The Senate sent telecom legislation to President Bush on Wed. evening in a literal 11th-hour vote. By approving HR-5419, the Senate approved 3 legislative measures and ended weeks of political infighting about everything from Congressional Budget Office scoring to appropriators’ authority and boxing regulation. Sources said the White House would sign the act, which includes the spectrum relocation trust fund, E-911 funding and a temporary fix to accounting problems in the E-rate program. The junk fax bill, HR-4600, was the only legislation that had a reasonable chance to pass and didn’t. “The legislation brings needed changes that will promote homeland security and increase wireless broadband opportunities,” FCC Chmn. Powell said.
At our deadline, Congress had taken no action on pending telecom legislation and appeared unlikely to do so. Conflicting stories and behind-the-scenes finger pointing highlighted the debate this week, but congressional and industry sources attributed the collapse of legislation to one central theme: Political infighting and retaliation.
There appears to be a break in the stalemate over remaining telecom legislation before Congress, but it remains unclear if there’s time to move legislation before Congress recesses for the year. Senate Commerce Committee Chmn. McCain (R-Ariz.) agreed to move the Universal Service Fund provision that’s part of the trio of telecom bills awaiting congressional action (HR-5419). McCain had a hold on the bill because the House wouldn’t consider his bill to create a national boxing commission. It appeared the 2 other measures -- on spectrum trust fund relocation and E-911 funding -- wouldn’t get moved.
FCC Chmn. Powell and USTA urged Congress Mon. to pass legislation that would exempt the universal service fund from Anti-Deficiency Act requirements that would delay E- rate payments and could lead to higher USF fees on telecom consumers. The USF provision is part of HR-5419, which also includes spectrum trust fund relocation legislation and federal funding for E-911 deployment. The bill has been stalled by Senate Commerce Committee Chmn. McCain (R- Ariz.), who’s insisting that the House also consider his legislation that would establish a national boxing commission. In a public statement Mon., Powell said all 3 measures were important and urged Congress to pass the bill before it adjourns. Congress is scheduled to meet this week to consider the intelligence reform legislation, but many in the telecom industry hope the impasse on HR- 5419 can also be resolved this week, though sources have said both McCain and House leaders appear reluctant to change their position. “The temporary Anti-Deficiency Act exemption is necessary to mitigate unnecessary increases to our contribution factor as well as ensure our school children have continued access to computer resources,” Powell said. A letter Mon. from 219 USTA members to Senate leaders urged Congress to pass the USF legislation. “Unfortunately, if not corrected, this bureaucratic change could also cause consumer phone rates to rise dramatically,” said USTA Pres. Walter McCormick.
A senior House Commerce Committee aide said Fri. that high-cost support of the Universal Service Fund (USF) was growing too large, and when reforming USF next year, members would look for more efficient ways to disburse the fund, perhaps even favoring wireless technologies over wireline. House Commerce Committee senior counsel Howard Waltzman told a Progress & Freedom Foundation (PFF) forum on USF that if the goal of the high-cost program is to ensure affordable voice telephony, more-efficient wireless technology might be preferred to costly wireline service. Waltzman said “appropriators didn’t consult us” before inserting a provision in the 2005 omnibus appropriations bill that would prevent the FCC from imposing a “primary- line restriction” on USF high-cost support. Waltzman intimated that House Commerce Committee leadership would be interested in considering some forms of line restrictions when USF came up in the House. “There’s no reason to increase the size of the fund,” Waltzman said of the high-cost fund.
House Telecom Subcommittee ranking Democrat Markey (Mass.) said FCC Chmn. Powell and the Office of Management & Budget gave “insufficient analysis to the repercussions” to the Universal Service Fund of the FCC’s application of the Anti-Deficiency Act (ADA). Powell responded to several questions Markey asked Powell about ADA application to USF, to which Markey said it was clear that Congress needed to act “quickly to minimize the damage” the policy change would create. Powell told Markey that the Commission didn’t believe there was or would be any risk that USF programs -- including E-rate -- wouldn’t meet their funding requirements. Powell told Markey that he didn’t expect any short- or long-term effects from the accounting change.
CTIA asked the FCC to change a requirement in a 2002 order revising Universal Service Fund contribution rules that force carriers that decide to pay USF fees based on the 28.5% wireless safe harbor to nonetheless calculate some of revenue streams and submit the numbers to the FCC. The safe harbor is the assumed amount of wireless calls that are interstate and thus subject to USF fees. A carrier source said Thurs. that when the FCC modified its rules most didn’t notice at first that in addition to raising the safe harbor from 15% to 28.5% the FCC also imposed a reporting requirement for some classes of revenue, specifically for minutes beyond the customer’s monthly basket and for international calls. The source said taking this step negates some of the safe harbor’s benefit. “It’s not that easy for wireless carriers to do this for any category of revenues,” the source said. “For those who avail themselves of the safe harbor it doesn’t make sense to do it for some [revenue sources] but not for everything.” About half of the carriers use safe harbor calculation in assessing USF contributions. The larger carriers in particular find the calculations difficult. CTIA said the reporting requirements “improperly limit the scope of the wireless safe harbor and will result in recovery practices that are unreasonably expensive, administratively burdensome for carriers, extremely confusing for consumers, and inconsistent with direction provided in Commission orders.” - HB
A review of the 1996 Telecom Act might not be the only reform coming from Congress next year, staffers said Wed. Lisa Sutherland, telecom aide to Sen. Stevens (R- Alaska), told the ALTS Business & Policy Conference that Stevens would consider reforming the FCC’s decision-making process. Sutherland, who will become the Senate Commerce Committee staff dir. next year when Stevens becomes chmn., didn’t offer any ideas on how the process should be fixed, but told us the telecom industry always seems to be in a state of uncertainty because FCC rulemakings take too long and are held up in lengthy court challenges.
Another obstacle has emerged for the beleaguered spectrum trust fund legislation. Senate and industry sources told us that Senate Appropriations Committee ranking Democrat Byrd (D-W.Va.) has placed a hold on the bill, which has now been paired with E-911 and universal service fund (USF) legislation (HR-5419). Sources said Byrd’s hold is due to the same concerns that appropriators always had over the bill: The usurping of Appropriations Committee jurisdiction. The bill, which seeks to reimburse Defense Dept. and other govt. users for portions of the 3G spectrum they now occupy, would essentially appropriate money from spectrum auctions in advance. House appropriators had similar concerns over HR-1320, the original spectrum trust fund bill, that were eventually resolved before the House passed the bill in 2003. That bill is now part of HR-5419, a catch-all bill passed by the House 2 weeks ago, and includes state funding for E- 911 deployment and an exemption from Anti-Deficiency Act requirements on USF. The Senate Commerce Committee has passed spectrum trust fund legislation, but it never moved to the Senate floor. During deliberations on the bill, Senate Appropriations Chmn. Stevens (R-Alaska) said he had concerns that the bill would usurp appropriators authority. But sources said Byrd’s hold wasn’t the main obstacle for HR-5419. Senate Commerce Committee Chmn. McCain (R-Ariz.) is also holding up the legislation because House leadership won’t take up his measure to establish a national boxing commission. One industry source said differences with Byrd, which were based on substance, are likely to be easier to resolve than the differences between McCain and House leadership, which sources said appear to be political.
Responding to a petition by the American Public Communications Council (APCC), the FCC clarified part of its universal service rules as they apply to payphone providers. The FCC denied an APCC request to reconsider requiring independent payphone providers to contribute to the Universal Service Fund (USF). However, it agreed to clarify that if an independent payphone provider purchased telecommunications for resale and contributed directly to the Universal Service Fund (USF), it shouldn’t be subject to the “pass-through” of universal service contributions by interexchange carriers and LECs. “Allowing such a practice results in a double burden for payphone providers that use resold telecommunications services,” the FCC said. The action came as the FCC considered numerous petitions for reconsideration of 2 universal service orders. In an order issued Nov. 29, the FCC denied most of the petitions either because the FCC said they raised no new facts or were moot. However, the FCC also clarified, in response to a request by the Wireless Cable Assn., that MDS licensees aren’t required to contribute to the USF on the basis of revenue derived from broadcasting services. The FCC also clarified that MDS licensees that provide interstate telecom services to others for a fee on a non-common carrier basis aren’t exempt from contribution requirements. The FCC clarified for CTIA that mobile carriers are required to report as end-user revenues the proceeds they gain from providing telecommunications to entities qualifying for the so-called “de minimis exemption.” However, they don’t have to identify individually the resale customers qualifying for the exemption. The exemption applies to carriers whose telecom activities are so small their contributions would be “de minimis.” Among those denied was a petition by Mobile Satellite Ventures for reconsideration of a decision that all ‘pure’ resellers were ineligible for universal service support. MSV had argued that resellers should be eligible for support when they resell the services of a facilities-based carrier that isn’t a recipient of universal service subsidies.