Carriers of various sizes told the FCC they back a bid by Windstream to convert to price cap regulation (CD Aug 8 p9) -- but for different reasons. Big companies like Verizon saw Windstream’s regulatory shift as raising a prospect of savings in access charges and Universal Service Fund contributions. Midsized rural companies saw a chance to follow Windstream’s lead and gain flexibility themselves.
Telecom carriers will contribute slightly less to the Universal Service Fund as a percentage of revenue in the fourth quarter, the FCC said. The “contribution factor,” or percent of interstate and international revenue that carriers donate to the fund, will drop to 11 percent in the fourth quarter, starting in October, from 11.3 percent. After rising significantly in the second quarter, to 11.7 percent from 9.7 percent, that percentage has been dropping slightly. The percentage reflects the sum spent on USF subsidies and the amount of industry revenue available to draw from. The fourth-quarter figure is designed to collect $1.9 billion, more than half going to the “high-cost” fund to support rural telephony. The rest goes to the E-rate, Lifeline low-income support and rural health care services.
Both broadband and wireless should be in the mix for high-cost Universal Service Fund reform, the Federal-State Joint Board on Universal Service said Thursday in a brief statement. The board adopted the statement in July, but it took the FCC two months to release it, sources said Friday.
The FCC Wednesday released an order allowing the agency to come down hard on those trying to defraud the Universal Service Fund program. Under previous rules, the FCC could “debar” from participation in the program only those found to have defrauded the schools and libraries program. The rule change expands enforcement throughout the program. “Debarment of applicants, service providers, consultants, or others who have defrauded the USF is necessary to protect the integrity of the universal service program,” the order said. “We do not find any reason to exclude the high-cost, rural health care, or low-income programs from our debarment rules.”
The FCC should raise the income ceiling for LifeLine and Link-Up program eligibility so the programs are in line with a similar one subsidizing heating costs, the Iowa Utilities Board said in comments filed late Friday. The FCC voted in 2004 to raise the Lifeline and Link-Up eligibility ceiling to 135 percent of federal poverty guidelines, seeking comments on whether to raise it to 150 percent. The agency recently asked for comments to “refresh” that issue, which had lain dormant.
Qwest urged the FCC to crack down on traffic pumping by competitive local exchange companies, saying the problem won’t be solved by targeting incumbent LECs alone. At the same time, a group of small telephone companies that have been engaging in the so-called scheme complained to the FCC that bigger telecom companies are refusing to pay the access charges that have been generated. Traffic pumping is when a small ILEC enters into a partnership with a “free calling service” to attract more of the long distance calling that’s subject to access charges. The small ILEC often jacks up its access rate ahead of time to assure even more revenue from interstate telecom companies like Qwest and AT&T. Qwest said it agreed with a recent letter from AT&T (CD Aug 1 p10) that warned the problem won’t go away unless both ILECs and CLECs are targeted. If the FCC “is successful in reducing incentives of small ILECs to engage in such schemes” the problem will “simply move to CLECs,” Qwest said in an Aug. 15 letter to the FCC. CLEC rates aren’t directly regulated by the FCC so the agency can’t require rate adjustments as it can for rate-of-return regulated ILECs, Qwest said. An alternative would be to declare that traffic to free calling services is not “terminating traffic” and thus CLEC access charges can’t be levied on it, Qwest said. The agency also could require CLECs to certify that they don’t expect access traffic to grow beyond a specified percentage over any 3- month period. If traffic greatly exceeded that level, the FCC could step in, Qwest said. A third approach would be a rule that traffic above a set number of minutes per month wouldn’t be subject to the access tariffs. Also filing on Aug. 15, six rural LECs, both incumbents and CLECs, told the commission they're being “harmed” by big telecom companies’ refusal to pay access charges. Also written in response to AT&T’s July 30 letter, the rural companies said withholding access payments is “unlawful self-help.” No regulatory body has even recognized the term “traffic pumping” and there’s nothing wrong with telephone companies developing ways to increase traffic, they said. It is “a common practice used by all LECs, including AT&T,” the letter said. For example, is it traffic pumping “when AT&T Mobility entered into an arrangement with American Idol to provide the service that allows viewers to vote for their favorite vocalist by text message or cell phone call,” they asked. “Rural carriers have been facing decreasing revenues for years, due in large part to line loss from declining rural populations, and from cellular telephone providers,” including AT&T Mobility, the companies said. “This country’s rural carriers have a choice,” the letter said: “They can offer new services to generate new telecom revenues or they can rely on higher USF subsidies. We believe it is in the best interest of the carriers and the American public if rural carriers attempt to generate more traffic.” The six companies are All American Telephone, Aventure Communications, Farmer’s Telephone of Riceville, Iowa, Great Lakes Communications, Superior Telephone Cooperative and Tekstar. EH
Three lawmakers urged FCC Chairman Kevin Martin to adopt a temporary cap on universal service subsidies to competitive eligible communications carriers, a move proposed by the Joint Universal Service Board. The Monday letters reflect a dogged campaign by the Coalition to Keep America Connected, lobbying for 4 rural telecom trade groups and about 800 small to mid-size communications companies. Since May, when the Joint Board backed the cap, coalition representatives have been meeting steadily with members of Congress (CD May 2 p1). The coalition hopes to get Congress to pressure the FCC to adopt a permanent cap, which wireless carriers oppose. The letters to Martin from Sen. Tom Coburn, R-Okla., and Reps. Lloyd Doggett, D-Texas, and Collin Peterson, D-Minn., said “virtually all of the growth in the USF is occurring in the competitive eligible telecommunication carrier (CETC) portion of the fund.” Earlier, 18 lawmakers urged the FCC to keep the cap, but no date is set for a decision. “I support the temporary cap if that will lead to reforms that will fix the broken subsidy structure,” Sen. Coburn said.
Hearings and letters to the FCC and NTIA on DTV consumer education will multiply in September, when Congress returns, Hill aides said in interviews this week. Senate Commerce Committee Chairman Daniel Inouye, D- Hawaii, told reporters he will convene a fall hearing on the DTV transition, saying a July 26 session convinced him “more needs to be done.” House Telecom Subcommittee Chairman Ed Markey, D-Mass., also will scrutinize consumer education efforts, an aide told us.
A study concluding that competitive telecommunications providers serve small towns but not more isolated rural areas (CD July 16 p12) “raises far more questions than it answers,” a coalition of competitors operating in Texas told the Federal-State Joint Board on Universal Service. The Texas USF Reform Coalition said the study, sponsored by four midsized carriers, should be “disregarded” until reviewed by Texas regulators considering a related universal service case in the state. The coalition of the Texas Cable & Telecommunications Association, Time Warner Telecom of Texas and Sprint Nextel said much material in the study is dubbed confidential, so outsiders cannot see it. The study is based on data from the four sponsors, but claims of industry harm - - from being unable to average costs across town and countryside -- do not jibe with the companies’ financial success, the coalition said. The study was sponsored by CenturyTel, Consolidated Communications, Embarq and Windstream. The coalition said it “is not suggesting that the Joint Board should attempt to reconcile the claims.” Instead, it should wait for the outcome of the Public Utility Commission of Texas’s “contested case” taking up the same questions: “In that forum, the critical tools of discovery and cross-examination will be available to look beyond the curtain of confidentiality that masks the methodology… used in the study.”
State regulators at their summer meeting advanced four more telecom policy resolutions, on numbering, broadband data collection, IP relay fraud and broadband over power line cost accounting. The Telecom Committee of the National Association of Regulatory Utility Commissioners (NARUC) decided against resurrecting a fifth policy matter, a controversial resolution narrowly defeated by its staff subcommittee that would have urged that federal Universal Service Fund reforms be neutral regarding providers and technologies.