Mich. PSC called for comments by Sept. 9 on whether it should create state universal service fund (USF) to supplement federal universal service support. PSC (Case U- 13477) asked parties to comment on: (1) Whether state USF was necessary. (2) Effects of USF on affordability under rate regime of total element long-run incremental cost. (3) Other effects on state and industry if PSC were to create fund. Parties also were asked to make suggestions on how PSC should conduct USF inquiry and timeline it should follow.
Requiring all facilities-based broadband providers to contribute to schools and libraries (e-rate) portion of Universal Service Fund (USF) would create level playing field and broaden the pool’s funding base, Verizon Regulatory Affairs Dir. Scott Randolph told FCC in ex parte filing July 2. Randolph’s letter came after reply comments deadline for broadband wireline proceeding at FCC July 1, in which some cable operators expressed opposition to Verizon’s proposal.
NARUC told Sen. Breaux (D-La.) July 1 that state regulatory agencies still have some jurisdiction over DSL broadband services. NARUC was replying to questions Breaux had for Assn. in May 22 Senate Commerce Committee hearing on broadband. Robert Nelson, vice chmn., NARUC Telecom Committee, and member of Mich. PSC, said Breaux-Nickles broadband bill (S-2430) presumed FCC and courts already had determined scope of state jurisdiction over broadband, which they hadn’t. Comment deadline was Mon. in FCC rulemaking to affirm its tentative decision to classify broadband as information rather than telecommunications service (see separate story in this issue). Ruling broadband is information service would make it exempt from unbundling and regulatory oversight by PUCs, particularly in regard to consumer protection enforcement, NARUC said.
There appeared to be little agreement among regulators or witnesses Fri. at FCC en banc hearing on how to fix current universal service system, whether it needed major overhaul or tweaking and, for that matter, whether it needed fixing at all. FCC scheduled hearing and invited state members of Federal-State Joint Board on Universal Service as best way “to gain input in the shortest time on various views and proposals for reform,” FCC Comr. Abernathy said as she opened hearing. Asked by Comr. Copps if there really was sense of urgency, consultant Kathleen Wallman said that was one of “the first assessments” Joint Board would have to make. “I don’t know if there is a sense of urgency on the part of all parties,” she said. “Some participants may disagree.” Wash. State U. Prof. William Gillis said he didn’t think there was consensus on urgency of reforming universal service because some parties would benefit more from change than others.
Rural senators expressed variety of concerns about Universal Service Fund (USF) and way FCC is administering it in Senate Commerce Communications hearing on issue Wed. Sen. Rockefeller (D-W. Va.) criticized FCC Chmn. Powell, saying Powell wasn’t committed to USF despite “swearing” not to undermine fund during his Senate confirmation hearing. Rockefeller said FCC was using uncommitted e-rate funds to keep USF contributions stable. “I'm not sure of his commitment to e-rate. I'm not sure of his commitment to universal service,” Rockefeller said, adding that he was “very unhappy” with Powell’s treatment of those issues. FCC needs to be “much more aggressive and timely” in redefining USF contribution system and should have it “worked out” by April, Rockefeller said. Sen. Dorgan (D-N.D.) also was critical of Powell, saying FCC had “chopped away at” USF and fund was in great jeopardy if FCC didn’t take aggressive action. He also said Powell should be called before Senate Commerce Committee to testify about USF.
Wash. regulators granted wireless carrier RCC Minnesota, which does business under Cellular One brand, eligible telecom carrier (ETC) status. That qualifies carrier to receive universal service subsidies. Wash. Utilities & Transportation Commission (Case UT-023033) granted RCC’s petition despite objections of several rural incumbent telcos. WUTC disregarded incumbents’ call for hearings on their claim that RCC shouldn’t get ETC status because its wireless signals didn’t cover all wireline exchanges within its cellular service area. WUTC said hearings weren’t mandatory on ETC applications and weren’t necessary because RCC had demonstrated that support from USF would enable it to make infrastructure investments necessary to fill in its coverage gaps. WUTC said ETC designation for RCC would result in increased investment, more customer choice and improved public safety without harming rural incumbents.
Responding to request by AT&T (CD June 13 p6), FCC voted Thurs. to apply unused e-rate funds to reduce size of contributions carriers made to Universal Service Fund (USF). Agency emphasized that action ensured that USF line item on customers’ bills would remain “stable for the immediate future.” Increases in carrier contributions translate to increases in line items on customer bills because carriers pass those costs on to users. USF item originally was on agenda for open meeting Thurs. but FCC voted on it ahead of time. Decision appeared to be somewhat controversial, with Chmn. Powell concurring in part and Comr. Martin dissenting in part. E-rate program helps schools and libraries finance infrastructure for computers.
Neb. Supreme Court denied petition for direct hearing of lawsuit challenging legality of PSC’s 7% state universal service fund surcharge. Action means case must work its way through lower state courts. David Domina, attorney for plaintiffs in class action suit on behalf of all Neb. telecom ratepayers, said case would be filed in Lancaster County Dist. Court. Top Neb. court gave no reason for refusal to hear case. Suit alleged that surcharge set by PSC in 1999 actually was state tax that could be imposed only by act of legislature. Surcharge generates $55 million annually for state USF.
FCC is expected today (June 13) to take action on AT&T request that it apply unused e-rate funds to reduce universal service fund (USF) assessment on long distance carriers. Commission has scheduled vote on unused funds issue at agenda meeting, although it hasn’t indicated how vote will go. AT&T Vp Robert Quinn acknowledged that company had urged agency to take such action. He said AT&T first made proposal in March in response to FCC request for comment on what to do about $950 million in unused e-rate funds. Company stepped up its lobbying recently after Universal Service Administrative Co. (USAC) announced it would have to raise USF assessment to 8.77% of interstate revenue, up from 7.28%. Quinn said that would translate to further increase in 11.5% USF fee now charged to its customers to cover assessments. Customer fee is higher than percent paid by AT&T because of company’s continuing problem of declining revenue. Fee charged to AT&T is based on level of revenue 6 months earlier. By time AT&T makes contributions, its revenue is lower than that, meaning fees to customers have to be raised to get amount of money required. Quinn said AT&T also stepped up action because time had run out for action on waiver request to help ease revenue problem by letting AT&T base contributions on estimates of future revenue, rather than 6-month-old revenue. New assessments go into effect July 1. He said AT&T separately had asked FCC for longer term fix for declining revenue problem, such as basing contributions on number of lines rather than revenue. Quinn said problem appeared to be more acute for AT&T than some companies. Companies such as Verizon that are just entering long distance business have increasing revenue, he said. Some carriers have opposed AT&T’s initiative for fear it will muddy larger contribution reform issue. Meanwhile, FCC set 1 p.m. June 21 meeting to explore broader issue of whether to change USF contribution methodology. Agency late Wed. said it wanted “additional input from industry and other affected parties” on proposals to reform contribution system. Commission said it invited state members of Federal-State Joint Board on Universal Service to join in presiding over meeting.
Alaska Regulatory Commission (ARC) Chmn. Nan Thompson warned state’s lawmakers that failure to reauthorize her agency could endanger federal universal service funding that supported rural telecom service. In letter to legislature, Thompson said if there were no state commission, there would be no agency to handle annual universal service certifications required by FCC. Federal universal service fund (USF) rules require state commissions to make annual certification that USF money is being used for intended purposes. as prerequisite for continued federal support. Agency recently filed certification for 2002 and probably would be able to perform duty for 2003, but after that there would be no entity to ensure that state’s rural telecom carriers continued to receive the $70 million in annual USF support that now flows to Alaska. She said there would be other adverse consequences to Alaska’s economy, state budget and all regulated utilities if ARC weren’t renewed. She said “regulatory and legal confusion” surrounding dying ARC would undermine efforts by state’s telecom, electric, gas, pipeline, water and sewer companies to obtain financing for new projects. Legislature in regular and first special session was unable to break political barrier raised by key Senate Republicans that had blocked ARC reauthorization. Agency isn’t due to die until June 30, 2003, but Thompson warned that it must start curtailing its activities July 1 unless renewed. Legislature will try again to settle ARC issue in 2nd special session that’s due to convene June 24.