The FCC should grant a Cingular request that it reverse course and include revenues classified as “toll” charges under the wireless safe harbor for USF, CTIA said. Under FCC rules, the Commission doesn’t seek supporting data from wireless carriers on the percentage of calls that are interstate and so subject to USF fees, instead of intrastate, provided a carrier assumes that 28.5% of calls are subject to USF. The problem, Cingular told the FCC in a complaint, is that instructions on a 2002 worksheet for calculating USF payments keep it from applying the safe harbor to toll calls. Cingular said this apparent inconsistency in the worksheet requires it to make “significant additional contributions” for toll calls. “The Commission did not qualify the availability of the safe harbor and, indeed, it would have been antithetical to the purpose of the safe harbor for it to have done so,” CTIA said. “When it addressed the wireless safe harbor again in 2002, the Commission did not suggest any limitation on its application.” CTIA said the issue hits other carriers. “The inappropriately narrow application of the wireless safe harbor has concerned CTIA and its members for at least two years, and CTIA urges the Commission to grant Cingular’s request,” CTIA said.
Universal service support for rural wireless firms has grown “dramatically” the past year and soon will exceed $1 billion, McLean & Brown consultants said. At the same time, support for incumbent wireline telephone companies has been “essentially constant” since 2002, said the paper, an update of a March 2005 report by the Phoenix-based firm. The paper said incumbents face more than 6 wireless competitors in some rural areas, a further indication today’s fund distribution process for competitive carriers “is still fatally flawed and must be fundamentally reformed.” The paper said 58% of “study areas” set up for Universal Service Fund (USF) funding purposes have 2 or more wireless competitors and 29% have 3 or more. The report was financed internally, not commissioned by clients, said consultant Glenn Brown. It was praised by the Coalition to Keep America Connected, made up of incumbent telecom companies. “The paper notes that without fundamental reform of the portion of the program that subsidizes wireless [carriers], the entire fund is at risk,” the coalition said in a release. The paper said the FCC could ease the situation by: (1) Fixing the USF collection mechanism. (2) Limiting some rural areas to “just one carrier of last resort” eligible for USF support. “Not all areas can sustain multiple carriers without massively inefficient support,” the paper said. (3) Establishing separate funding mechanisms for wireline and wireless carriers. For most consumers, they are complementary products. (4) Reforming intercarrier compensation.
Mercedes-Benz USA weighed in on the debate over reform of the universal service fund contributions process, urging the FCC to exempt “core telematics” from any numbers-based system. Mercedes said core telematics is a vehicle-based public safety service relying on phone numbers and network airtime mobile carriers provide. Mercedes Tele Aid service, which links occupants of Mercedes vehicles to an emergency call center, is offered free for the first year, then costs $240 yearly, the car firm said. If the FCC wanted to levy USF contributions on telecom providers involved in core telematics transmission it could assess them under today’s revenue-based system, Mercedes said: “Although Tele Aid relies on phone numbers and CMRS airtime to enable customer vehicles to communicate with… call centers, Tele Aid does not provide the ability to call, or be called from, any other locations. Tele Aid is a public safety ‘information’ service, not telecommunications.”
T-Mobile agreed to accept a numbers- and capacity-based contribution methodology for USF provided it is structured so it doesn’t discriminate against wireless carriers. T-Mobile, which previously urged a revenue-based approach, said last week in a filing a numbers-based approach would be acceptable if subscribers on family plans don’t have to pay USF fees beyond what the primary subscriber pays. T-Mobile said the FCC should recognize that “the family is an economic unit sharing one ‘bucket’ of minutes and that each family member will need a mobile phone, with its own number, to replace the single wireline number formerly used by the entire family.” T-Mobile also said the FCC shouldn’t assess a monthly fee for prepaid plans, but that any fee should be included in the price at which the cards are sold to customers. On Mon. TracFone, a 2nd carrier, disagreed with T-Mobile’s approach on prepaid plans, saying a numbers-based methodology remains “wholly inappropriate for prepaid wireless services.”
LAS VEGAS -- Ore. PUC Comr. Ray Baum -- chairing a NARUC-sponsored group offering the latest proposal for intercarrier compensation reform -- said he hopes to present a final version to the FCC by May 15. But he conceded that wireless and cable companies are generally unlikely to support that plan, and many members of NARUC and NASUCA have questions. Baum has asked industry to finish its review of the plan and report back by April 21.
FCC Chmn. Martin’s universal service fund plan could cause lower-income seniors to cut back long distance calling, according to a study funded by the Seniors Coalition, which bills itself as an alternative to AARP. Estimating the Martin plan would add $1-$2 monthly to phone bills, the group said 83% of seniors oppose changing the USF fee.
More industries would contribute to the Universal Service Fund (USF), with distributions more tightly controlled, under a bill introduced Thurs. by Reps. Terry (R- Neb.) and Boucher (D-Va.). The bill would allow USF funds to go to pay for broadband services. “Reforming USF is a significant step in closing the gap between rural Americans and urban Americans, allowing for all of America to compete in the global marketplace with both products and ideas,” Terry said in a statement.
Consumers in 12 states would be hardest hit by a proposal before the FCC to move to a numbers-based system for contributing to the Universal Service Fund, the Keep USF Fair Coalition said Thurs. The coalition said consumer bills would go up the most in Cal., Fla., Ill., Md., Mass., Mich., Minn., N.Y., O., Pa., Tex. and Va. In all of those states except Tex. and Minn. “consumers already pay more in federal USF taxes than their states get back for schools, hospitals and rural connectivity and that disparity would grow even wider” under the plan supported by FCC Chmn. Martin, the group said. Tex. and Minn. would move from being USF “winners,” taking in more USF funding than paying out, to being USF “losers,” the coalition said.
The rising cost of universal service subsidies might be stemmed through a new system based on “reverse auctions,” FCC Chmn. Martin said in a Q&A session at a Bank of America conference Wed. in N.Y.C. Martin said the idea, which has been proposed in the past, would let phone companies bid to provide universal service in rural areas, with the winners offering the lowest per-subscriber subsidies. For example, a bidder might say service could be guaranteed at $100 a subscriber, he said. “They'd be bidding on how little subsidy you need,” he said. What’s nice, he said, is that such a system would be technologically neutral.
CTIA, which views USF as one of the most significant regulatory issues for wireless carriers, told the FCC as it crafts new rules for distributing universal service support to Qwest and other “non-rural” carriers that its primary goal must be not to give an advantage to some carriers at the expense of others. The FCC in Dec. sought comment on how to change its rules after the 10th U.S. Appeals Court, Denver, twice remanded the FCC rules for high-cost support, most recently a year ago. “It’s a serious flaw with the current system that it’s based on what carriers spend and not necessarily on where they provide service or who they are providing service to,” Paul Garnett, dir. of regulatory policy at CTIA, said Tues. at the Catholic U. symposium on telecom. “You can end up with a carrier in a very urban or suburban area that happens to spend a lot of money, gets access to high cost universal service support, then have another carrier… that offers service in very rural areas and gets absolutely no universal service support.” Garnett said the CTIA spent about a year developing its numbers-based proposal on USF reform, which represents the group’s “very diverse” membership. “Basing all high-cost universal service support on efficient costs is long overdue,” CTIA said. “Whatever changes are made to the underlying mechanisms, the FCC must ensure that universal service support continues to be distributed in both a competitively- and technologically- neutral manner, as required by the [Telecom] Act. That way, consumers, and not state or federal regulators, will determine who competes for and delivers services to them.” CTIA said the FCC should adopt a “single, simplified, and unified support mechanism,” replacing the 5 high-cost mechanisms now in place. Wireless carriers believe they don’t get their fair share of USF money, the Assn. said, with wireless carriers responsible for some 34% of contributions to universal service, while receiving only about 12% of payments. Dobson Cellular, meanwhile, said in a filing that any changes should follow broader themes of the need for reform. “Through several pending proceedings, the Commission is in the process of considering fundamental reforms to the high-cost program, for both the rural and non-rural mechanisms, as well as possible reform to the overall administration and management of the universal service program,” the wireless carrier said: “Comprehensive reform is needed with regard to all high-cost support mechanisms, and the Commission must take a comprehensive, ‘big picture’ approach to such reform.”