Senate Appropriations Committee Chmn. Stevens (R-Alaska) told the National Telecom Coop Assn. (NTCA) Tues. he didn’t believe the FCC had the legal authority to assess universal service fees on cable modem and satellite Internet providers. Stevens said the Universal Service Fund (USF) eventually could become insolvent unless more funds were put in the system or unless spending became more targeted. “The end of this fund is coming unless we find a way to get funds into it,” Stevens said: “Long distance is the primary contributor to the fund. It’s also the industry that’s in the most trouble.”
FCC Chmn. Powell has delayed action on a proposal to reclassify wireline broadband Internet access because the agency doesn’t want to overload staff resources at both the Wireline Bureau and commissioners’ offices, an FCC official confirmed Thurs. when questioned about it. The agency originally planned to act on the broadband proposal next month but now isn’t scheduled to act until June or later. A “specific time frame hasn’t been decided” yet, the staff member said. Some broadband deregulation already occurred in the UNE order so it’s less imperative that the agency act quickly now, he said. In addition, the media ownership proceeding will heavily tax the resources of commissioners’ staff so it may be difficult for the agency to handle the broadband proceeding at the same time, the staff member said. The Wireline Bureau is a bit worn out from the UNE proceeding and several Sec. 271 applications still are being processed, he said. However, a lobbyist said the delay also appeared to be rooted in concern by Powell that the broadband proposal wouldn’t win a majority vote. Having just experienced such an outcome in the UNE proceeding, Powell doesn’t want to risk a similar experience, the source said. The Wireline Bureau reportedly had completed a draft of the order before Powell decided to delay action, leading some to think more than resources were at issue in the delay. Among other things, the delay continues uncertainty whether cable modem service should contribute to the Universal Service Fund (USF). When the FCC adopted an interim reform of USF contributions methodology in Dec., it decided to set the cable modem issue aside and deal with it in the wireline broadband proceeding. Next on the agenda for wireline action are performance measurements and the universal service contributions methodology, sources said.
Reports of fraud in the E-rate program may be “just the tip of the iceberg,” said House Commerce Committee Chmn. Tauzin (R-La.), who’s pushing the panel’s investigation of the program. As part of the Universal Service Fund (USF), the E-Rate program funds telecom services to schools and public libraries. In letters to the FCC and the Universal Service Administrative Co. (USAC), which administers USF under the FCC’s direction, Tauzin cited the potential of more than $200 million in fraud and raised questions about the effectiveness of federal oversight of the program, which never has been fully audited. Oversight & Investigations Subcommittee Chmn. Greenwood (R-Pa.) also signed the letter.
NTCA CEO Michael Brunner wrote members of the House and Senate Agriculture committees asking them to commit to preserving the Universal Service Fund (USF). The letter, dated March 6, emphasized that the USF worked “in tandem” with the Rural Utilities Service telecom loan program, but said FCC action could harm USF. “Actions by the FCC are threatening the viability of the program by failing to recognize the impact that a reduction, or loss, of universal service support may have on rural carriers,” the letter said. “The impact of these actions could result in rising costs of service for rural carriers and higher rates for rural consumers.”
The FCC Wireline Bureau proposed a universal service contribution factor for the 2nd quarter that it expected to result in lower line charges on long distance customers’ bills, although wireless subscribers weren’t likely to see similar short-term relief. The 2nd-quarter contribution factor for the first time reflects a system based on providers’ projections of collected end-user revenue instead of on historical billing data. The proposed contribution factor would be 9.0044%, which an industry source said was the highest to date and resulted from a series of interim changes adopted by the FCC while it studied broader modifications.
Verizon agreed to pay $5.7 million to U.S. Treasury to settle FCC investigation into violations of Telecom Act ban on Bell companies’ providing long distance service before receiving authority from FCC. Commission announced it had entered into consent decree with Verizon in which company admitted it had marketed long distance in its local service region on 5 occasions in Jan.-July 2002 through cable TV ads, bill inserts and direct mail solicitations. FCC Chmn. Powell said action demonstrated agency’s “commitment to deterring companies from entering the market prematurely.”
OPASTCO said Tues. it was upset with way many state PUCs were allowing competitive carriers to receive Universal Service Fund (USF). Group said it would start pushing message to Congress that states were straying from congressional intent of Telecom Act of 1996 and that FCC needed more oversight of PUCs. With OPASTCO members in Washington for annual legislative and regulatory conference, many were planning to meet with members of Congress this week in attempt to put more focus on USF issues, particularly designations of eligible telecom carrier (ETC) by state PUCs.
There’s no reason FCC has to limit itself to same universal service contribution system for all types of telecom carriers, American Assn. of Paging Carriers (AAPC) told Commission in comments Fri. AAPC told agency that all 3 proposals to change contribution methodology to one based on connections would hurt paging companies and suggested agency use different systems for different carriers
President Bush’s budget released Mon. proposed legislation that would assess user fees on unauctioned spectrum licenses. Few details were included in budget as to which unauctioned licenses would be subject to such fee, but it did say fees would begin in 2005 and would total $1.9 billion in first 10 years.
State regulators and FCC are too quick to give wireless competitors right to obtain universal service funding, OPASTCO said in White Paper released at its annual convention in Maui. “High-cost universal service support is not a subsidy program” and regulators shouldn’t designate competitors as eligible telecom carriers (ETCs) without being sure it’s in public interest, paper said. Otherwise, universal service fund will be jeopardized because there won’t be enough money to support it, OPASTCO said. High-cost universal service support going to wireless ETCs has grown to projected $100 million in 2003 from less than $500,000 in 1999, paper said: “It is estimated that if all wireless providers nationwide were granted ETC status that the annual funding level of the USF would grow by approximately $2 billion. Clearly, an increase of this magnitude would not be sustainable… Rural ILECs are the only providers of ubiquitous, high-quality, facilities-based service throughout their respective service areas. Thus, if rural ILECs lose the ability or incentive to continue investing in their networks -- or worse yet, if their existence is placed at risk -- then some rural areas may be deprived of basic universal service.” Paper said regulators had been placing competition above public service and “competition is not always in the public interest.” First priority should be to deliver service to high-cost areas, paper said -- www.opastco.org.