A bill introduced by Sen. DeMint (R-S.C.) that would give the FCC authority to define what constitutes fair competition for consumers is based largely on ideas from the Progress & Freedom Foundation’s project on telecom reform. The bill, which has no co-sponsors, includes a substantial section on universal service fund (USF) reform -- the first major Senate telecom bill to address the matter. The provisions are based on research by experts PFF convened from universities, law firms and research groups (CD Dec 9 p3). DeMint’s bill would require the FCC to adopt within 6 months after enactment a new contribution mechanism based on phone numbers; place a $3.6 billion cap on distribution, in the form of performance-based block grants to states.
A bill to create a market-oriented, competition-based communications regulatory system was introduced Thurs. at our deadline by Sen. DeMint (R-S.C.). Under it, communications firms would be regulated like other businesses, to protect consumers and ensure there’s no unfair competition, he said. Services alike from a consumer’s perspective would be treated alike. As such, phone service offered by a cable, land line or wireless firm would come under standard rules. The USF program would be reformed so all service providers contribute equally and funds go out more efficiently, transparently and in a technologically neutral way. Cable TV franchises would be phased out over 4 years. States’ enforcement roles would be preserved, preserving their authority to protect consumers and manage public rights-of-way. “We can no longer force a modern, dynamic industry to operate on archaic rules that destroy job creation, limit consumer choice and needlessly raise prices,” DeMint said. He urged Congress to “wake up” to the fact that today’s rules date to the days of rotary phones.
Telecom will be a “high priority” at the Senate Commerce Committee in 2006, Committee Staff Dir. Lisa Sutherland told a CompTel conference Thurs. It’s premature to say if the House, which has released 2 versions of its draft bill, will take the lead, Sutherland said. “Our bill will take a broader approach and Universal Service Fund (USF) reform will be an important element,” she said. Senate Democratic Counsel Rachel Welch agreed, saying both House and Senate will be looking at one another’s telecom reform efforts.
An FCC Office of Inspector Gen. (OIG) effort to audit more Universal Service Fund (USF) contracts remains stymied by an auditor shortage, OIG said in a report to Congress for the 6 months ending Sept. 30. OIG has long wanted more auditors, especially for E-Rate projects. “Unfortunately, we have made no additional progress in either obtaining additional staff or completing the 3-way contract with USAC (the Universal Service Administrative Co.)” meant to get auditors from an accounting firm, the OIG said. A staff member was to transfer from the Commission’s Office of Managing Dir., but “personnel actions were frozen shortly after Chairman Martin assumed his position and no action has been taken to complete this transfer.” OIG said the 3-way contract for contractors seemed to have FCC approval but in mid-Aug. the FCC Gen. Counsel’s Office raised concerns about the vendor selection process. The OIG said: “We have been working with USAC since the summer of 2004 to establish a three- way contract under which the OIG and USAC can obtain audit resources to conduct USF audits. In addition to providing access to resources to conduct audits, the three-way agreement was intended to provide access to resources necessary to provide support to criminal investigations of E-Rate and USF fraud. As a result of delays in establishing the three-way agreement, the FCC OIG has struggled to provide adequate investigative support to federal law enforcement.”
Universal Service Fund (USF) reform should be a pillar of telecom reform, FCC Comr. nominee Copps told Senate Commerce Committee Chmn. Stevens (R-Alaska) at his Tues. confirmation hearing. The FCC needs to hear from Congress what “universal service” means, Copps said. He also said the contribution methodology needs repair. Responding to Stevens’ query on Copps’s top priority in updating the ‘96 Telecom Act, he said: “USF is so essential to the future of this country… I think we've got to fix that system.”
The National Emergency Number Assn. (NENA) raised red flags about a request from wireless reseller TracFone that the FCC potentially lighten the regulatory load placed on it if it’s designated as the first wireless reseller with eligible telecommunications carrier (ETC) status under the USF lifeline program. Public safety sources said Tues. while TracFone is relatively small compared to a few of its peers, the issues raised aren’t, especially if other resellers also apply for ETC status.
In response to a federal court remand, the FCC voted Fri. to seek comment on how to craft new rules for distributing universal service support to Qwest and other “non-rural” carriers. Non-rural carriers tend to be bigger carriers with more urban than rural customers. The rules would guide the FCC in deciding how much support they should get when serving high-cost areas.
FCC Chmn. Martin made it clear he still backs a numbers-based approach to reforming the way companies contribute to the Universal Service Fund (USF), despite concerns about that method’s effect on low-volume telephone users. User groups have said a phone number- based approach would hike USF fees carriers pass on to customers.
Plans for a draft House telecom bill markup are on hold until next year, lawmakers decided late Thurs. afternoon, when they couldn’t resolve differences. “We'll have a markup when we're ready to have a markup,” a panel spokesman said. David Hickey, telecom aide to Rep. Stearns (R-Fla.), said at a conference sponsored by the Practising Law Institute (PLI): “We want to get it done and we were debating a markup.”
A plan to reform the Universal Service Fund (USF) with more state control and a cap on growth got Sen. Sununu’s (R-N.H.) conditional backing at a Wed. forum sponsored by the Progress & Freedom Foundation (PFF), which also proposed the reform package. As it stands, the USF program “significantly distorts the marketplace, undermines innovation and limits services to customers,” Sununu said. PFF’s plan correctly aims to limit growth and increase efficiency, he said: “We've got too many programs that are on auto-pilot.”