More than 10 voice over Internet protocol (VoIP) providers led by the Voice on the Net (VON) Coalition are getting together to create an unprecedented group to encourage a public policy that refrains from applying traditional telecom regulation to Internet voice communications. The ad hoc coalition, expected to be announced formally before the end of the year, will try to form voluntary agreements on some key common carrier obligations, such as universal service, E911, disability access and law enforcement monitoring of VoIP calls. “These legitimate concerns can be addressed without imposing heavy regulation on VoIP and… if they are addressed successfully the political pressure to regulate VoIP will dissipate,” said VON Coalition Chmn. Tom Evslin, who represents the ad hoc group.
The omnibus appropriations bill (HR-2673), expected to clear the House today (Mon.) (see separate story, this issue), would require the FCC to fund any audit of the Universal Service Fund (USF) E-rate program. The conference report on the bill adopts language from the Senate Commerce Justice State (CJS) appropriations bill (S-1585) conference report that prevents appropriations to the FCC be used to audit E-rate. Instead, Congressional appropriators said the money should be taken from the USF. Currently, the FCC Inspector General (IG) is prohibited from using USF money to fund audits through his office. FCC IG Walker Feaster said the result of the bill would likely require the FCC to hire independent auditors to evaluate the E-rate program. The report language showed that the FCC had asked for $3 million to review the E-rate program. The program, which funds telephony and Internet access for schools and libraries, has been under fire from Congressional members. House Commerce Committee Chmn. Tauzin (R-La.) has raised concern about fraud in the $2.2 billion E-rate program. Last week, Tauzin asked the General Accounting Office to examine the policies of the E-rate program (CD Dec 3 p5). That review is in addition to the investigation being conducted by the House Commerce Oversight Subcommittee.
FCC Comr. Adelstein reiterated Thurs. his concern about the pressures on the Universal Service Fund (USF) caused by the growth of competitors seeking support from it, and recommended a new process that could place limits on competitive use of USF support. Speaking at a telecom conference sponsored by FCBA and the Practising Law Institute, Adelstein said the Telecom Act intended multiple carriers to be eligible for support or it wouldn’t have created the eligible telecom carrier (ETC) process for additional carriers to gain funding. However, he said he wondered whether Congress had anticipated the size of the demand that was emerging. “It may come to a choice of financing competition or financing network development in rural areas,” he said.
FCC Chmn. Powell gave early indications of his thinking about a regulatory regime for Voice-over-Internet Protocol (VoIP) Mon., saying he saw consensus that the service might be deemed “interstate” in nature and that concerns about VoIP were focused on 4 or 5 discrete issues. His comments to reporters came after an FCC forum on VoIP that featured industry leaders, state public utility commissioners and others.
Legislation to modify the universal service fund (USF) received Native American endorsements. The National Indian Telecom Institute (NITI) and the National Congress of American Indians (NCAI), expressed support for S-1380 in separate letters to Senate Commerce Committee Chmn. McCain (R-Ariz.). S-1380, introduced by Sen. Smith (R-Ore.), would adjust distribution of USF payments to Bells and other large ILECs for rural services. The pot of about $230 million, called the “non-rural” fund because it goes to bigger carriers, is calculated statewide and goes mostly to Ala., Miss. and W. Va. “The FCC’s statewide averaging approach excludes more than 40 states and most tribal lands from eligibility for high-cost support,” NITI said. S-1380, and its House counterpart (HR-1582) from Rep. Terry (R-Neb.), would calculate based on the wire center. “This represents a more equitable approach given that one wire center typically covers a more homogeneous service area and reflects service costs more accurately,” the NITI letter said. NCAI said the legislation was needed, as many Native American communities don’t even have basic telecom services. “In recent years, numerous experts have reported that Native Americans face an urgent situation in which their telecommunications infrastructure is falling far behind the rest of the Unites States,” NCAI said. The bill has 22 co-sponsors, including McCain, but hasn’t been scheduled for hearing or markup. While urging its passage, NITI said it had concerns: (1) A cap on funding to any one state could result in “truly needy wire centers” from receiving funding. (2) The value of phone exchanges could rise as a result of USF funding changes, making it more difficult for tribes to purchase the exchanges in their areas. “This possible side effect does not outweigh the arguments in favor of the bill, as most tribes will be better served by greater service investments by incumbents than by attempting to take over service themselves,” the NITI letter said. “However, for tribes that have determined that purchase of the local exchange is the only way to ensure adequate service to its people, this effect must be considered.”
Rep. Terry (R-Neb.) endorsed FCC rules to improve a universal service fund (USF) program for rural health care providers (CD Nov 14 p7). The program provides discounted telecom services at rates equal to those in urban areas. “This will go a long way to provide quality health care to those who may not have direct access to it,” said Terry, who has introduced legislation (HR-1582) that would reform USF to allow more large ILECs to receive USF funding in Western states.
Sen. Smith (R-Ore.) wrote to FCC Chmn. Powell to clarify comments he made in an Oct. 30 Senate Commerce Committee hearing on the universal service fund (USF). In the hearing, Smith asked Powell several questions about his USF bill (S- 1380) that would redirect some of the high-cost, nonrural fund, which mainly goes to Bells and large ILECs that serve rural areas (CD Oct 31 p1). That bill, along with a similar one in the House by Rep. Terry (R-Neb.), are commonly known as the “Qwest bills” since more of the funding would go to that carrier’s 14 Western states. Smith had said he believed the program was “unfair” since most funding went to 3 states, Miss., Ala., and W.Va. But Powell raised several doubts about the need for the legislation and pointed out that it was only a small part of the total USF fund ($234 million of an approximate $3 billion fund.) In the letter, Smith said that fund, while small, actually would serve at least 70% of all rural customers. “In most states, these customers -- the majority of rural Americans -- see no benefit from this program,” Smith said. In response to Powell’s comments that many carriers sold rural exchanges, Smith said the bill would focus exclusively on high-cost wire centers. “If a carrier sold its high-cost exchanges, it would not be eligible for funding for those exchanges,” he said. “This approach is simple and fair. The FCC’s current methodology is neither.” Smith also said the bill did include a cap on the overall size of the fund, a provision that Powell said would have to be in the bill or it would create very large increases in the fund.
A USTA plan to get high-tech suppliers to support a deregulatory lobbying campaign may be an antitrust violation, 26 competitive telecom companies plus ALTS and CompTel said in a letter sent Fri. to key congressional committees. USTA invited top executives of high-tech companies to a closed dinner Oct. 20 in Washington to discuss a possible lobbying alliance and seek funding from the suppliers. One Bell official later characterized the plan as a natural move, given that high-tech suppliers had tended to support Bells’ deregulatory campaigns.
Senate Communications Subcommittee Chmn. Burns (R-Mont.) said he wasn’t sure when he will introduce the Universal Service Fund (USF) draft bill that has been floating around for some time, but said it could be before this session ends (CD Oct 28 p1). “We're thinking pretty quick, we think,” he said. Burns also said that once recommendations were received from the Federal-State Joint Board that’s studying USF distribution methods, further legislation might be warranted. “We don’t want to go down the distribution route until we see what the Joint Board has done,” he said. “I don’t want to preempt them in any way.”
Western Wireless asked the FCC to discontinue using the rate-of-return (RoR) regulatory system for setting rural telephone companies’ universal service fund (USF) support and access charges. Western Wireless said RoR “bloats the USF, creates opportunities and incentives for waste, fraud and abuse and inhibits the development of efficient, innovative and competitive services for rural consumers.” Western Wireless proposed to replace RoR with a “forward-looking cost-based methodology.”