A bi-partisan group of House members is urging the FCC not to adopt a primary line restriction on universal service support. Citing a recent recommendation by the Federal-State Joint Board on Universal Service, the members said such a restriction would “wholly vitiate the purpose of universal service.” The members said a primary line restriction would put rural customers at a distinct disadvantage to urban customers because 2nd lines and cell phones would be more expensive for rural residents. “Rural customers would have the right to only one phone line at a reasonable cost comparable to urban areas, and their second lines could be charged exorbitant rates,” the letter said. The members said such a step would be “drastic” and would prevent the upgrade of facilities in urban areas. The letter also urged the FCC to consider rural small businesses in its final USF decision so that the result will “ensure that your final decision will not impair their ability to maintain lines in a cost effective way.”
AT&T said it had saved about $250 million since 2000 by not paying terminating access charges on phone-to-phone IP telephone calls, a practice the FCC recently said wasn’t allowed (CD April 22 p1). In a 10-Q filing with the SEC Mon., AT&T said as a result of the FCC ruling, the company will begin paying terminating access charges on the IP calls that will amount to about $15-20 million per quarter. AT&T said the FCC was also reviewing the way it computed access charges and universal service payments for calls made on enhanced prepaid calling cards (CD June 30 p6). The company said its current treatment of these calls “has generated approximately $215 million in access savings since the third quarter of 2002, and approximately $140 million in USF contribution savings since the beginning of 1999, compared with the cost that would have been incurred by a basic prepaid card offering.” AT&T told the SEC “an adverse ruling by the FCC on the prepaid card petition would… increase the future cost of providing prepaid cards.”
Even if it’s VoIP, telecom is “an essential public service” and local govts. will want to make sure reliable service is available to the public, said Marilyn Showalter, chmn. of the Washington Utilities & Transportation Commission. NATOA Pres. Coralie Wilson said govts. “simply cannot let technical standards lapse” just because of VoIP: “We need assurance the network will continue to operate.” Speaking on the same local govt. panel here, Neb. PSC Comr. Anne Boyle said “consumer protection goes beyond CALEA and E911.” She said VoIP providers need to comply with best practices, as well as with good customer service, and consumers are “who the government is there to protect.” At a later panel of FCC bureau chiefs, Wilson raised the question of mandating technical standards for new telecom services. He got little response, other than from Robert Pepper, FCC chief of policy development. Pepper indicated only that the Network Reliability & Interoperability Council would deal with such issues, and that the diversification of telecom into wireless and IP-based services increases diversity of the overall network. Local govt. officials spent much of their time talking about how to assure Universal Service Fund (USF) funding with the arrival of new technologies. Cal. PUC Comr. Susan Kennedy endorsed a per-number USF fee. Showalter agreed that’s probably “pretty reasonable,” though she said in the long term telephone numbers won’t be needed. Fla. PSC Comr. Charles Davidson, however, said USF “needs a business plan… It shouldn’t be a program that just expands and becomes a new tax.” Showalter suggested broadband will be necessary in the future and if people can’t afford it “government must assure that it gets there.” Kennedy, however, said Internet and video services “clearly” don’t qualify for USF. -- MF
Congress should “redefine” the purpose of the Universal Service Fund (USF) and what kind of “tax” should be used to support it, Qwest CEO Dick Notebaert said Wed. at a Progress & Freedom Foundation lunch. Policy-makers should decide what they really want to fund through the USF -- for example, low income households or expanding broadband coverage -- he said. Then they can define how the money is raised because “there are better ways to do it,” he said. Regulators keep adding uses for USF and “never say, ‘We've done it, let’s move on,'” Notebaert said. USF is a tax now, whether regulators care to call it that or not, he said: “We ought to call a tax a tax.”
ILECs were pushing for “significant price increases” in negotiations with CLECs over UNE-P, a CLEC executive and representative of ALTS told the Senate Commerce Committee Tues. The increases “would not allow us to sustain our business,” said Cbeyond CEO James Geiger at the hearing on “lessons learned” from the Telecom Act: “The assumption of the incumbent is that unbundling elements are gone.” Geiger also suggested that ILECs weren’t even putting the local loop on the table, though Qwest Chmn. Richard Notebaert said he didn’t object to loops’ remaining an unbundled element.
Hours before the Senate took up legislation seeking to ban Internet access taxes, President Bush promoted the ban as a way to stimulate broadband deployment (see separate story, this issue). The Senate late Mon. was prepared to take a procedural vote as the first step toward consideration of S- 150 by Sen. Allen (R-Va.). S-150’s main opponent, Sen. Alexander (R-Tenn.), said Senate Majority Leader Frist (R- Tenn.) has been urging compromise for months, but said talks appeared to have failed: “We simply have a difference of opinion.”
A variety of consumer groups launched a campaign Thurs. to work for retention of the revenue-based Universal Service Fund (USF) collection system. The Keep Universal Service Fair Coalition, made up of senior, disability, consumer, minority and rural organizations, said moving to a flat, connections-based system would harm consumers and low-volume users. Connections-based systems would collect money through a subscriber line or per-user fee, which would mean low- volume users would “pay the same amount in USF fees as high- volume users.” The coalition includes 12 organizations such as the Alliance for Public Technology, Alliance for Retired Americans, American Assn. of People with Disabilities, Black Leadership Forum, Gray Panthers.
The National Telecom Cooperative Assn. (NTCA) raised concerns with Sen. Sununu (R-N.H.) about his VoIP legislation (S-2281), pointing out that VoIP services would have a competitive advantage over traditional phone carriers. NTCA, which mainly represents rural local phone carriers, wrote Sununu Mon. to present 4 primary concerns with the bill: (1) The exemption from access charges that VoIP would get could cripple rural carriers. NTCA said a recent survey showed a “bill and keep” regime as proposed in the bill would cost rural carriers $2 billion annually. “The bill also encourages private negotiations for access compensation, which is an approach that has not worked in the past and has resulted in the loss of millions of dollars in rural carrier cost recovery from the wireless industry,” the letter said. (2) Universal service fund (USF) burdens would be shifted towards rural carriers, because the bill proposes a connections-based USF contribution methodology. “The impact of the flat-fee nature of this approach would be particularly harsh on low-volume users such as rural and elderly residential consumers,” the letter said. (3) VoIP providers would have the same requirements to open their networks to law enforcement as “information service providers.” “Yet, the law enforcement community is not certain it has the statutory authority to require information service providers to comply with such laws,” the letter said: “This would provide such carriers with a competitive advantage over incumbent carriers.” (4) An exemption of VoIP from state and local tax would also prove to be problematic because it “offers VoIP providers a competitive advantage over ILECs that currently do pay state and local taxes on their voice service.”
A “call for clarity” is the motivation behind VoIP legislation introduced Fri., Sen. Sununu (R-N.H.) said. Sununu announced targeted legislation designed to free VoIP from much of the regulation now applied to the legacy phone networks. House Commerce Committee Vice Chmn. Pickering (R- Miss.) said he would introduce similar -- but not identical -- legislation on the House side. Pickering said it was important to free VoIP from over-regulation because the technology would be a driver for broadband deployment.
Cingular Interactive (CI) filed an application for review last week of the Universal Service Administrative Co.’s (USAC) assessment of universal service fund (USF) contributions from CI. In a filing at the FCC, CI said it owes no past due USF contributions: “The only services CI provided during the time period for which USAC has sent invoices claiming USF contributions are information services, which are not subject to USF contribution requirements,” CI told the FCC. The company said it reported to the USAC in 2002 its services had been reclassified as information services. “The reclassification was based on the FCC’s evolving interpretation of the difference between information services and telecommunications services,” CI said. In part, CI argued USAC lacks authority to make a determination that it is providing telecom services, contending only the FCC can reverse “existing precedent.” CI said the FCC’s Wireline Bureau can take corrective action on the USAC decisions under delegated authority. “CI"s services could be found to constitute telecommunications services only by adopting new policies and overruling or departing from the Commission’s authoritative case law, which cannot be accomplished under delegated authority,” CI said. If a decision that favors Cingular isn’t handed down, CI said it wants the petition to be referred to the full Commission.