Chmn. Martin’s political instincts will mean the FCC tackles fewer controversial items in coming months as commissioner vacancies remain unfilled, analysts said Wed. at an FCBA brown bag lunch. Prospects are dim for quick appointments, as the White House focuses on potential nominees to the Supreme Court, where one or 2 seats could open up this summer, they said.
A bipartisan coalition of rural lawmakers said the House should take the first crack at addressing problems with the Universal Service Fund (USF) in telecom rewrite legislation. The proposal came Tues. at a press conference announcing 9 principles to be included in a bill. Sixty members of the Rural Caucus sent a letter to House Commerce Committee Chmn. Barton (R-Tex.) and Ranking Member Dingell (D-Mich.), outlining the principles, which include extending the base of contributors to USF to include “all providers of 2-way communications regardless of technology used to ensure competitive neutrality.”
FCC Comr. Copps expressed concern about one part of the Commission’s proposal to improve management of the universal service fund (CD June 15 p8): possible elimination of the application process for the E-rate program. The FCC asked for comment on distributing the funds directly to schools and libraries based on their size, instead of requiring applications, Copps said. In a separate statement, Copps said such a change could make it harder to identify fraud, because it would let funds be used for unspecified services and equipment, rather than requiring applications that specify where the money would go. Eliminating the application process presents other potential problems, he said: “Distributing funds directly to schools could conceivably exclude Catholic and other private and parochial schools from the E-rate program. Tying funds to school size could conceivably result in our rural and insular schools being denied the funds they need for the extraordinary cost of services in these areas, just because they have fewer students.” Copps said he supports many aspects of the proposal to improve USF programs, which the FCC revealed Tues. in a notice of proposed rulemaking. The E-rate program’s importance “means it needs regular review and care,” he said. Copps said he’s particularly supportive of a proposal to strengthen debarment rules and take new steps to identify and punish “predatory contractors.” Comr. Adelstein said he, too, backs better debarment rules and is glad the NPRM seeks comment on broadening the debarment rule “to encompass entities that have been found guilty of civil and criminal violations beyond those associated with our universal service programs or entities that are shown to have engaged in clear patterns of abuse of our rules.” Adelstein said he’s less supportive of proposals “to adopt overly formulaic approaches,” for example “allocating support based on formulas, like school size, may ignore critical differences in the cost to obtain services in rural parts of the country and may work against smaller or private schools that cannot achieve economies of scale.”
The FCC Tues. launched an inquiry into management and oversight of the universal service fund (USF) and will seek comments on how to improve the program. Among topics under scrutiny: (1) How to simplify and streamline the program’s management. The agency tentatively concluded a multi-year application process for telecom services in the E-rate and rural healthcare programs would simplify matters. The FCC also asked for comment on shortening or consolidating application forms and adopting deadlines to provide certainty to program applicants. (2) The effectiveness of efforts to protect the fund against misuse. The Commission tentatively concluded “more aggressive debarment procedures are necessary” and asked for comments on ways to improve the debarment rules, according to an FCC news release. The FCC also sought comment on establishing independent audits of some USF beneficiaries and contributors, and on rules to ensure those audits are effective and fair. It asked for suggestions on rules for recovering USF money not used in accordance with the rules. (3) The effectiveness of the administrative structure. (4) The need for performance measures to assess the program’s effectiveness. FCC Chmn. Martin said the notice of proposed rulemaking (NPRM) “provides an opportunity fo the Commission to explore the lessons learned through the operations of the High Cost and Low Income programs” and possibly apply them to other USF programs. Martin said the programs use strict formulas to distribute universal service support. “This type of formulaic approach may hold promise for improving the administration of the E-rate and Rural Healthcare programs,” he said.
Clarification: Speaking at Supercomm (CD June 9 p10), FCC Chmn. Martin said the USF high-cost fund hasn’t violated Anti-Deficiency Act controls.
Less than a decade after Congress passed a landmark law expanding the types of companies supporting the federal Universal Service Fund (USF), the fund faces a new financial crisis. The main problem, though, isn’t that the fund will run out of money any time soon. Due to fees the FCC assesses on local, long distance, wireless, paging, pay phone and international carriers alike, the USF now takes in about $6.5 billion a year. That money subsidizes rural and low-income residential phone service and communications links to rural schools, libraries, hospitals and other vital services. If the fund needs more cash, the fees automatically are adjusted upward.
CHICAGO - Federal and state regulators said Wed. they sympathize with concerns about local franchising requirements impeding video competition but doubt the FCC has authority to preempt them. On a panel at the Supercomm show here, FCC Comrs. Abernathy and Adelstein and Cal. PUC regulator Susan Kennedy, considered a maverick who favors federal preemption on some issues, said Congress or state legislatures are better positioned to take such action.
Despite pressures at multiple levels, the universal service fund (USF) may finish 2005 without a legislative overhaul. Senate Commerce Chmn. Stevens (R-Alaska) and ranking member Inouye (D-Hawaii) and House Commerce Committee Chmn. Barton (R-Tex.) want USF reform, as do others. Industry wants USF reform. And the FCC is pursuing reform (see accompanying article).
With universal service fund (USF) charges soaring for wireline and wireless carriers alike, the Bells, long- distance providers, rural phone companies, mobile carriers and cable TV operators are pressing for changes in the funding formula. But that’s where agreement ends.
When the USF was new, Franklin Roosevelt wasn’t halfway through his first term. Even so, the venerable program still has a startling capacity to make news.