Federal Universal Service Fund

Supported by at least 2 Bell companies, USTA urged the FCC in comments to leave the IP-enabled services market free of economic regulation. But some consumer groups argued the Commission should subject VoIP to Title II regulation to protect consumers, and use its authority to exempt such services from unnecessary regulations. The Local Govt. Coalition reminded the FCC it had “no power to adopt a comprehensive scheme for regulating information services independent of Title II, Title III or Title VI” of the Communications Act. Meanwhile, states pressed for a technology-neutral functional approach to VoIP oversight. “Regulators should not be choosing technology winners and losers,” NARUC Gen. Counsel Brad Ramsay told us. More comments were expected after our deadline Fri.

The organization that administers the universal service program reportedly is planning an audit of the prepaid calling card business to see if providers are contributing enough to the universal service fund (USF). A spokesman for the Universal Service Administrative Co. (USAC) said he can’t comment on whether audits are being conducted, but sources close to the process said the board recently approved funding to conduct such an audit.

OPASTCO members from rural telephone companies throughout the country are lobbying on Capitol Hill this week to urge 3 things: Changes to the universal service program, a delay in VoIP legislation and repeal of the estate tax. “The message you're taking to Capitol Hill will directly impact your companies’ future, the viability of your communities and the ability of your customers to have modern service,” OPASTCO Pres. John Rose told more than 130 members Tues. at a morning briefing before the Hill visits: “Go to the Hill and deliver the message for rural areas.”

Advanced telecom capabilities such as broadband are being deployed to all Americans in “a reasonable and timely fashion,” telecom and cable operators said in comments to the FCC Mon. The comments were filed in response to the 4th inquiry launched by the Commission under Sec. 706 of the Telecom Act earlier this year (CD March 12 p6). The Act requires that the Commission conclude the inquiry and report to Congress within 180 days.

Hours before the Senate took up legislation seeking to ban Internet access taxes, President Bush promoted the ban as a way to stimulate broadband deployment (see separate story, this issue). The Senate late Mon. was prepared to take a procedural vote as the first step toward consideration of S- 150 by Sen. Allen (R-Va.). S-150’s main opponent, Sen. Alexander (R-Tenn.), said Senate Majority Leader Frist (R- Tenn.) has been urging compromise for months, but said talks appeared to have failed: “We simply have a difference of opinion.”

The FCC is expected to call for comments “in a month or 2” on a proposal by the Federal-State Joint Board on Universal Service (CD March 1 p1) to make changes in the funding program’s operation, including a controversial plan to limit funding to one line per customer.

Rural telephone company executives at a convention in Washington applauded loudly Mon. when FCC Comr. Adelstein promised he would fight to defeat a proposal to limit universal service funding to one “primary” line. “I hope it’s dead on arrival at the FCC,” Adelstein said of the proposal by the Federal-State Joint Board on Universal Service. Limits on universal service funding would put consumers in rural areas “at a disadvantage,” he told the National Telecom Co-op Assn. (NTCA). Such limits would “undercut investment in rural America,” he said.

Newly anointed House Commerce Committee Chmn. Barton (R- Tex.) reiterated his support for the “Tauzin-Dingell” method of telecom deregulation, noting that he was a co-sponsor of the bill in the 107th Congress. Asked if Tauzin-Dingell was essentially dead since the FCC has enacted some of the bill’s provisions, Barton said the philosophy behind Tauzin-Dingell hasn’t died. Barton has said the Telecom Act of 1996 will need to be reformed in the upcoming 109th Congress, as has Senate Appropriations Chmn. Stevens (R-Alaska), who will likely become Senate Commerce Committee Chmn. next year. Barton said the U.S. was falling behind other countries -- Korea, Japan, Western Europe -- in broadband deployment, and the govt. should look for ways to accelerate the rollout of high-speed Internet access. However, Barton has named Rep. Pickering (R-Miss.), an opponent of the Tauzin-Dingell approach, to be the Committee vice-chmn. Pickering said when evaluating the Telecom Act, the Committee will take into account many factors, including VoIP, the universal service fund (USF) and spectrum reform. Pickering said the Committee should look to “maintain competition and choices” when reforming telecom law. Barton was careful not to commit to any changes in telecom policy, noting that the Committee hadn’t yet been through the hearing process that he said is needed to educate members on the state of the industry. Barton said the Committee will have hearings this year on the federal budget and will likely hear testimony from relevant Administration officials, including those from the Commerce Dept. Barton said the Committee will look for ways to streamline the budget of agencies over which the Committee has jurisdiction. The Committee will also continue its investigation into the E-Rate USF fund that provides funds to schools and libraries for telecom services, Investigations Subcommittee Chmn. Greenwood (R-Pa.) said. Barton didn’t say whether he would support the E-rate program, only saying it remains a “controversial” spending mechanism. House Telecom Subcommittee Chmn. Upton (R-Mich.) will remain in his post, and he said Thurs. that the Subcommittee would begin to “lay the framework” for telecom reform this year. He said the Subcommittee will hold a hearing on the Satellite Home Viewer Improvement Act (SHVIA) next week. There were few changes to the Committee structure from that of former Chmn. Tauzin (R- La.). Rep. Hall (R-Tex.), who switched from the Democratic party, will take Barton’s position as chmn. of the Energy Subcommittee. Rep. Shadegg (R-Ariz.) will be the Committee Whip and Rep. Shimkus (R-Ill.) will become the Committee Coalition Dir. Barton said most of the staff would remain in place, save the few who follow Tauzin when he leaves Congress. Barton announced C.H. “Bud” Albright would be the Committee Staff Dir. Albright comes to the Committee from Reliant Resources -- an energy company -- and once was the Committee’s Chief Oversight Counsel. Lawrence Neal will become Deputy Staff Dir. for Communications. Neal spent 20 years in the press office of former Sen. Phil Gramm (R-Tex.) and comes to the Committee from the Census Bureau. Andy Black will be the Deputy Staff Dir. for Policy. Black was on Barton’s Energy Subcommittee and also in the private sector for The Advocacy Group.

There was no agreement on whether the FCC should grant Level 3 petition seeking relief from access charges on “voice-embedded IP communications,” in comments filed with the Commission. Level 3 had asked the agency to forbear on rules that might be interpreted as permitting LECs to impose access charges on IP traffic originating or terminating on the public switched telephone network (PSTN), while the agency completes its reform of intercarrier compensation. The FCC last month ruled that Pulver.com’s computer-to- computer Free World Dialup service was an unregulated information service, marking the first “easy” step in addressing IP-based services (CD Feb 13 p1). However, many agreed Level 3 petition dealing with VoIP that touches the PSTN, raised more complicated issues, which should be addressed in the forthcoming VoIP rulemaking proceeding.

The FCC could “come under heavy pressure from lawmakers to back away” from a proposal by the Federal-State Joint Board on Universal Service to limit universal service funding to customers’ primary lines, Legg Mason said Mon. in a research report. The proposal released late Fri. sought to curtail the burgeoning increase in demand on the Universal Service Fund (USF), fueled in part by the growth of competition from wireless providers. The action means the current situation in which USF support can go to multiple lines and multiple carriers no longer would exist. The board offered the FCC suggestions for easing the plan’s impact on rural telephone companies: (1) “Restate” existing USF support for rural LECs (RLECs) based on primary lines so they wouldn’t lose support at first. (2) Order lump sum payments for RLECs so they would be kept whole at first. In both cases, RLECs would lose support only as they lost primary lines to competitors. (3) Freeze the per-line support available to competitors but “hold harmless” the RLECs so they don’t lose funding. FCC Comr. Martin had said his support for the primary line restriction was contingent on adopting the hold-harmless approach. The primary line plan was criticized by both competitors and RLECs. Western Wireless said the proposal would create “huge implementation difficulties” and was “antithetical” to the Telecom Act’s goals. The National Telecommunications Co-op Assn. (NTCA) said limiting universal service support to a single line “is not the right way to control the growth of the fund.” NTCA said “better management” could accomplish the same end: “All carriers should demonstrate their costs and receive support based on those actual costs.” NECA Pres. Bob Anderson said he was concerned that providing support to only one line would “seriously disrupt the flow of revenue to rural telephone companies.” He said rural companies depended on universal service revenue to provide services such as broadband: “Without these revenues it would be very difficult, if not impossible, for these companies to continue providing the telecommunications services that their customers are now receiving.”