federal State Board on Universal Service, including FCC Comr. Tate, Wed. at CTIA’s Wireless 2007 show. A source said the cap could be lifted this year. Recommendations of the joint board are expected shortly.
ORLANDO -- Wireless will have a major role in the USF program, FCC Chmn. Martin reassured wireless carriers Tues. Sources said after Martin’s remarks to the CTIA conference here that they're having trouble reconciling Martin’s advocacy of caps on reimbursements to competitive eligible telecom carriers (CETCs) with his insistence Tues. that USF be technologically neutral.
AT&T proposed a plan to “stabilize” the Universal Service Fund (USF) by calling a one-year moratorium on new carriers’ applications for USF money, freezing the number of lines for which wireless carriers can get USF support and making about $200 million in targeted reductions to USF programs. AT&T emphasized the plan isn’t “a crude cap” on funding, as proposed by Verizon. “Simply freezing the fund is neither an appropriate nor a sufficient goal,” AT&T said in a March 22 filing with the Federal-State Joint Board on Universal Service. “This interim stabilization step must be seen not only as a means of providing the Joint Board with time to conduct its review of longer-term proposals, but as the first step on the path to such fundamental reform,” the company wrote. AT&T said the plan targets “the source of runaway fund growth [which] has come most significantly from new ETCs [Eligible Telecommunications Carriers] and new ETC lines.” ETC is a regulatory term for carriers eligible to get USF subsidies. Much of AT&T’s plan would hit competitive ETCs, many of whom are wireless carriers. For example, the $200 million in reduced funding would occur through a 25% reduction in the USF funding that’s used to replace access charges. The money would continue to be available to rural ILECs whose access charges were replaced but not to competitive “ETCs that neither have, nor have ever had, an entitlement to access charges and thus do not share incumbents’ historical reliance on such support,” AT&T said.
The growth of the Universal Service Fund (USF) could be stemmed by creating a separate sub-fund for wireless carriers, based on their own costs, not rural ILECs'costs, the Independent Telephone & Telecom Alliance (ITTA) told the FCC. Competitive eligible telecom carriers (CETCs), which mainly are wireless, are “key drivers” of huge USF growth since 2001, the ITTA told agency staff in a March 22 ex parte meeting. USF outlays to wireless competitors were about $1 million in 2000 but more than $1 billion in 2006, ITTA said in materials given FCC staff. CETC funding is pegged at $1.28 billion this year and projected to reach nearly $2 billion in 2008, said ITTA, which represents midsized rural carriers. Subsidies to wireline carriers were flat 2000-2006 at about $2 billion, plus $1 billion to offset access charge reductions, ITTA said in a chart. As an option to a separate wireless universal service fund, ITTA proposed requiring wireless companies to assume “carrier of last resort” obligations if they kept getting universal service support based on ILEC costs and ILEC study areas. ITTA told the FCC the wireline network is the best vehicle for expanding broadband service to rural areas, with other service providers relying on it. So it’s important to have a “stable and predictable” USF to support ILEC broadband deployment, the association said.
Regulators should consider something other than a cap to slow Universal Service Fund (USF) growth, 5 Senate Commerce Committee members told the co-chairmen of the Federal-State Joint Board in a March 21 letter. In the belief that the joint board and FCC “won’t adopt any serious reforms of the program without a cap,” several witnesses at a recent committee hearing recommended capping the USF, the senators told FCC Comr. Tate and Ore. PUC Chmn. Ray Baum: “We reject that notion.” The joint board is expected to urge an “emergency cap” soon, said Sens. Rockefeller (D-W.Va.), Pryor (D-Ark.), Dorgan (D-N.D.), Klobuchar (D-Minn.) and Smith (R- Ore.): “We urge you to consider other more thoughtful measures to limit the growth of the USF instead of arbitrarily capping the fund.” Instead, the joint board should weigh “competitively-neutral proposals, ensure accountability for how funds are used, and promote build-out of advanced services in rural regions through effective targeting of funds to high cost areas,” the letter said. The cap has been described as a temporary measure, but “we are concerned that it would become a de facto permanent cap,” the senators said.
A hefty increase in the amount of money telecom carriers, and ultimately consumers, must contribute to the Universal Service Fund beginning in April has triggered renewed calls by industry groups for USF reform. The FCC late Thurs. raised the so-called “contribution factor” -- the proportion of interstate and international revenue that telecom carriers must donate to the fund -- to 11.7% from 9.7% for the 2nd quarter, starting in April. The industry money goes to USF subsidies.
The FCC is to vote at its March 22 agenda meeting on an item addressing proper regulatory treatment for access to the Internet using wireless networks. That item is one of 13 set for a vote. The FCC is to take up almost 180 requests for waiver or review, or both, of USAC decisions on USF funding, and an amendment of Part 101 of Commission antenna requirements for the 10.7--11.7 GHz band. The FCC will consider its congressionally required report on competition in satellite communications, it said. The Satellite Industry Association has pressed the Commission to treat other platforms as competing with satellite. The FCC shouldn’t leave in the final document market distinctions listed in the notice of inquiry lest they give Congress a distorted view, SIA said. An order on the ABC-Citadel merger and another on FM digital broadcasting also are set for votes at meeting. The Commission will take up 2 other media items. One deals with exclusive contracts for video service providers in multiple dwelling units. The other evaluates about 200 applications to build new or modified noncommercial educational FM stations.
“Congress must act to restore our global leadership in broadband networks,” Sen. Smith (R-Ore.) said Tues. in prepared remarks to the Fiber to the Home Council annual meeting. Internet services, not voice, fuel innovation, he said, urging Congress to pass a bill (S-711) he co-sponsored with Sens. Dorgan (D-N.D.) and Pryor (D-Ark.) to allow annual use of $500 million from the Universal Service Fund (USF) to extend rural broadband. Smith introduced the bill Feb. 28. Smith also supports S-234 to bolster wireless broadband and municipal investment in Wi-Fi networks. Smith said he and Sen. Kerry (D-Mass.) will introduce a bill to push broadband by providing credits for research, depreciation for broadband equipment and credits for deploying broadband services to charitable and local emergency response entities. The bill would require a Dept. of Treasury study of depreciability of fiber equipment used in telecom services, Smith said: “All of these tax incentives will be temporary in order to spur broadband deployment over the next few years.”
The Satellite Industry Assn. has been meeting with FCC aides to lobby for reverse auctions to be instituted for distributing universal service subsidies, according to several filings. The satellite industry has been paying into the Universal Service Fund, SIA Exec. Dir. David Cavossa said, but won’t be eligible to receive subsidies until the FCC declares broadband services eligible. If satellite operators ask for subsidies only for the customer dish and modem, the service could be less expensive than running cable, fiber or telephone lines to rural, remote areas, said Cavossa. SIA is proposing a pilot USF program to test its hypothesis in the market, Cavossa said.
Mass. consumers will benefit if the FCC shifts universal service contributions from a revenue base to phone numbers, a pro-numbers group said Fri., challenging predictions of harm to consumers by the Mass. Consumer Coalition and the Keep USF Fair Coalition (CD March 9 p10). Opponents used “incorrect data and ‘funny math,'” said the USF by the Numbers Coalition. The opposing group “exaggerates how high numbers- based assessments would be” and overstates what Mass. customers now contribute to USF, said USF by the Numbers, composed of AT&T, CTIA, NCTA, USTelecom, Verizon, VON Coalition, DSL.Net, GCI and IDT Corp.