Federal Universal Service Fund

AT&T executives met with FCC staff to discuss the Universal Service Fund, said an ex parte filing Tuesday. “While a numbers only-based system was adequate just a few years ago, changes in the marketplace and the direction of USF reform require a more inclusive methodology."

Tying Universal Service Fund support levels to cost models that don’t take satellite broadband into account “severely inflates” the support required to reach the 7 million targeted households, Hughes Network Systems said in a meeting with the FCC’s Wireline, Wireless and International bureaus. That inflation aggravates “the subsidization of inefficient terrestrial build-out,” the company said in a presentation. Hughes said satellite broadband shouldn’t be included in revised USF, since it already offers nationwide service without support. Requiring satellite broadband providers to contribute for the service would be unfair because it would be paying for competing companies’ terrestrial buildout, it said.

ViaSat is willing and able to provide telephone service if required to take part in an updated Universal Service Fund, the company said in a meeting with the FCC Wireless, Wireline and International bureaus. Satellite broadband remains critical for broadband universal service and ViaSat is planning on “timely, sufficient and competitively priced satellite capacity,” it said in a presentation at the meeting. The company, which provides satellite broadband through its WildBlue unit, also suggested revised USF rules consider different partitions of geographic regions and eliminate support where effective competition exists.

Cellphone tax law, public safety, cybersecurity and universal service are among issues expected to get Congressional attention when members return from recess next month, Hill and industry officials said. But with elections in early November, Congress is quickly running out of time to finish pending legislation on those and other matters. “On telecom, the final few weeks will mostly be about laying the groundwork for a busy 2010-11 in areas like spectrum, privacy and broadband regulation,” said Concept Capital analyst Paul Gallant.

A Universal Service Fund overhaul “would best be grounded on classification of broadband Internet connectivity as a telecommunications service” by the FCC, said the Media Access Project in a meeting last week with the Wireline Bureau. “Such a decision would minimize the chance of an anomalous and undesirable outcome in which the Commission plausibly might require contributions from broadband providers but have no authority to provide explicit support for broadband deployment and adoption.” MAP can’t yet endorse either revenue-based or numbers-based contribution to USF, because of the current legal uncertainty about the commission’s broadband authority, it said. Whatever method is chosen, the group said it shouldn’t “increase the relative contribution burden passed through to providers’ residential subscribers, nor promote more regressive assessments."

Sorenson was alone seeking one compensation rate for all video relay service providers under the interstate Telecom Relay Service fund, in comments at the FCC last week. Sorenson is the biggest VRS provider and is paid the least under the current system. Responding to a notice of inquiry about taking a “fresh look” at the VRS program and reducing fraud, Sorenson’s rivals and consumer groups representing the deaf urged the FCC to maintain the current tiered approach, with some minor changes.

In what could be a messy November election for Democrats, telecom industry lobbyists are closely watching the re-elections of several members active on their issues. Those races include House Communications Subcommittee Chairman Rick Boucher, D-Va., and subcommittee members Zack Space, D-Ohio, and Lee Terry, R-Neb. They also include Senate Agriculture Committee Chair Blanche Lincoln, D-Ark., and Senate Commerce Committee member Barbara Boxer, D-Calif. Boucher has a large financial advantage over his Republican opponent and political analysts and others give him the edge.

Rural carrier associations urged the FCC to expand the contribution base for the Universal Service Fund. The Wireline Bureau met Tuesday with officials representing the Rural Alliance, National Exchange Carrier Association, National Telecommunications Cooperative Association, Western Telecommunications Alliance and the Organization for the Promotion and Advancement of Small Telecommunications Companies, a Thursday ex parte filing said. The rural incumbent local exchange carriers seek USF contributions from all broadband providers, regardless of their means of transmission.

Imposing Universal Service Fund obligations on satellite providers that don’t receive USF support isn’t a “fair or rational way” to provide broadband to remote areas, a group of satellite companies said at a meeting with the Wireline Bureau’s Telecommunications Access Policy Division. Inmarsat, Iridium, Intelsat, SES World Skies, Spacenet and WildBlue representatives were at the meeting, an ex parte filing said. The satellite companies urged the bureau to “think broadly about alternative contribution methodologies,” though each would raise definition and classification questions, the filing said.

USA Mobility asked the FCC not to change how it collects Universal Service Fund fees in a way that imposes significantly higher charges on users of paging systems. “Many of USA Mobility’s customers pay less than $.10 per month in USF charges, and even most higher-revenue customers pay less than $.25 per month,” the company said in an ex parte filing about a meeting with commission officials. “Accordingly, a numbers-based or connections-based contribution methodology that imposed flat monthly charges in the neighborhood of $1.00 would inflict dramatically higher costs that would adversely affect USA Mobility’s ability to retain its price-sensitive subscriber base."