ORLANDO -- Cooperation within the competitive telecom industry is needed to win regulatory wars, many said at the CompTel trade show here last week. “The lesson to be learned” from the results of the FCC’s Triennial Review Order (TRO) is that “we need to create a public policy debate that clears” CLECs’ views, Covad Vp-Govt. & Internal Affairs Susan Davis said. She said the TELRIC procedure recently initiated by the Commission showed “that if you say something long enough people will start to believe it.”
Some Western state political entities are trying to drum up support for legislation they say would more fairly distribute a portion of the Universal Service Fund (USF). But neutral observers said the USF fight was turning into one of regions -- mainly Qwest states vs. the BellSouth region -- with few others anxious to join the fight. One industry source described it as a USF “civil war” between Qwest and BellSouth.
Hispanic members of Congress urged Senate Commerce Committee Chmn. McCain (R-Ariz.) not to support S-1380, the Rural Universal Service Equity Act, because of the effects it could have on Puerto Rico. The members said it would threaten $56 million in funding for P.R. Signers of the Sept. 24 letter included: Reps. Acevedo-Villa (D-P.R.), Menendez (D-N.J.), Beccera (D-Cal.), Rodriguez (D-Tex.). S- 1380, sponsored by Sen. Smith (R-Ore.), would create a new formula for calculating distribution of the Universal Service Fund non-rural high-cost fund, which is primarily distributed to Bells and large ILECs. The fund has been controversial because only 8 states receive money from that fund, with the largest amount going to Miss. A similar bill (HR-1582) was introduced in the House by Rep. Terry (R-Neb.). The letter said this change, along with the 1999 FCC decision to alter financial calculations for P.R. resulting in a loss of $40 million in annual support, would “be devastating for Puerto Rican families and businesses.” “Without this support, long- distance rates to and from Puerto Rico will continue to increase, thus creating further economic hardships not only for those living in Puerto Rico but also for their friends and families throughout the Unites States,” the letter said. The letter said a “piecemeal” change to USF, instead of a comprehensive overhaul, would only hurt some states. Dale Curtis, of the Coalition for Equitable & Affordable Rural Service (CLEAR), said there are nearly 3 million Hispanics in the U.S. who don’t benefit from this program as it’s now structured. CLEAR supports the passage of both the Terry and Smith bill. Curtis also said the bill has “hold harmless” clauses that prevent the funding from being drastically reduced to any state or territory. Both the Latino Coalition and the Hispanic Business Roundtable are members of the CLEAR Coalition.
The FCC proposed an $806,861 fine against Globcom, a Northbrook, Ill., long distance reseller, for not making Universal Service Fund (USF) and Telecom Relay Service (TRS) contributions. The Commission said Tues. that Globcom owed $700,000 to the USF as of Aug. and hadn’t satisfied its obligation to contribute to the TRS Fund, which helps people with hearing or speech disabilities use the telephone system. The agency said Globcom apparently underreported its revenue to the Commission “and at times failed to report revenue information at all.” That information is used by the FCC to calculate carriers’ USF and TRS payments. The FCC Enforcement Bureau said this is the largest fine ever proposed for such violations and FCC Chmn. Powell said it’s “an important step in preserving the integrity of the Universal Service Fund by sending a signal to carriers who shirk their duty to pay their fair share.” The agency said it increased the normal level of fines because “it appears that Globcom deliberately chose not to pay its universal service contributions each month for revenues derived from January 1, 2001, to the present.” The Commission said that despite “numerous monthly communications” from the Universal Service Administrative Co. (USAC), Globcom had “done nothing to address this matter.” It also ordered Globcom to submit a report in 30 days outlining its plans for coming into compliance with the rules. Globcom can seek a reduction or cancellation of the fine in that 30-day period but the agency warned it wouldn’t take inability to pay as an excuse without federal tax returns, financial statements or other objective documentation.
Clarification: The Progress & Freedom Foundation said the study of the Universal Service Fund (USF), titled “Universal Service Policy: At the Crossroads,” detailed several possible solutions to USF problems but made no specific policy recommendations (CD Sept 29 p6).
The Progress & Freedom Foundation (PFF) released a study on the universal service fund (USF) that said the program was “ill-defined” and threatened by new technology. The study, written by Raymond Gifford and Adam Peters, outlined several possible solutions, but said “both regulators and legislators would be well-advised to take a step back and reconsider what the universal service fund is really supposed to pay for before determining which mechanisms should be employed.” One proposed solution is “phone stamps,” a voucher program to offset costs in rural areas for low income people. At a PFF panel discussion on Fri., several speakers discounted that idea. Nanette Thompson, Alaska PUC Comr., said such a “means-based” approach isn’t realistic because the expense for providers is in building the network. “It’s not a question of affordability of service, but of the cost to provide the service,” she said. Other ideas included an offset similar to the earned income tax credit and using a “reverse auction” as a distribution method. The paper also suggested abandoning charges on interstate services with an across-the-board surcharge on all communications service revenue. Thompson, who’s also the state chmn. on the joint federal-state board on USF, said the state side of the board favors that approach. Matt Brill, aide to FCC Comr. Abernathy, the federal chmn. of the joint board, said such an approach would likely require legislation. John Rose, OPASTCO pres., said reform of USF should focus on 4 issues: (1) The public interest standard. (2) An increase in accountability. (3) Distribution based on actually costs. (4) A broader base of support to draw from. John Stanton, Western Wireless chmn., said wireless companies should be included in the distribution of USF funds since that technology is well suited for rural areas and since it’s becoming the only line for many consumers. He said while wireless company contributions make up 30% of the USF, wireless companies receive only 2% of the distributions.
Careful not to step on the toes of the House Commerce Committee, House Small Business Rural Enterprise Subcommittee Chmn. Graves (R-Mo.) said he would be working with Commerce Committee Chmn. Tauzin (R-La.) as they examined the problems and potential solutions for the Universal Service Fund. After a subcommittee hearing Thurs. that focused mainly on eligible telecom carrier (ETC) designation, Graves said he had many concerns about the fund -- particularly how it was applied to rural small businesses -- and said he would work with Tauzin and the Commerce Committee as each panel examined USF issues. The House Telecom Subcommittee held its own hearing on USF issues Wed. (CD Sept 25 p1).
In the first of 3 days of House activity on the universal service fund, the House Telecom Subcommittee took a broad look at the program as most members and witnesses said something had to be done to fix the program before it becomes insolvent. But agreement ended at that point, as an array of witnesses offered competing suggestions for a fix.
Senate Communications Subcommittee Chmn. Burns (R-Mont.) led an industry summit on Universal Service Fund (USF) designed to draw consensus on a new contribution method to USF. Sens. Stevens (R-Alaska) and Dorgan (D-N.D.) also participated, along with FCC Comrs. Martin and Adelstein. Burns said participants were “closer than they even they think” on reaching a consensus for contribution methods. USTA Pres. Walter McCormick told us he expects legislation soon from Burns. Participants at the summit, which wasn’t open to the public, said the conversation stayed mostly on contribution methods. But McCormick said he emphasized that distribution of USF funds could be used to regulate competition as more entities are vying for USF funds.
Industry sources said the Wed. summit on the Universal Service Fund could lead Senate Communications Subcommittee Chmn. Burns (R-Mont.) to introduce USF legislation shortly. Burns and Sen. Dorgan (D-N.D.) will host the summit of “stakeholders” in the USF debate. The meeting is scheduled to examine contribution methods, with Mont. PSC Chmn. Bob Rowe as moderator. It also will include analysis of what contribution methods are most feasible to adopt and which are the most troublesome. Sources said depending on the tone of the summit, Burns could file USF legislation this week. A source said he was likely to want USF legislation in the public record before a potential USF hearing later this month. One industry source said a USF bill was likely to be limited in scope and would deal with contribution methods. A source said Burns might push for including intrastate calls in addition to interstate calls as a contribution source. Another source said Sen. Stevens (R-Alaska) would push for including facility-based broadband, such as cable modem, as a USF contributors. The meeting isn’t open to the public, but is scheduled for this morning in Rm. 192, Dirksen Bldg.