The Universal Service Fund should be shut down, but until then a temporary cap on USF outlays would be a good stop-gap, the National Taxpayers Union said Tuesday in a letter to FCC Chairman Kevin Martin. The USF “is a textbook example of taxation and redistribution via regulation,” the group said. USF disbursements are “part of a multi-billion- dollar wealth transfer,” the group said.
NARUC urged House Appropriations Committee leaders to adopt language in a Senate bill to extend an exemption for the Universal Service Fund from Antideficiency Act controls. Without the exemption, phone rates could rise “unnecessarily,” Tony Clark, chairman of NARUC’s Telecommunications Committee, wrote Appropriations Committee Chairman David Obey, D-Wis., and Ranking Member Jerry Lewis, R-Cal. The Universal Service Administrative Co. could “lose millions in safe government-backed securities” and the E-rate program could be disrupted for nearly six months, said NARUC’s letter Friday. Congress has passed temporary exemptions for three years, and the current one expires Dec. 31, the letter said. The Senate version of the fiscal 2008 Financial Services and General Government Appropriations bill would extend the exemption a year, but the House version has no exemption, Clark wrote. “Allowing the temporary exemption of USF from the Antideficiency Act to lapse could unnecessarily complicate efforts underway at the FCC to enact comprehensive reform of the Universal Service program.”
FCC file room security needs beefing up, the agency’s Office of Inspector General said in a report based on six months of investigations that ended in September. The inquiry came after news reports on a file containing “non- confidential contract documents” relating to telecommunications service between the U.S. and Haiti was lost from the FCC’s Reference Information Center, the IG said.
The Federal-State Joint Board on Universal Service issued long-awaited recommendations for reforming the Universal Service Fund late Tuesday that generally followed an outline released in September. The goal of the wide- ranging group of proposals is to reform the high-cost portion of the USF, which subsidizes service in rural areas. The FCC has a year to act on the recommendations.
The AT&T-Dobson Communications merger order could have long-term effects on the wireless marketplace, creating as it does a new, higher screen level for when a merger raises market power concerns, industry officials said. The order (CD Nov 16 p10) states that with the addition of 700 MHz spectrum to be auctioned next year, a merged carrier can hold up to 94 MHz of spectrum in a given market without triggering more detailed FCC review. The previous standard was 70 MHz. Sources said the provision was made part of the order at the suggestion of Wireless Bureau Chief Economist Walter Strack.
The Federal-State Joint Board for Universal Service has agreed to a permanent cap for the high cost part of the Universal Service Fund, most likely at 2007 levels, regulatory and industry sources said Wednesday. The proposal would also create separate funds for wireline, wireless and broadband.
More than 70 percent of Americans polled back capping the high-cost portion of the Universal Service Fund, and 62 percent oppose using USF subsidies to widen broadband access in rural areas, said Cap the Fund, a group opposing more USF spending. “This program requires us to trust the government not to throw money to services that could be better provided by non-subsidized companies,” said Mac Haddow of the Seniors Coalition, a Cap the Fund member.
The Federal-State Joint Board for Universal Service may be ready to present its long-term reform proposals to the FCC as soon as week’s end, said board co-chairman Ray Baum of the Oregon Public Utility Commission. Baum said he was “cautiously optimistic” about the timetable, although members are working on “final details” such as preparing their public statements on the recommendations. The proposal will be “close to the outline” the board released in September, Baum said in a phone conversation. The board had announced agreement then on key issues such as making USF subsidies available for broadband services and ending the equal support rule that gave competitive rural carriers the same level of subsidies as incumbents. Asked whether the recommendation will be unanimous, Baum said he didn’t know.
FCC Commissioners Robert McDowell and Jonathan Adelstein likely will come in for intense lobbying in coming weeks, as wireless carriers seek to beat a cap proposed for Universal Service Fund payments. The carriers want to know why they're getting special attention as the FCC tries to curb the fund.
FCC Chairman Kevin Martin has circulated an order and two notices of proposed rulemaking on Universal Service Fund reform, sources said. The items started circulating Oct. 26. The order, based on the Alltel merger order, would cap USF payments at June 2007 levels, unless a carrier filed cost data showing its per-line costs are less than the capped funding level. Martin also circulated two rulemakings. One would provide for reverse auctions for USF payments, the other would eliminate the identical support rule. The items could be taken up at the Nov. 16 FCC agenda meeting. The notices could prove touchy because they sidestep the Joint Board on Universal Service in making long-term changes, sources said Thursday. Ray Baum, an Oregon regulator who serves as state chairman of the joint board, told a CTIA conference last week he worries that the joint board’s work may come to naught. “We might not be able to get anything out,” he said.