With the outlook increasingly bleak for a minimum required bid to win the 700 MHz D-block license, Commissioner Michael Copps said Tuesday that, no matter what happens, the FCC will have to make certain that public safety has a national, interoperable broadband network. At our deadline, the only bid for the 10 MHz national license was the $472,000 bid made on day one, which is well short of the minimum $1.33 billion. No company has come forward to replace Frontline Wireless, which announced before the auction began that it would not make the down payment required to participate in the auction.
The FCC may release three universal service items for public comment as soon as today (Friday), indicating it may be ready to start moving on long-awaited Universal Service Fund reform. Commissioners already have voted on the three items, which will have the same comment dates so parties can file one set of comments covering all three if they wish, a source said.
Capping subsidies only to selected wireless companies, such as AT&T Mobility and Alltel, won’t stop the Universal Service Fund from growing, AT&T said in an ex parte meeting Tuesday with FCC Commissioner Robert McDowell. The reference was to USF caps imposed on companies after acquisitions, such as in the AT&T-Dobson merger and Alltel’s purchase by TPG Capital and Goldman Sachs Capital. McDowell last month questioned the a need for a cap on rural wireless competitors, since caps were required in the acquisitions (CD Dec 21 p2). “Capping only AT&T Mobility and Alltel leaves 51 percent of wireless CETC [competitive eligible telecom carrier] funding uncapped,” AT&T said in a paper presented at the meeting.
A rural telecom company proposed a plan it said would let the FCC control Universal Service Fund growth without “drastic and untested reverse auctions.” In a letter to the agency, Panhandle Telecommunications Systems urged the FCC to continue letting multiple wireless competitors operate in rural areas but give them an “economic incentive” to use other wireless carriers’ networks where it isn’t economically feasible to build more facilities, PTS said. Wireless rivals’ universal service support should be based on their own costs, not the “identical support” process, which bases competitors’ support on incumbent local exchange carrier costs, PTS said. Under the plan wireless competitors would have to share their networks with other wireless carriers licensed in the same area and charge less than the standard roaming rate. This would discourage building more networks and lessen the drain on the USF, which finances those networks, the plan said. The proposal is by the competitive subsidiary of Panhandle Telephone Cooperative, making it more neutral than some, PTS said. Panhandle Telephone Cooperative is an incumbent local exchange carrier in Oklahoma, Texas and New Mexico. Its PTS subsidiary provides competitive wireless service in Oklahoma and Kansas and competitive local exchange carrier service in Texas. The reduced roaming rate would be based on “the national average cost to produce a wireless minute,” also called “local wholesale rate,” PTS said. This rate would be used to set USF support for wireless competitors, PTS said. A formula would be devised to let wireless competitors “calculate their own costs based on a national average cost without resorting to the highly- regulated and burdensome cost accounting methods currently required of some ILECs,” PTS said. The proposal includes a procedure for paying competitive wireline companies. They would have to do cost studies like those incumbent rate-of- return LECs do. “Since many rural CLECs are accustomed to preparing cost studies in their affiliated ILEC areas, they should be willing to prepare a similar study for their CLEC areas as well,” the letter said. The plan would cap USF support for a wireline CLEC at 1.5 times the support per line in the state where the company operates.
The FCC asked for comments on TracFone’s request for eligible telecommunications carrier status to provide Lifeline service in Pennsylvania. ETC status allows a carrier to get universal service funding. TracFone told the FCC it plans to seek USF money just for Lifeline and not to provide service in high-cost areas. Comments are due Feb. 8, replies Feb. 25.
The Kansas Corporation Commission became the third state commission to rule that interconnected VoIP providers must pay into the state universal service fund. The commission said making VoIP providers contributors is consistent with federal law and FCC policy since they already pay into the federal universal service fund. The KCC (Case 07-GIMT-432- GIT) said interconnected VoIP providers’ ability to separate traffic jurisdictionally doesn’t matter if the federal fund’s safe-harbor mechanism applies to their state contributions. The commission dismissed arguments that it’s preempted by federal law. Federal law and policy are silent on VoIP payments to state funds, and when New Mexico and Nebraska ordered interconnected VoIP providers to contribute to their state funds, they didn’t face preemption claims, it said. The KCC will hold workshops within 60 days to help set a formula for figuring VoIP universal service fund contributions and to settle other matters of follow-through.
LAS VEGAS -- Testing of devices designed to surf the Internet using the white spaces without causing harmful interference to TV broadcasts could take months to complete and analyze, FCC Chairman Kevin Martin Kevin Martin told CES here. Martin fielded audience queries on the topic during the session and afterwards from the press. Some industry and FCC officials have said in recent weeks they worry that consideration of the item may be on hold.
About $4.1 billion of the Universal Service Fund’s $6.6 billion disbursements in 2006 went to “high-cost” rural subsidies, according to a report issued Monday by the Federal-State Universal Service Joint Board. The staff report said schools and libraries support was $1.7 billion, low-income was $808 million and rural health care was $41 million. High-cost support increased by $300 million from the year before, which the report attributed to more subsidies going to competitive carriers. The USF report tracks a variety of telecom trends and is the only document that includes statistics from all incumbent local telephone companies in the U.S., the FCC said in a news release accompanying the joint board report. For example, the report shows Bell access lines declined to about 118 million in 2006, compared with 127 million in 2005, while fiber installations grew.
FCC action on early termination fees (ETFs) is expected early in 2008, with the commission expected to refocus at least in part on telecommunications issues following a major fight over media consolidation. The Universal Service Fund, 700 MHz auction, future use of the broadcast white spaces, and 800 MHz rebanding also are expected to get agency attention.
The Benton Foundation blasted the Bush administration for failing to achieve universal broadband access by 2007. Mostly completed in September, the report was held until now so it could include material on a November Joint Board on Universal Service decision to include broadband as a supported service, said Charles Benton, foundation CEO and founder. The board ordered the FCC to create a specific broadband fund under the program, a “critical first step,” but not enough unless the “FCC acts immediately,” the report said. And the $300 million proposed annual broadband fund is “woefully inadequate for tackling the challenge at hand,” the report said. With broadband deployment costing $1,000 a line, a $300 million yearly fund at most would add 300,000 broadband connections, boosting penetration “only about 1 percent,” the report said. The National Exchange Carrier Association pegs annual costs at closer to $3 billion. The Bush administration should have drafted a strategy for universal broadband deployment, the report said. Nearly 60 percent of households with incomes above $150,000 have broadband, compared with less than 10 percent of households with incomes below $25,000. Broadband deployment should be covered under the Universal Service Fund, especially for rural areas, the report said. “Making the transition to broadband can, over the long run, save consumers tremendously,” the report said. Broadband service costs could be lowered through a “modernized” USF program and policies allowing municipalities to offer the service, it said.