Sen. Smith (R-Ore.) wrote to FCC Chmn. Powell to clarify comments he made in an Oct. 30 Senate Commerce Committee hearing on the universal service fund (USF). In the hearing, Smith asked Powell several questions about his USF bill (S- 1380) that would redirect some of the high-cost, nonrural fund, which mainly goes to Bells and large ILECs that serve rural areas (CD Oct 31 p1). That bill, along with a similar one in the House by Rep. Terry (R-Neb.), are commonly known as the “Qwest bills” since more of the funding would go to that carrier’s 14 Western states. Smith had said he believed the program was “unfair” since most funding went to 3 states, Miss., Ala., and W.Va. But Powell raised several doubts about the need for the legislation and pointed out that it was only a small part of the total USF fund ($234 million of an approximate $3 billion fund.) In the letter, Smith said that fund, while small, actually would serve at least 70% of all rural customers. “In most states, these customers -- the majority of rural Americans -- see no benefit from this program,” Smith said. In response to Powell’s comments that many carriers sold rural exchanges, Smith said the bill would focus exclusively on high-cost wire centers. “If a carrier sold its high-cost exchanges, it would not be eligible for funding for those exchanges,” he said. “This approach is simple and fair. The FCC’s current methodology is neither.” Smith also said the bill did include a cap on the overall size of the fund, a provision that Powell said would have to be in the bill or it would create very large increases in the fund.
A USTA plan to get high-tech suppliers to support a deregulatory lobbying campaign may be an antitrust violation, 26 competitive telecom companies plus ALTS and CompTel said in a letter sent Fri. to key congressional committees. USTA invited top executives of high-tech companies to a closed dinner Oct. 20 in Washington to discuss a possible lobbying alliance and seek funding from the suppliers. One Bell official later characterized the plan as a natural move, given that high-tech suppliers had tended to support Bells’ deregulatory campaigns.
Senate Communications Subcommittee Chmn. Burns (R-Mont.) said he wasn’t sure when he will introduce the Universal Service Fund (USF) draft bill that has been floating around for some time, but said it could be before this session ends (CD Oct 28 p1). “We're thinking pretty quick, we think,” he said. Burns also said that once recommendations were received from the Federal-State Joint Board that’s studying USF distribution methods, further legislation might be warranted. “We don’t want to go down the distribution route until we see what the Joint Board has done,” he said. “I don’t want to preempt them in any way.”
Western Wireless asked the FCC to discontinue using the rate-of-return (RoR) regulatory system for setting rural telephone companies’ universal service fund (USF) support and access charges. Western Wireless said RoR “bloats the USF, creates opportunities and incentives for waste, fraud and abuse and inhibits the development of efficient, innovative and competitive services for rural consumers.” Western Wireless proposed to replace RoR with a “forward-looking cost-based methodology.”
Senate Communications Subcommittee Chmn. Burns (R-Mont.) said the FCC should act more quickly in addressing universal service fund (USF) issues. “We have a situation that requires a deadline,” Burns said. “It’s time they move.” Burns is floating a staff draft of a bill that would open intrastate telecom traffic to USF requirements and would place a deadline on the FCC to finish a proceeding on contribution methods to the USF. The bill comes as the Senate Commerce Committee prepares to conduct its 2nd hearing of the session on USF today (Thurs.). The hearing will be in the Russell Bldg. Rm. 253 at 10 a.m and feature FCC Chmn. Powell as a witness. Neb. PUC Comr. Anne Boyle said she understands Powell will testify in favor of opening intrastate telephone lines for USF revenue. Boyle said she and FCC Comr. Martin are opposed to allowing intrastate revenue collection for USF. Boyle said the Burns bill was an “incomplete” attempt to fix USF because it only addresses contributions and not how the USF fund is distributed. She said it was an attempt to bolster the fund through intrastate fees and that “all governors should be alarmed.” Boyle also said legislation should create a system for telecom carriers receiving USF to be audited. Boyle said NARUC hasn’t taken a position on intrastate USF funding. Boyle is a member of the NARUC Telecom & Consumer Affairs committee, as well as a board member.
Senate Communications Subcommittee Chmn. Burns (R-Mont.) is circulating draft legislation to reform the contribution methodology of the universal service fund (USF). The bill would: (1) Allow the FCC to collect USF support on intrastate telephony traffic. (2) Impose a deadline on the Commission to finish its open proceeding on USF collection methods. Industry sources familiar with the bill said it was likely to be a prominent topic at the Senate Commerce Committee hearing on USF scheduled for Thurs.
States and municipalities are expressing concern that legislation designed to prevent taxes on access to Internet service eventually could restrict local govt. regulation of telephony and cable service. NARUC, the National Governors Assn. (NGA), National Assn. of Telecom Officers & Advisors (NATOA) and the TeleCommUninty Alliance (TCUA) are among the local interests expressing concern about S-150, the proposed Internet Tax Non-Discrimination Act.
Reps. Terry (R-Neb.) and Stupak (D-Mich.) chastised the FCC for failing to significantly reform a provision of the universal service fund (USF) Thurs. (CD Oct 17 p4). In response to a 10th U.S. Appeals Court, Denver, ruling, the FCC directed state regulators to compare rural rates with urban rates and sought comments on rate reviews. The “nonrural” fund -- $234 million for Bells and other large ILECs to serve rural customers -- has come under criticism because only states receive any funding, much of which goes to BellSouth. Miss. gets the lion’s share with $120 million. Terry and Stupak are the principal sponsors of legislation (HR-1582) designed to reform the distribution formula to be based on wire centers rather than statewide averages, which supporters say would spread the fund more evenly. “When given an opportunity to fix one of the most unfair and poorly targeted programs in the federal government, the FCC took a pass,” Terry said. “By turning a deaf ear to the public outcry, they've put the ball in our court and we're going to act.” Sen. Smith (R-Ore.) has sponsored a similar bill (S- 1380).
The Kan. Corporation Commission approved a negotiated agreement between SBC and CLEC Sage Telecom on the level of support Sage would receive from the state universal service fund for customers in high-cost areas served via UNEs. The issue had threatened to delay Sage’s designation as an eligible telecom carrier (ETC) entitled to receive universal service subsidies. Sage had wanted to receive the same per- line support SBC did, but SBC objected. Under the approved agreement, Sage will get state USF support equal to the lesser of the UNE price it pays and the per-line subsidy SBC receives.
LAS VEGAS -- FCC Comr. Martin is “troubled” by the concept of substituting wireless for wireline in universal service situations, he said at the USTA convention here Tues., citing particular concerns about wireless’ ability to provide adequate E911 and separate powering. NTIA ex-Dir. Nancy Victory, meanwhile, said the Universal Service Fund (USF) needed an “extreme makeover.”