The Mont. PSC is eyeing retail or wholesale rate cuts for Qwest to ensure its ratepayers benefit from sharp increases in the company’s federal universal service subsidies the last 10 years. In 2005 the PSC opened an inquiry on Qwest’s use of universal service high-cost support funds (Case D2005.6.105). In the latest docket report, the PSC said Qwest’s annual universal service subsidy jumped from $1.3 million in 1996 to $16 million yearly for 2004-06. Qwest said universal service subsidies go to add, upgrade and maintain network facilities in its high-cost areas; the PSC noted Qwest’s gross network investment statewide fell from $52.6 million in 1996 to $24.6 million in 2005. The PSC said Qwest’s gross construction cost has fallen more than 50% since 1996, as its universal service subsidies “have increased dramatically.” Qwest said universal service support doesn’t offset its rural network construction expenses so its rates should stay the same. But the PSC said that while there’s no evidence Qwest improperly uses universal service subsidies, “it is difficult to pinpoint exactly where the USF money is going,” or verify that Mont. customers get maximum benefit from the subsidies. The PSC said it may order direct ratepayer benefits of $8-$10 million via a cut in basic exchange rates, killing Qwest’s monthly extended area calling surcharge, or implement MCI’s proposal to cut Qwest intrastate access charges. The PSC hired a consultant to study these and other alternatives for using Qwest’s universal service revenue to benefit ratepayers. The consultant’s report is due June 12; Qwest’s response, July 19. Data requests must be completed by Aug. 30, and hearings will open Sept. 26.
The FCC should adopt multi-tiered standards for what it deems broadband and consider varying standards for different technologies, CTIA said in comments. The group was weighing in on an FCC inquiry’s questions on how to define broadband in a changing marketplace and on how to speed deployment. CTIA stressed that wireless may not offer the same speeds as wireline but is still broadband and should be so classified. The FCC issued a Notice of Inquiry (NOI) last month, asking for comments to help it write the 5th Sec. 706 report to Congress on broadband deployment, as required by the Telecom Act (CD April 17 p1).
Rep. Boucher (D-Va.) asked OPASTCO to promote his Universal Service Fund (USF) bill (HR-2054) on the Hill Wed. at the group’s legislative conference. The measure would revamp the USF program by widening the contribution base to include all those providing network connections, and expand services to pay for broadband. “We are in a hypercompetitive global market,” Boucher told OPASTCO members, stressing the importance of getting faster broadband deployment throughout the country, especially in rural areas. USF is under stress “today as never before,” Boucher said, adding that he and the bill’s chief co-sponsor, Rep. Terry (R-Neb.), have worked 3 years on “comprehensive” legislation to deal with problems in the system. Boucher’s bill has 11 co-sponsors, all but one Republicans. It has attracted support from AT&T, Qwest, Embarq and Alltel and NTCA, Boucher said, and the challenge is to encourage trade groups that like the bill to urge other lawmakers to sign up. “This bill will not be passed into law without your personal assistance,” Boucher told OPASTCO members. OPASTCO Pres. John Rose said the group applauds the bill but thinks it wise to pursue regulatory as well as legislative fixes.
FCC Chmn. Kevin Martin plans to proceed as soon as the fall on a proposal to change how telecom providers contribute to the Universal Service Fund, he said Mon. after a speech. Martin told reporters he is waiting for a U.S. Appeals Court, D.C., decision on a related universal service issue before teeing up a proposal to replace the revenue-based contribution system with one relying on phone numbers.
FCC Chmn. Martin backs “exploring” inclusion of broadband in the high-cost Universal Service Fund (USF), he said in a letter to House Telecom Subcommittee Chmn. Markey (D-Mass.). Martin declined to answer Markey’s April 2 query (CD April 3 p7) as to whether Martin favors using USF subsidies for broadband -- a strategy explored in several legislative proposals on Capital Hill.
As expected, the FCC issued a call for comments on the recommendation by the Federal-State Joint Board on Universal Service for an interim cap on USF subsidies to “competitive eligible telecom carriers” (CETCs), which generally are wireless providers (CD May 2 p1). The agency said comments would be due 14 days after the notice of proposed rulemaking is published in the Federal Register, and replies 7 days after that. The FCC asked for comments on a variety of issues, including “whether there are public interest concerns” about limiting the cap to CETCs. Parties that disagree with the recommended year’s duration for the cap should explain why, the FCC said. “We also seek comment on the Joint Board’s recommendation to impose the cap on a state-by-state basis, including how this would affect the state ETC designation process,” the NPRM said: “Parties should also address whether the cap should be set at the level of support received by competitive ETCs in 2006, as the Joint Board recommended, or some other level.”
Democrats are scrambling to fill broadband gaps in rural America, with House Telecom Subcommittee Chmn. Markey (D- Mass.) drafting a bill based partly on a successful state program that mapped high-speed service holes. Markey’s bill would have NTIA draw and maintain the map, to be posted on the Internet and searchable by users, according to a copy of the discussion draft. A hearing on the bill is set next Thurs.
The FCC should avoid asking carriers for overly granular data in studying sector competition, CTIA said. The group was responding to an agency request for comments on wireless industry competition to go into the agency’s 12th Annual CMRS Competition Report. CTIA said USF money will be key to greater wireless expansion in rural America.
The FCC levied $1 million-plus in fines against 2 telecom resellers for not contributing to regulatory funds or to file related paperwork. Wireless reseller InPhonic was fined nearly $820,000 for not paying into the Universal Service and Telecom Relay funds, not submitting worksheets showing what it owed and not registering as a contributor until after it was providing service. The FCC proposed an additional $100,000 fine for failing to get authorization to provide international telecom service. InPhonic buys air time wholesale and resells it. Global Teldata, a reseller of local, long distance and international service, was fined $236,774 for not making USF contributions, registering or submitting worksheets.
Claims that a cap on wireless universal service recipients wouldn’t be competitively neutral “ring hollow” because wireline LECs have had caps in the past, USTelecom Pres. Walter McCormick told the FCC in a letter. “Universal service caps are not new,” he said in response to concerns voiced about a recommendation by the Federal-State Joint Board on Universal Service (CD May 3 p1). “Almost a decade ago, the Commission established an indexed limit on the high- cost fund for ETCs [eligible telecom carriers] and capped the amount of corporate operations expense that an ETC could recover” through USF payments, he said. As now, the action was taken to “prevent excessive growth in the size of the universal service fund,” McCormick said, and the cap was upheld by the 5th U.S. Appeals Court, New Orleans. “Unlike the high-cost fund for incumbent ETCs, the universal service support available to competitive ETCs has never been capped,” McCormick said.