CTIA asked the FCC to make clear that carriers won’t have to make potentially significant retroactive payments to the USF because of confusion over the definition of “toll revenue” on a key reporting form. CTIA filed a petition for declaratory ruling at the agency, seeking guidance on questions tied to the agency’s latest USF contribution order, approved at the June agenda meeting (CD June 22 p1).
Few changes mark the latest edition of a controversial plan for reforming intercarrier compensation, submitted Mon. to the FCC by AT&T, BellSouth, Cingular and hundreds of small carriers. Now dubbed the “Missoula Plan,” it’s the final version of a proposal by the remaining elements of the NARUC forum (CD March 15 p1). The proposal immediately drew fire in the form of a statement from many industry groups and companies, including NASUCA, CTIA, NCTA and CompTel.
Telecom customers nationwide are getting stuck for a fortune needlessly subsidizing rural telephone companies via the Universal Service Fund (USF), a consumer group charged Wed. The govt. would spend less giving satellite or wireless phones to rural residents otherwise without service than it does “enriching” rural telecoms, said a representative of the Seniors Coalition in a call-in news conference.
Pessimism dogs the Senate telecom bill (HR-5252) as a shortened session’s legislative days dwindle, lawmakers hedge votes and leadership support is scant for the controversial, complex measure, Hill sources and lobbyists said. Sept. would be the earliest the bill could see floor time, Hill sources said, and even then only if major arm twisting could line up the 60 votes needed to avoid filibuster.
State preemption language entered the telecom reform fray “late in the game” and “would pretty significantly change” states’ role in wireless regulation, Dan Phythyon, Alliance for Public Technology public policy dir., said as he moderated a Thurs. discussion of the issue in D.C. These circumstances have made federal preemption of state wireless regulation a “fairly hot” issue, he said -- a conclusion backed by the heated discussion that followed. Speakers were reacting to the telecom bill that cleared the Senate Commerce Committee (CD June 29 p1) last month. State preemption language wasn’t present until the final draft.
CTIA Pres. Steve Largent met with FCC Comr. McDowell this week to discuss a variety of issues of significance to the wireless industry, including universal service reform, the need for a national regulatory framework for wireless, spectrum issues and intercarrier compensation. The meeting with McDowell was part of a series of meetings the association held at the Commission this week. The regulatory team for CTIA also met with Michelle Carey, aide to Chmn. Martin, to discuss USF reform, and with Barry Ohlson, aide to Comr. Adelstein, to discuss EAS issues.
A collection system for the Universal Service Fund (USF) based on telephone numbers gained the support of a new telecom alliance called the USF by the Numbers Coalition. The coalition - made up of groups such as NCTA, CTIA and USTelecom and its members AT&T and BellSouth -- held a news conference call Tues. to “set the story straight” on misconceptions about the plan, it said.
VoIP providers are setting up meetings to discuss their options in light of a surprise FCC decision ending their federal preemption protection if they use traffic studies to calculate Universal Service Fund payments, VON Coalition Pres. Staci Pies said. The FCC’s universal service reform order, released June 27, lets VoIP providers pay into the USF based on 65% of revenue, a figure known as a “safe harbor,” or submit traffic studies to show the amount of interstate revenue is lower. But if they use traffic studies the FCC no longer will deem them eligible for federal preemption, subjecting them to state regulation. The order said the FCC in the 2004 Vonage Order opted for federal regulation of VoIP because “it was impossible to determine whether calls by Vonage’s customers stay within or cross state boundaries.” But if a VoIP provider can tally its USF payment based on the actual percent of interstate calls, “the central rationale justifying preemption… no longer would be applicable” to that provider. That is, if they can pinpoint their traffic’s jurisdiction, the problem spurring the Vonage Order no longer exists, according to the new order. “It’s a Catch-22,” said Pies, a PointOne vp. NARUC Gen. Counsel Brad Ramsay said the “state friendly” language was welcome. The preemption decision wasn’t mentioned in the news release on the FCC vote June 21 (CD June 22 p1).
The telecom industry voiced mixed feelings about an Iowa Telecom request to receive universal service funding through the nonrural program even though it’s a rural company. In comments filed July 3, some said the FCC should approve the request, some said the FCC shouldn’t let Iowa Telecom “game” the system and AT&T said it sympathizes with Iowa Telecom but thinks the FCC should reform the process rather than make a special concession. Iowa Telecom sought the special treatment because the nonrural program is based on forward- looking economic costs (FLEC), rather than the embedded costs used in the rural program. Under FLEC, the company could get Universal Service Fund (USF) support; under the embedded cost standard, it can’t. Iowa Telecom’s former owner invested very little in the network, making Iowa Telecom’s embedded costs so low it can’t get USF support under the rural mechanism, the company told the FCC. In comments filed July 3, Embarq urged that Iowa Telecom’s petition be granted because the company is in an unfair position due partly by outdated universal service rules. “Ten years have passed since the Commission first acknowledged that FLEC was the proper costing approach to be used when calculating explicit federal support” and yet it still calculates rural costs on an embedded cost methodology, Embarq said. The Independent Telephone & Telecom Alliance (ITTA) said “by historical accident… Iowa Telecom appears to be caught in a trap in which its federal and state wholesale and retail pricing mechanisms… do not align with the method by which rural carriers become eligible for high-cost loop support.” ITTA said Iowa Telecom “should not be penalized either for the low inherited book value of its assets or for the more generalized concerns about the application of FLEC to rural carriers.” AT&T agreed Iowa Telecom is in “an untenable position” but said the better route would be for the FCC to act in a pending proceeding aimed at reforming the high cost support mechanisms. “Iowa Telecom’s petition exemplifies the irrationality of the Commission’s existing mechanisms and the need for comprehensive universal service reform,” AT&T said: “Without such support, Iowa Telecom faces the Hobson’s choice of imposing significant rate increases or foregoing network investment necessary to provide advanced services to its customers.” But the National Assn. of State Utility Consumer Advocates (NASUCA) said “no company should be able to game the Universal Service Fund… to maximize its ’take’ under the fund.” Iowa Telecom “is a rural carrier and is limited to the support allowed under the USF for rural carriers.” Sprint Nextel accused Iowa Telecom of trying to gain a “windfall” of “ineligible” USF support. Sprint Nextel said Iowa Telecom already got some relief by gaining forbearance from access charge rules “ostensibly so the Iowa Telecom can fund its infrastructure upgrades.” It’s not necessary for the FCC to grant the company “an additional exemption,” Sprint Nextel said.
Correction: The Keep USF Fair Coalition opposes a numbers-based contribution system for universal service (CD June 21 Special Report).