Legislation introduced Thurs. by Rep. Terry (R-Neb.) would distribute more universal service support to states west of the Mississippi River by changing the distribution formula for a portion of the universal service fund (USF). The bill, which is co-sponsored by Rep. Stupak (D-Mich.), would change the distribution formula for the so-called “nonrural” USF so that more states would get funding from it.
Federal Universal Service Fund
The FCC's Universal Service Fund (USF) was created by the Telecommunications Act of 1996 to fund programs designed to provide universal telecommunications access to all U.S. citizens. All telecommunications providers are required to contribute a percentage of their end-user revenues to the Fund, which the FCC allocates for four core programs: 1. Connect America Fund, which subsidizes telecom providers for the increased costs of offering services to customers in rural and remote areas 2. Lifeline, which directly subsidizes low-income households to help pay for the cost of phone and internet service 3. Rural Health Care, which subsidizes health care providers to offer broadband telehealth services that can connect rural patients and providers with specialists located farther away 4. E-Rate, which subsidizes rural and low-income schools and libraries for internet and telecommunications costs The Universal Service Administrative Company (USAC) administers the USF on behalf of the FCC, but requires Congressional approval for its actions. Many states also operate their own universal service funds, which operate independently from the federal program.
Expressing frustration at the FCC’s pace of developing solutions to problems facing the universal service program, Senate Commerce Communications Subcommittee Chmn. Burns (R- Mont.) said he would like to see a summit involving members of Congress, the FCC and the Federal-State Board on Universal Service. “This horse [the FCC] isn’t going to run any faster unless we put the spurs on,” Burns told reporters after a hearing Wed. on universal service. He said such a summit would help members determine whether legislation was needed in any areas and, if so, whether Congress could begin work on a bill this year.
FCC legal advisers said Wed. they were aware of concerns by rural ILECs that universal service money was shrinking while requests for it were growing with the arrival of competitive carriers in rural areas. But they also told members of the National Telecom Co-op Assn. (NTCA) that those were very difficult problems to solve because the Telecom Act encouraged competition as well as universal service. The advisers told NTCA that numerous universal service issues were teed up at the Commission, including what services should be funded and how the support money should be raised, and they wouldn’t be easy to solve. NTCA members were in town for their annual Legislative & Policy Conference.
State regulators are eyeing wireless best practices as a potential way to avert the need for service quality regulation, at the same time as industry is drafting voluntary guidelines, officials said. Neb. PSC Comr. Anne Boyle told us she had circulated proposed best practices at last month’s National Assn. of Regulatory Utility Comrs. (NARUC) winter meeting for review. Boyle said the issue was teed up for an upcoming NARUC meeting in Denver, with hopes that industry, FCC and the National Assn. of State Utility Consumer Advocates (NASUCA) would participate, she said. Meanwhile, the Mo. attorney general is in negotiations with Sprint PCS and Nextel on a lawsuit filed in Dec. over billing practices.
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.
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
While economic improvement will be major theme pushed by most ILEC and Bell company lobbyists on Capitol Hill in new session beginning in Jan., ILECs also plan to address other issues, from tax reform to content management. Bell and ILEC lobbyists have said regulatory change that could help spur investment is primary goal, but many are vague on specifics and cite pending FCC action as precursor to Hill lobbying strategy.
Congress eventually will have to “weigh in” on universal service, NTCA CEO Michael Bunner said Wed. in letter to incoming Senate Commerce Committee Chmn. John McCain (R- Ariz.) that urged continuing universal service fund (USF) support. “We continue to advocate these concepts before the Federal Communications Commission in a plethora of open proceedings,” letter said. “Yet, it is our belief that it will be crucial for Congress to weigh in on these matters as well, to ensure congressional intent is being met in terms of ensuring the future of this indispensable national policy.” Bunner said “string of adverse regulatory and judicial decisions” in name of “competitive neutrality” have eroded congressional mandate on universal service. “The Senate has long played a leading role in advocating and monitoring the many aspects of this critical national policy,” he said. NTCA outlined its leading USF principles: (1) Universal service support must be sufficient and sustainable and all providers of telecom should contribute as public interest mandates. (2) Eligible telecom carriers (ETCs) receiving universal service support should receive such support based on their own costs rather than on costs of incumbent. (3) Competing ETCs should receive support only when they actually had captured customer lines, begun service to new lines or modified their rates or services. (4) States must take their public interest duties more seriously when authorizing additional ETC’s in given market.