Largely reiterating past arguments, telecom interests fought over when and how to revamp the Universal Service Fund and intercarrier compensation. In comments last week, carriers, states and others dissected three FCC overhaul plans, known as Appendices A, B and C. Appendix A is FCC Chairman Kevin Martin’s Oct. 14 revamp plan, B is a proposal addressing USF only, and C a revised Martin plan incorporating changes sought by the Organization for the Promotion and Advancement of Small Telecommunications Companies and other groups. Earlier this month, Martin said a revamp this year is unlikely (CD Nov 19 p2). But other commissioners have said they want to vote on an order at the December meeting. (See separate story on the FCC agenda in this issue.)
The Universal Service Fund high-cost program has an unacceptably high rate of erroneous payments, said the FCC Office of Inspector General in a Wednesday report on the IG’s second round of USF audits. After studying USF high-cost distributions, the OIG estimated that the high-cost program’s erroneous payment is 23.3 percent, resulting in $971.2 million in improper payments, the FCC said. A program is considered to be “at risk” if the rate exceeds 2.5 percent. The OIG report looked at 384 audits of high-cost recipients performed by commercial audit firms contracted and managed by the Universal Service Administrative Co. with FCC OIG oversight. The commission is collecting industry feedback on how to improve USF management and administration. In comments last week, USF payers and recipients said they wanted more clarity, administrative efficiency and audit consistency (CD Nov 17 p6).
Adoption of numbers-based system as part of Universal Service Fund reform would have a negative effect on “important emergency communications services” if the fee is imposed on vehicle telematics services, such as OnStar or ATX, APCO and the National Emergency Number Association warned the FCC. Telematics companies were also at the FCC for recent meetings to ask the FCC not to impose the fee on their lines, a step proposed in all three rulemakings on USF reform now before commissioners.
The Alaska Telephone Association agrees that Alaska and Hawaii should be exempted from pending changes to Universal Service Fund distribution, the association said in meetings last week with FCC Commissioners. However, “the identical support rule should not remain in effect indefinitely,” it said. The association is concerned that “a broadband standard that did not apply to the non-contiguous states could result in our citizens being left without comparable access.” The association met with Commissioners Robert McDowell and Deborah Tate, and aides to Commissioners Kevin Martin, Michael Copps and Jonathan Adelstein, according to an ex parte. Comments on three plans to revamp USF and intercarrier compensation are due Wednesday.
AT&T urged revisions to the contribution aspect of an FCC Universal Service Fund overhaul plan known as Appendix B, one of three overhaul plans for which the agency has sought comment. In a late Friday ex parte letter, AT&T also rejected the contribution approach detailed in Appendices A and C, plans that additionally tackle intercarrier compensation. All the plans would move USF contribution from a revenue-based approach to one based on the quantity of phone numbers and business connections that a carrier owns. AT&T wants a numbers-only contribution method. But if the FCC determines that there should be an additional assessment based on business connections, the agency should modify its proposed assessment measurements to make them “more technology neutral and forward-looking insofar as they are not based on legacy ILEC speed breakpoints,” AT&T said. Also, AT&T believes the FCC’s definition of “assessable number” is “confusing, introduces -- without explanation -- terminology not previously used by Congress or by the Commission, and is unnecessarily overreaching,” it said. AT&T wants a simple definition saying an assessable number is “a North American Numbering Plan (NANP) telephone number that enables a Final Consumer to make or receive calls.” The FCC definition left room for a post-number call identifier, but AT&T wants the FCC to instead seek further comment on that point, the carrier said. AT&T also asked the commission to expand the implementation period for contribution change to at least one year, from six months, plus an extra six months during which providers would “report numbers while continuing to contribute based on revenues.” AT&T also proposed edits related to other exemptions, subsidy funds, reseller certifications and Universal Service Administrative Co. invoices. Comments on the FCC’s three draft plans are due Wednesday. All FCC members other than Chairman Kevin Martin have said they want to vote on an overhaul at the Dec. 18 meeting, but Martin said last week it’s unlikely that that will happen (CD Nov 19 p2).
Panelists differed Friday on U.S. models for international broadband competitiveness and domestic competition at a forum of the Innovation Technology & Information Foundation. They did agree that a new national broadband policy that promotes competition is needed from the new presidential administration.
Rep. Henry Waxman, D-Calif., wrested the Commerce Committee chair from John Dingell of Michigan in a 137-122 Democratic Caucus vote Thursday that stunned many of the closest observers of the hard-fought race. Waxman would not preview his plans for telecom policy, but he brings a strong technology background to his new post. He also is said to be more inclined than Dingell to back net neutrality legislation, a campaign promise of President-Elect Barack Obama. Waxman likely will look hard at the universal service fund. As Oversight Committee chairman, he investigated the top 24 major telecom companies receiving USF subsidies. He completed that investigation in the summer but announced no action.
Citing “devastation inflicted by Hurricane Omar,” Virgin Island Telephone asked the FCC for an emergency waiver of accounting rules that could reduce the company’s high-cost loop support under the Universal Service Fund. While the FCC considers the petition, it should tell the Universal Service Administrative Co. to put any reduction to high-cost subsidies on hold until Feb. 28, the company, Vitelco, said Wednesday in a petition. Vitelco expects to spend $2.5 million through mid-January repairing wireline infrastructure in the Virgin Islands, it said. Unless the FCC waives rules requiring that carriers include net salvage value in USF support calculations, the high plant removal costs combined with “relatively low plant investment over the last several years,” will mean it gets less USF high-cost money, Vitelco said. “This outcome is not appropriate because the negative net plant balance is not the result of an over-recovery of invested capital,” it said. Vitelco’s finances are strained because parent company Innovative Communications is in Chapter 11 bankruptcy, and because the Virgin Islands Public Service Commission is investigating Vitelco’s earnings, the company said. Vitelco expects the investigation to cost it more than $1 million, it said.
The National Telecommunications Cooperative Association rejected another rural carrier association’s proposed edits to FCC Chairman Kevin Martin’s overhaul for intercarrier compensation and the Universal Service Fund. The revised plan, which includes revisions by the Western Telecommunications Alliance and the Organization for the Promotion and Advancement of Small Telecommunications Companies, is one of three proposals currently out for comment. In a Monday letter to the FCC, NTCA shot down five changes, saying they would drive “many rural ILECs … out of business within ten years.” NTCA also condemned Martin’s original plan, saying it would be “a smothering blanket on efforts to extend and maintain broadband to the most rural, high-cost parts of the United States.” NTCA said the FCC should instead “adopt a set of completely new comprehensive [intercarrier compensation] and USF reform measures,” as described previously by NTCA. Formal comments on the three plans are due Nov. 26, with replies Dec. 3. FCC members other than Martin have said they want to vote on an overhaul at the Dec. 18 meeting, but Martin said Tuesday it’s unlikely that will happen (CD Nov 19 p2).
A vote is unlikely on intercarrier compensation and Universal Service Fund overhaul at the FCC’s Dec. 18 meeting, Chairman Kevin Martin told reporters Tuesday after he spoke at a Phoenix Center telecom symposium. But he left open the possibility that the FCC could act while he still is chairman at its January meeting. Martin said the FCC may act in December on rules for the AWS-3 and 700 MHz D-block auctions. He also said Comcast could face fines or other penalties for failing to respond adequately to a request by the commission for information on the policies of cable companies switching to digital (CD Nov 18 p7).