The FCC defended its management of the E-rate program as consistent with its historical organizational structure but said it could make changes to the administrative structure in light of the Govt. Accountability Office’s (GAO) critical review. On Wed., the GAO presented the House Commerce Oversight & Investigations Subcommittee its report on the FCC’s management of E-rate, which funds Internet and information technology equipment for schools and libraries. The GAO concluded there were structural flaws in the FCC’s management of E-rate, but the FCC said its use of a private organization to manage the program was similar to its establishment of the National Exchange Carrier Assn., which manages the access charge assessments. “Congress was well aware of that practice when it enacted the Telecommunications Act of 1996,” the FCC said in its written response to the GAO report. The FCC said it believes its current management structure of E-rate -- part of the universal service fund -- was consistent with congressional intent. The FCC also disagreed with GAO’s assessment that the FCC never conducted a comprehensive study of federal policies that would apply to E-rate. The FCC cited several separate reviews of policies relating towards USF and E-rate. The FCC acknowledged the GAO’s conclusion that performance measurements for E-rate weren’t comprehensive. It said the FCC has assigned additional staff to review the performance measurements. The FCC also said it has brought on more staff to catch up on back appeals, another flaw cited in GAO’s review. During the hearing, House Commerce Committee Chmn. Barton (R-Tex.) said E-rate fraud, waste and abuse, which has been investigated for nearly 2 years by the Oversight & Investigation Committee, was out of control and Congress must consider a legislative fix. House Commerce Committee ranking Democrat Dingell (Mich.) also agreed, saying he looked forward to joining with Committee leadership to “enact the reforms that the FCC either cannot, or will not, implement.”
Chances of a Telecom Act rewrite this year are slim, and court decisions will make any action confusing for Congress, panelists said at Catholic U. symposium on the Telecom Act’s future Thurs.
Wed.’s House Telecom Subcommittee hearing on VoIP focused mostly on how the new telecom service fits with the Universal Service Fund (USF) and intercarrier compensation. House Commerce Committee Vice Chmn. Pickering (R-Miss.) used the hearing to say he would reintroduce VoIP legislation. The bill will resemble legislation he introduced last year to preempt state regulation of VoIP, an issue apparently resolved by the FCC’s ruling in the Vonage petition. But Pickering said it was also “critical” to address intercarrier compensation in VoIP legislation. His bill would set a deadline for the FCC to finish reviewing intercarrier compensation regulations. Pickering suggested a deadline, and all witness at the hearing agreed. But Mark Shlanta, CEO of S.D. Network Communications, said the review period should be 12-18 months instead of the 180 days Pickering proposed. Pickering deemed a compromise of 9 months acceptable. House Commerce Committee Chmn. Barton (R-Tex.) asked the witnesses if they would support reducing or eliminating USF. “Reform it, don’t repeal it,” Carl Grivner, CEO of XO Communications, said of USF. Grivner said it should apply equally to all carriers, including cable VoIP providers. Barton asked if anyone on the panel would vote to repeal USF. When none replied, Barton said: “Now that we've determined that you're for USF, are you willing to pay into it?” Thomas Rutledge, COO of Cablevision Systems and representing NCTA, said cable is willing to support USF. However, he said an updated definition of USF is needed to clarify exactly what services USF funds could underwrite. House Telecom Subcommittee Chmn. Upton (R-Mich.) asked the witnesses if USF should be financed with a flat fee for each phone line. Most said no. Paul Erickson, SunRocket chmn., said assessing USF as a percentage of revenue would be the easiest. CenturyTel Pres. and COO Karen Puckett and Grivner said they would support a revenue percentage formula. Barton said he thought VoIP was a poor acronym for Internet phone service and suggested his own: BITS, for Broadband Internet telephone service. He said it was “food for thought” and he would consider other acronyms.
Senate Commerce Committee Chmn. Stevens (R-Alaska) laid out new communications-related ideas Wed. at a breakfast forum held by The Hill newspaper. He suggested changing sunshine rules for the FCC and the system for auctioning spectrum. Stevens clarified positions on indecency regulation and said he remained open to ideas for guarding children from raunchy TV. He left open how the proposed telecom mergers might affect universal service fund distribution.
At least 3,000 consumer letters were filed in the FCC’s universal service docket (96-45) Wed. urging the FCC to reject a proposal to move to a flat fee for universal service fund (USF) contributions by carriers. The letters, all the same, appear to be written by a lobbyist group. At our deadline, its identity couldn’t be confirmed. However, one of the letters indicated a link to a website -- http//keepusffair.org -- sponsored by a consumer coalition that includes the Telecom Research & Action Center (TRAC). Signed by individuals from throughout the country, the letters told the FCC: “I do not want to pay more for my telephone service! I urge you to reject a flat fee proposal that would change how contributions are made to the Universal Service Fund… Under the flat fee you are considering, people who make few long distance calls would pay the same as people or businesses that make many calls… This is unfair.” The letter also makes reference to wireless service: “I use my wireless phone for safety, security and convenience. I don’t want to lose those benefits so big businesses can pay less than their fair share.”
“There is a psychological barrier that has to be crossed” in regulating IP technologies like VoIP when they involve voice, FCC Wireline Bureau Chief Jeffrey Carlisle told VoIP-industry lawyers and govt. staffers. This barrier is making the states nervous as the FCC moves to regulate -- or deregulate -- in 2005, said Carlisle, who’s also chmn. of the FCC’s Internet Policy Working Group (IPWG). “It would be very nice if we could get away from the binary world of ‘It’s a telecommunications service,’ to ‘No, it’s an information service,'” he said, suggesting few regulatory restrictions may be recommended when the IPWG sends an order draft to commissioners in April or May: “We're not looking for things to regulate.” Carlisle said the FCC will move forward on clarification of interstate/intrastate and certain IT/telecom distinctions by spring, independent of the Brand X case, which won’t be decided until June -- though he said a slight delay on the final order could emerge from the court decision. Carlisle said USF and E-911 will be the big issues facing a “very tired” FCC which has dealt with 8 years of ironing out the 1996 Telecom Act; he suggested the FCC might be unwilling to make E-911 capability mandatory but said he understood the concerns of parents whose children “might have to call 911” on what appears to them to be a standard telephone.
The Clear Coalition, which supports Sen. Smith’s (R- Ore.) bill (S-284) to redistribute the $292 million “non- rural” fund in the universal service fund (USF), delivered flowers and a Valentine’s Day message to the 80 senators representing 40 states that don’t receive any of the money. The message said: “Look which states get NO LOVE this Valentine’s Day.” Miss., Ala. and W. Va. are leading recipients of the fund. The fund goes to larger ILECs that serve rural consumers. Supporters of the fund have argued there are more rural consumers served by large ILECs in the leading states, which is why these states get much of the money.
Senate Commerce Committee Chmn. Stevens (R-Alaska) had strong words for AT&T, which he said was skirting its universal service fund (USF) obligations by not applying the fee to its prepaid calling cards. AT&T has argued that since the cards also feature an ad, it’s an information service rather than a long-distance service. Stevens’ anger was also directed at AT&T’s efforts to use these calling cards to direct complaints to members of Congress, who he said were inundated with calls from constituents concerned about the issue.
Verizon Wireless Gen. Counsel Steven Zipperstein said the carrier isn’t sure what wireless carriers will get out of the FCC’s intercarrier compensation (ICC) proceeding, which is to kick off next week in a major way with the release of a rulemaking. “The situation is fluid,” Zipperstein told reporters: “There are a lot of competing interests at stake. It’s a very, very highly political issue. What I would say is we're absolutely on top of it.” Zipperstein compared ICC to wireless carriers ongoing campaign to cut taxes on wireless services. “Our concern is… that wireless customers are treated fairly,” he said. “Just like in the tax area where wireless customers have been unfairly burdened with discriminatory taxation where the states have been foisting on our customers unfair obligations… the same core principle holds true in the intercarrier comp and USF area.”
Sen. Smith (R-Ore.) was expected at our deadline to again introduce legislation designed to distribute a portion of the universal service fund to more states. The bill will likely be similar to his legislation introduced last year, S-1380, which would change the distribution formula for the USF’s so-called nonrural fund, used to fund larger carriers’ networks in rural areas. Industry sources said the bill would have 19 co-sponsors. Rep. Terry (R-Neb.) introduced similar legislation last year (HR-1582). The bill is supported by Qwest, which serves many rural states that don’t receive funding. “Under the FCC’s latest estimates, a single state will receive more than half of this fund, and 40 states -- including many of the most rural and remote parts of the country -- will not receive a dime. This is clearly unfair and unacceptable, and we support Senator Smith’s efforts to fix it,” said Gary Lytle, Qwest senior vp-federal relations. The CLEAR Coalition, which also supports the Smith bill, released data Thurs. that said Miss. -- served by BellSouth -- received more than half the $290 million fund. The study said 3 states in 2005 would receive about 75% of the fund. Only 10 states receive funding, the report said. Since 2000, Miss. has received about $726 million from this one USF account, the report said.