The FCC sought comments on an Ascent Media Group request to reverse a Universal Service Administrative Co. decision. USAC refused to accept an amended August 2007 Form 499-Q used to determine Ascent’s universal service contribution. Ascent said it inadvertently gave its entire projected revenue instead of projected billed USF revenue, but didn’t realize the mistake until after the 45-day revision window. Comments are due May 13. Replies are due May 20.
Affordable voice service for those in need, not financial support for carriers, would be the “paramount” aim of the universal service program, according to draft legislation released Monday at a Free State Foundation panel discussion. Proposed by House Commerce Committee ranking member Joe Barton of Texas, the bill drew panelists’ praise as embodying proposals with widespread support.
FCC Chairman Kevin Martin circulated late Friday changes in an order approving a Universal Service Fund cap that likely mean approval of a cap within days, we've learned. Counting Commissioner Robert McDowell’s support, Martin has three votes for the high-cost fund cap. Commissioner Deborah Tate backed the cap while Commissioner Michael Copps cast a no vote.
The most important FCC aides on telecom are Wireline Bureau Chief Dana Shaffer and Wireless Bureau Chief Fred Campbell, along with Chairman Kevin Martin’s wireline adviser Ian Dillner and wireless adviser Aaron Goldberger, said sources including current and former FCC staff.
U.S. Cellular met with members of the Federal-State Joint Board on Universal Service to argue against a cap on the fund, which is now before FCC commissioners, it said. The carrier said in an FCC filing that it stated at the meeting that “there is no crisis in USF funding,” with the fund down 16 percent last year. It called the cap “the wrong move at the wrong time,” institutionalizing discrimination that exists in the fund. U.S. Cellular pointed out that Mississippi now gets $140 million from the high-cost fund, compared to $2 million in Missouri and $100,000 in Illinois. “Since 1999, Wireless has drawn $3 billion and wireline has drawn $25 billion,” the carrier said.
Subsidy caps and reverse auctions proposed to rein in a rapidly growing Universal Service Fund split wireline carriers by geography, in comments to the FCC. While Verizon urged a high-cost cap and auctions, rural groups said the reforms would undermine broadband deployment efforts. Meanwhile, wireline groups didn’t contest a proposal to kill the identical support rule. Wireline groups also expressed mixed feelings on a Universal Service Joint Board proposal to expand high-cost support to broadband and wireless.
Wireless carriers’ advice to the FCC on Universal Service Fund reform varied sharply, as companies and groups commented on three rulemakings on the universal service fund. A general message was that wireless must play a significant role as the fund is restructured. There was broad support for an advanced mobility fund. But wireless players disagreed on the wisdom of eliminating the identical support rule or launching reverse auctions to shrink the fund. Comments came as the FCC poised to approve a fund cap many in wireless fear will hit their sector the hardest (CD April 1 p1).
“It’s critical that the universal service system adapts to keep pace with the dramatic changes driving the sector,” said USTelecom President Walter McCormick as the telecom association Thursday filed comments on three universal service proceedings. USTelecom urged the FCC to cap high- cost support and “gradually remove access support” for competitive eligible telecommunications carriers. The FCC should phase out support for multiple wireless lines in one household, and look at end-user rates when it calculates high-cost support for fixed line ETCs, USTelecom said. The association supported using reverse auctions to “reduce the number of wireless competitive ETCs to one per geographic area” and determine their support. USTelecom also urged the FCC to target USF subsidies at high-cost wire centers within large study areas and “begin the transition to project-based support to build out service in areas lacking wireless coverage.”
The FCC needs a reverse auction mechanism to curb growth of the Universal Service Fund, said Americans for Tax Reform. The USF, which it called “a revolving multi-billion dollar slush fund,” exemplifies “bloated big government with a heavy dose of entitlement politics,” said the group, headed by Grover Norquist. The high cost program “a monument to inefficiency and waste,” fritters away millions of tax dollars, the group said. Short of killing the USF, the best way to control it is by reverse auctions, it said.
The FCC denied BellSouth and Arya International petitions seeking reconsideration of universal service fund contribution obligations the FCC set in 1999. That order, made on remand from the Fifth Circuit U.S. Court of Appeals, established a “limited international revenues exemption.” LIRE stipulates that carriers with interstate revenue comprising less than 8 percent of combined interstate and international revenue base their USF contribution only on interstate revenue. In December 1999, BellSouth and Arya filed for reconsideration of the order. Last week, the FCC rejected Arya’s argument that the 8 percent threshold was “arbitrary and capricious.” In 1999, 8 percent “provided sufficient margin of safety based on the contribution factors,” and fixing that figure kept the agency USF contribution factor “specific and predictable,” the FCC said. In 2002, the FCC raised the exemption threshold to 12 percent to reflect market changes, it added. The FCC also rejected BellSouth and Arya demands that the FCC refund all USF contributions collected from Jan. 1, 1998 to Oct. 31, 1999, and based on intrastate or international revenue exceeding the 8 percent LIRE. “Requiring refunds of this magnitude would compel” increased USF fees and might not be feasible, the FCC said. “That would cause manifest injustice for today’s consumers, as they shoulder higher bills while bearing no culpability for the refund problem.”