The FCC is working with OMB on a written interpretation of rules that would exempt the Universal Service Fund (USF) from Anti-Deficiency Act accounting rules, Senate sources said. ADA rules require funding to be in place before expenditures are made, which is difficult in a program like USF. Sen. Rockefeller (D-W.Va.) asked FCC Chmn. Martin about the status of negotiations with OMB at Martin’s renomination hearing last week. Martin told Rockefeller that he could provide details on the talks “soon.” Sources said the FCC had OMB’s oral assurance it would exempt USF from the accounting rules when the nomination of FCC Comr. McDowell up for Senate consideration. That was to be followed up with a written agreement later, making unnecessary legislation backed by Rockefeller and other senators to make the exemption permanent, Senate sources said.
The FCC levied a $237,992 fine against Telecom Management Inc. (TMI) for not contributing to the Universal Service Fund or paying regulatory fees. The Me.-based company offers long distance plans, toll-free numbers and phone cards by reselling Global Crossing services. The FCC said TMI didn’t contribute to the USF “despite having collected several hundred thousand dollars in USF fees from its customers.”
The FCC fined OCMC Inc. $1.13 million for not paying into the Universal Service Fund (USF). Seeking a reduced penalty, the operator services provider and telecom reseller called the sanction “inequitable” given its financial straits. The FCC rejected that claim, saying USF worksheets from OCMC show “its gross revenues are in the tens of millions of dollars and have been for several years.” OCMC “willfully and repeatedly violated our rules,” the FCC said. Last year, when issued a notice of apparent liability (NAL), the company owed more than $2 million to USF, the FCC said. OCMC made no USF payments in 2 of the 12 months since the NAL and only partial payments in 7 of those 12 months, the FCC said.
Cal. consumers would be the biggest losers if the FCC shifts to a numbers- or connections-based USF contribution, the Keep USF Fair Coalition said Wed. The higher the fee, the bigger the hit, the coalition said. Consumers in other large states, including Tex., Mass., N.Y. and Ill., would be hurt by the change in funding methodology, it said: “Californians currently pay $613.11 million in USF taxes and get back only $575.75 million in USF expenditures. Under the $1.50 per-connection tax switch for USF the California ‘deficit’ would soar from the current $37.35 million to $582.43 million.”
The Computer & Communications Industry Assn. asked the U.S. Appeals Court, D.C., to reverse and remand the FCC’s June 21 order imposing Universal Service fees on VoIP services. The group is challenging the agency’s legal authority in the matter. “The FCC’s decision to impose USF payment obligations on VoIP providers is an ill-advised step toward regulating the Internet,” said Ed Black, CCIA pres. “This order imposes the burden of supporting an outdated Universal Service program that subsidizes 19th Century technology on an innovative new technology still in its infancy. Common sense and sound public policy tells us that this logic is backwards.”
Some industry groups are using an FCC notice of proposed rulemaking on USF contribution methodology to argue for moving to a number-based method of calculating payments -- a question the FCC never raised, NASUCA claimed. The VON Coalition, CTIA and other groups said tweaks to current methodology will fall far short of needed reform.
Emergency alert legislation could be enacted as part of the port security bill moving through the Senate, key House and Senate committee staffers said Fri. at an FCBA lunch. Sen. DeMint (R-S.C.) introduced the Warning, Alert & Response Network (WARN) Act as an amendment to the port bill (HR-4954) Thurs. The Senate Commerce Committee approved the Warn Act by unanimous consent Oct. 20. It establishes a network for transmitting alerts across communications including cellphones, BlackBerrys, Internet, TV, radio and satellite TV.
George Mason U. Prof. Thomas Hazlett deserves a D for poor research, said 2 rural telecom officials unhappy with his characterization of rural telecom companies as high- spending (CD July 20 p7). Michael Fox of RT Communications and Jeffry Smith of GVNW Consulting issued a “response” to Hazlett: (1) “Rural is different,” with facilities costs that can’t be compared to urban areas. (2) The Universal Service Fund is needed to build rural infrastructure. (3) The USF isn’t a tax. (4) Growth in the USF “has been fueled by competitive entrants” not incumbents. (5) “Erroneous assumptions… lead to bad conclusions.” The authors who said they produced the response on their own -- concluded: “If the professor were a student, he might receive an A or B for his carefully-crafted writing style. However, we mark his paper with a C for logical flow and a D for veracity of research.” In a July paper for the Seniors Coalition, Hazlett said USF subsidies to rural companies encourage inefficiency and block adoption of advanced technologies.
The FCC fined Local Phone Services (LPS) $529,000 for not contributing to the Universal Service Fund. The FCC said LPS began offering long distance service in Kan. in 2002. The company registered to pay into the USF but its 2002 and 2003 revenues were considered “de minimis” and exempt from contributing under the program rules. However, in 2004 the company “no longer qualified for that exemption… but failed to file worksheets and make contributions to the USF for that year as required,” the FCC said. The Commission said LPS didn’t file worksheets through the end of 2005 and made no universal service contributions until May 26, 2006.
Comments on using reverse auctions for universal service support are due at the FCC Sept. 20 and replies Oct. 20, said a Federal Register notice Fri. The Federal State Joint Board seeks comments on many questions about USF auctions (CD Aug 15 p2).