Rate-of-return carriers should only need to seek recovery of universal service audit costs from the federal government, said state members of the Joint Board on Jurisdictional Separations. In reply comments Tuesday, they backed a petition by the National Telecommunications Cooperative Association (CD April 22 p4) that would assign all federal Universal Service Fund costs to interstate jurisdiction. “The audit costs involved are incurred to assist in the review of the function of the federal USF program and as such should appropriately be assigned to the interstate jurisdiction,” the state members said: “A significant, if not primary, purpose for the audits is to ensure the reasonableness of federal USF surcharges and to detect waste, fraud, and abuse of federal funding.” They rejected comments by Verizon saying costs should remain divided between intrastate and interstate jurisdictions. States may benefit from federal USF subsidies, but “it does not necessarily follow that States benefit from the federal audits,” they said. The “main beneficiaries” are the FCC, interstate ratepayers and the Universal Service Administrative Co., they said. States “have no control over whether federal audits are conducted, the scope of the audits, the audit costs, the selection of the auditor, or the federal universal service disbursement mechanisms that are being audited.”
Small phone companies went to Capitol Hill Tuesday to make the case for legislation including broadband in the universal-service program. Another priority is having this year’s must-pass satellite measure change retransmission- consent rules to give small phone companies easier access to video programming. But lawmakers warned that communications issues face stiff competition for attention in a Congress focused on the economy, health care, energy and a Supreme Court nominee.
The Rural Cellular Association didn’t rejoice on the one-year anniversary of the interim cap for the Universal Service Fund high-cost program. Instead, the association of small wireless carriers Friday sent a scathing white paper to acting FCC Chairman Michael Copps. RCA scolded the agency for delaying removal of the “interim” measure, and for imposing the cap in the first place.
Adopting a Universal Service Fund revamp proposal by Embarq would best satisfy requirements of a 2005 remand by the 10th U.S. Circuit Court of Appeals, Embarq told the FCC Wireline Bureau in a meeting Thursday. The court directed the commission to revamp its USF high-cost support rules for so-called “non-rural” carriers like Qwest that serve high-cost areas but have too many lines to be considered “rural” by the statutory definition. Comments are due May 8 on how the FCC should respond. Embarq said its plan “would stimulate substantial new broadband deployment, stabilize support for carrier-of-last-resort (CoLR) universal service, and create a more-stable foundation for further” USF reform “without increasing overall support levels.” The proposal is one of four plans under consideration by the FCC (CD April 9 p4).
Vonage and other traditional VoIP providers don’t have to pay into the Nebraska Universal Service Fund, the 8th U.S. Circuit Court of Appeals said Friday. The St. Louis-based court was upholding a district court decision that Nebraska officials had appealed. As the lower court had, the appeals court accepted Vonage’s claim to be an information service rather than a telecom service (CD Sept 15 p8).
Companies and interest groups are rethinking their FCC lobbying strategies as the likelihood seems to grow that Michael Copps will remain the acting chairman well into the summer. Industry sources said Wednesday they're still looking for issues that could be addressed before Julius Genachowski’s nomination to become the chairman clears the Senate.
States asked the FCC to promptly adopt a three-year Lifeline and Link-Up pilot program for broadband. In a letter Friday to the FCC commissioners, the National Association of Regulatory Utility Commissioners said the new Universal Service Fund program should be open to all broadband providers. Participating carriers shouldn’t automatically be designated eligible for other USF programs, but the FCC should require any provider receiving USF from another program to participate and contribute to the pilot program, NARUC said. The Federal-State Joint Board on Universal Service should study how the program is carried out and decide whether to expand the pilot into a national program. States should handle the eligibility and verification for low-income participants, it said.
The FCC must overhaul jurisdictional separations before revamping the Universal Service Fund and intercarrier compensation, said the National Association of State Utility Consumer Advocates. In reply comments on whether the FCC should extend the eight-year-old freeze on separations (CD April 21 p3), NASUCA rejected arguments by associations of rural incumbent local exchange carriers. They said separations reform should come last. Compensation and USF levels “are dependent on proper separations between jurisdictions, not the other way around,” it said. The Independent Telephone & Telecommunications Alliance, which didn’t file initial comments, sided with other rural associations. The separations freeze should continue until at least one year following USF and ICC reform, it said. “This approach will ensure that future modification of any separations requirements will be to complement, rather than complicate, the Commission’s ongoing efforts to ensure that regulatory frameworks reflect current competitive market conditions.”
The FCC must fix its audit program for the Universal Service Fund high-cost program, USTelecom and CTIA said Friday in a scathing letter to commissioners. The associations queried the accuracy of a November audit report from the FCC Office of Inspector General, which said the high-cost fund had an error payment rate of 23.3 percent. “The current audit program … results in misleading statistics generated as improper payments under the” 2002 Improper Payments Information Act, “which undermines the credibility of the audits and the USF,” they said.
The FCC should allow rate-of-return carriers to allocate federal audit expenses completely to interstate jurisdiction, said small carriers supporting a petition by the National Telecommunications Cooperative Association. The change would make recovery of audit expenses more certain, and save small companies time and money, they said. However, Verizon condemned the petition as having “no basis,” and urged the FCC to do away with jurisdictional separations altogether.