Correction: It was Robert Orent, pres. of Hiawatha Communications in Mich., who told a Senate universal service fund hearing that state PUCs were viewing eligible telecom carrier (ETC) status as welfare, weren’t taking into account the public needs of USF and didn’t fully understand the USF system (CD April 2 p1).
Legislation introduced Thurs. by Rep. Terry (R-Neb.) would distribute more universal service support to states west of the Mississippi River by changing the distribution formula for a portion of the universal service fund (USF). The bill, which is co-sponsored by Rep. Stupak (D-Mich.), would change the distribution formula for the so-called “nonrural” USF so that more states would get funding from it.
The American Assn. of Paging Carriers (AAPC) said the FCC shouldn’t adopt proposals on alternative universal service contribution methodologies (CD Feb 28 p7). It said neither of the proposals had been “shown to be an improvement over the existing system for the paging industry.” AAPC said an FCC study, which attempted to project the financial impact of the 3 contribution methodologies over the next several years, demonstrated “the hazards involved in changing the current system in the absence of a clear understanding of what the impact will be on different industry segments.” For example, AAPC said, the paging contribution under the first connection-based and 3rd number-based proposals was projected to decline compared with the current system. However, it said, “it is not possible to determine whether the projections represent real declines in the contribution levels, or whether they are artificial ones that are the product of flawed assumptions underlying the projections of current levels.” In a separate comment, the Mo. PSC suggested the FCC revise its current philosophy “to mandate that all contributors treat the recovery of the USF [universal service fund] assessment in a consistent manner, whether it is through implicit innovative pricing options or through an explicit surcharge on end-users.” The PSC expressed concern that the current mechanism was confusing for consumers. Since contributors are allowed to choose whether to recover the assessment through a line-item assessment, include the recovery in rates and bundles or use a blended recovery approach, “it becomes difficult for the consumer to effectively compare pricing among competitors,” it said.
Expressing frustration at the FCC’s pace of developing solutions to problems facing the universal service program, Senate Commerce Communications Subcommittee Chmn. Burns (R- Mont.) said he would like to see a summit involving members of Congress, the FCC and the Federal-State Board on Universal Service. “This horse [the FCC] isn’t going to run any faster unless we put the spurs on,” Burns told reporters after a hearing Wed. on universal service. He said such a summit would help members determine whether legislation was needed in any areas and, if so, whether Congress could begin work on a bill this year.
USTA announced a 5-part universal service platform Thurs. that it said was the result of several months of discussions among board members who represented various-sized companies. USTA Pres. Walter McCormick said USTA would use the 5 “principles” as a basis for lobbying for reform on Capitol Hill and at the FCC.
FCC legal advisers said Wed. they were aware of concerns by rural ILECs that universal service money was shrinking while requests for it were growing with the arrival of competitive carriers in rural areas. But they also told members of the National Telecom Co-op Assn. (NTCA) that those were very difficult problems to solve because the Telecom Act encouraged competition as well as universal service. The advisers told NTCA that numerous universal service issues were teed up at the Commission, including what services should be funded and how the support money should be raised, and they wouldn’t be easy to solve. NTCA members were in town for their annual Legislative & Policy Conference.
State regulators are eyeing wireless best practices as a potential way to avert the need for service quality regulation, at the same time as industry is drafting voluntary guidelines, officials said. Neb. PSC Comr. Anne Boyle told us she had circulated proposed best practices at last month’s National Assn. of Regulatory Utility Comrs. (NARUC) winter meeting for review. Boyle said the issue was teed up for an upcoming NARUC meeting in Denver, with hopes that industry, FCC and the National Assn. of State Utility Consumer Advocates (NASUCA) would participate, she said. Meanwhile, the Mo. attorney general is in negotiations with Sprint PCS and Nextel on a lawsuit filed in Dec. over billing practices.
Senate Appropriations Committee Chmn. Stevens (R-Alaska) told the National Telecom Coop Assn. (NTCA) Tues. he didn’t believe the FCC had the legal authority to assess universal service fees on cable modem and satellite Internet providers. Stevens said the Universal Service Fund (USF) eventually could become insolvent unless more funds were put in the system or unless spending became more targeted. “The end of this fund is coming unless we find a way to get funds into it,” Stevens said: “Long distance is the primary contributor to the fund. It’s also the industry that’s in the most trouble.”
FCC Chmn. Powell has delayed action on a proposal to reclassify wireline broadband Internet access because the agency doesn’t want to overload staff resources at both the Wireline Bureau and commissioners’ offices, an FCC official confirmed Thurs. when questioned about it. The agency originally planned to act on the broadband proposal next month but now isn’t scheduled to act until June or later. A “specific time frame hasn’t been decided” yet, the staff member said. Some broadband deregulation already occurred in the UNE order so it’s less imperative that the agency act quickly now, he said. In addition, the media ownership proceeding will heavily tax the resources of commissioners’ staff so it may be difficult for the agency to handle the broadband proceeding at the same time, the staff member said. The Wireline Bureau is a bit worn out from the UNE proceeding and several Sec. 271 applications still are being processed, he said. However, a lobbyist said the delay also appeared to be rooted in concern by Powell that the broadband proposal wouldn’t win a majority vote. Having just experienced such an outcome in the UNE proceeding, Powell doesn’t want to risk a similar experience, the source said. The Wireline Bureau reportedly had completed a draft of the order before Powell decided to delay action, leading some to think more than resources were at issue in the delay. Among other things, the delay continues uncertainty whether cable modem service should contribute to the Universal Service Fund (USF). When the FCC adopted an interim reform of USF contributions methodology in Dec., it decided to set the cable modem issue aside and deal with it in the wireline broadband proceeding. Next on the agenda for wireline action are performance measurements and the universal service contributions methodology, sources said.
Reports of fraud in the E-rate program may be “just the tip of the iceberg,” said House Commerce Committee Chmn. Tauzin (R-La.), who’s pushing the panel’s investigation of the program. As part of the Universal Service Fund (USF), the E-Rate program funds telecom services to schools and public libraries. In letters to the FCC and the Universal Service Administrative Co. (USAC), which administers USF under the FCC’s direction, Tauzin cited the potential of more than $200 million in fraud and raised questions about the effectiveness of federal oversight of the program, which never has been fully audited. Oversight & Investigations Subcommittee Chmn. Greenwood (R-Pa.) also signed the letter.