Alltel said the Florida Public Service Commission did rural customers in the Quincy area of the panhandle region a disservice in deferring action Tuesday on its application for wireless eligible telecom carrier (ETC) status, which would qualify it to receive universal service subsidies. Alltel said the PSC deferral was inappropriate because it hinged on national universal service policy issues rather than the merits of Alltel’s petition. Alltel (Case 06-0582-TP) said the PSC shouldn’t have turned its ETC petition into a platform for debate on national problems arising from the extremely rapid growth of the federal Universal Service Fund. The PSC said it deferred action in the face of conflicting recommendations from its staff. Some staffers recommended granting the application because it met all legal requirements and would give customers more service options. But other staffers urged denial on ground that naming Alltel an ETC would contribute to the explosive growth of the federal Universal Service Fund, leading to higher universal service fees for all Florida phone customers. The PSC members who voted for the deferral said they acted not only because of the Universal Service Fund issues but also to ensure all issues related to the need for Alltel as an additional universal service provider in the Quincy area are addressed.
CHICAGO -- Everything’s becoming reliant on broadband but the Universal Service Fund (USF) still is used to “facilitate voice competition in areas where it’s not economic to support even one provider,” FCC Chairman Kevin Martin said at NXTcomm Tuesday. The USF sorely needs to be “updated to facilitate broadband,” he said. Martin addressed the group remotely; his second child is due any day and he wanted to stay close to his wife in Washington, FCC staff members said.
Economists dueled Fri. over the govt. need to stimulate broadband deployment. At one point the debaters discussed whether broadband can is like “water or an iPod.” Robert Atkinson, Information Technology & Innovation Foundation (ITIF) pres., called for a “national broadband policy” to address what he said is incontrovertibly a lag in broadband deployment in the U.S. The OECD broadband rankings’ validity can be debated, but the key fact is that year ago the U.S. stood higher in those rankings and has slipped, he said at the ITIF-sponsored debate. “We need a proactive policy” on both supply and demand, said Atkinson: “The OECD numbers show we can do better.” But the Progress & Freedom Foundation’s Scott Wallsten said facts are scarce when it comes to justifying concern about U.S. rankings or to decide if a national policy is needed. OECD data are unreliable owing to inconsistent collection methods, he said. The count doesn’t include large categories like colleges and universities, Wallsten said: “The key is to identify what market failure there is.” Asked by a listener if society’s responsibilities vary in line with whether broadband is seen as a “fundamental need,” like a utility, or a consumer product, like an iPod, Wallsten said “broadband sure isn’t [a utility like] water.” Atkinson said he comes down “in the middle, slightly toward the water side.” Wallsten warned that some wanted to make ISDN national policy and now many don’t even know what ISDN is, except that it’s a slow technology. Atkinson said he wasn’t advocating a policy based on a specific technology like ISDN but rather a wider- scope broadband policy. The economists agreed on one thing: Any subsidies should be from “general funds,” not the USF. “There’s an enormous amount of inefficiency in USF support,” Atkinson said. “The USF is growing out of control,” said Wallsten. “Don’t go down that road again.”
“Dramatic shifts in the way universal service support is funded” reflect changes in the telecom industry, the FCC said in its 2005 “Telecommunications Industry Revenues” report, the latest in its annual series. The USF is funded via industry long distance, or “toll” revenue, which has seen continual drops, most recently from $71 billion in 2004 to $69 billion in 2005, the report said. Counting international toll revenue, the total USF base in 2005 was $75.3 billion, data show. One big change, said the FCC: Traditional long distance providers who in 1997 accounted for more than 80% of USF contributions now contribute less than 40%. Other items: (1) Overall wireless industry revenue grew 9% in 2005 to $107 billion. ILEC revenue fell about 2% to $104 billion. CLEC revenue rose 6% to $22 billion in 2006, one of few categories with more recent data.
USF subsidy of wireless carriers doesn’t significantly increase wireless provider coverage in rural areas, said studies for Verizon by Criterion Economics. Economist Jeffrey Eisenach said FCC, USAC and wireless carrier coverage map data show “unsubsidized carriers cover more people than subsidized” carriers. Subsidized competitive carriers aren’t compelled to expand geographic coverage areas, he told a Wed. briefing. They can add subscribers merely by opening a retail store in a town they already serve, intensifying coverage in the town without pushing out to more rural areas, he said. Another way to look at it, said Eisenach: Most USF-subsidized wireless service occurs in areas where unsubsidized wireless providers already operate. “All but 3.2 million, about 2%, of the population in subsidized areas have duplicative coverage from unsubsidized carriers,” he said. For example, “all but 2 million of Alltel’s 34.7 million subsidized covered pops have coverage from unsubsidized carriers,” Eisenach said. “There is no statistical correlation between the amount of subsidies paid and the proportion of the population or land area that has wireless coverage. I don’t think most people, including policymakers, have focused on the fact that the USF subsidizes lines,” not coverage areas. “We would strongly disagree that USF subsidies don’t equal more wireless service to rural Americans, said a CTIA spokesman. “Rural Americans desire wireless service, just like suburban Americans.”
The deadline for reply comments on a proposal to cap USF payments to competitive carriers moved to June 21 from June 13.
Senate Commerce Committee members said Tues. it’s not realistic to revamp the Universal Service Fund in 6 months at the start of the 2008 campaign cycle. Act now, members told FCC Comr. Tate, who serves as Joint Board chair. Tate endured tense, sometimes hostile questioning by members from both sides of the aisle over a recent Board recommendation to cap funding for competitive eligible telecom carriers (CETC), which are mostly wireless. To better understand how its decisions on rural service affect Americans, the FCC should move to the Me. backwoods, an official from that state said.
A revived net neutrality debate could block passage of telecom bills gaining momentum this Congress, Rep. Boucher (D-Va.) told Pike and Fischer’s Broadband Policy Summit Thurs. In the “hiatus” on major legislative activity, network operators and content providers should be talking, he said. Citing discussions with both sides, Boucher said he thinks there’s “potential common ground” and that the issue should be resolved.
Wireline and wireless carriers lined up on opposite sides as comments accumulated Wed. at the FCC on capping USF subsidies to competitive rural carriers. The cap was recommended by the Federal-State Joint Board on Universal Service as an interim measure to slow the rampant growth of the Universal Service Fund. But the recommendation to apply it only to competitive eligible telecom carriers (CETCs), generally wireless carriers, has created a sharp division among rural carriers.
The Senate Commerce Committee plans 2 hearings next week, on the Universal Service Fund (USF) and the 700 MHz auction, the committee said Mon. The June 12 USF hearing will consider a Joint Board recommendation to cap distributions of funds to wireless programs. June 14, the committee will examine public safety and competition issues related to the 700 MHz auction. In coming weeks, the committee may hold hearings on media ownership and violence, but nothing is set, Hill sources said.