The FCC is expected to establish a mix of proposals and options to provide broad direction for Universal Service Fund/intercarrier reform, said Stifel Nicolaus in a note. “We believe the FCC would like to trim fat from high-cost USF voice support, shift funding to broadband adoption and deployment, expand the USF contribution base and reduce and unify intercarrier compensation rates,” the analysts said. The drive for reform creates risk for rural local exchange carriers “if the commission moves to cut intercarrier compensation without providing adequate revenue replacement.” The upside could be “if reforms help RLECs compared to current trends by shifting cost recovery from declining intercarrier access charges to greater (broadband-oriented) USF support and end-user fees.” Verizon, AT&T and Qwest are likely to benefit from USF revisions and intercarrier rate cuts. “Wireless carriers seek greater USF parity, and while their voice support appears at risk, the FCC is looking to promote mobile broadband,” the analysts said. Reforms could possibly be followed by litigation. “Congress could help by clarifying the FCC’s jurisdiction, but legislation remains a tough sell.”
Federal universal service support for wireless carriers should be limited to one connection per household to help support broadband deployment to unserved areas, Qwest said in an ex parte filing. Fifty-two percent of wireless lines are in family plan packages and on average there are 2.8 handsets per wireless family plan, the telco said. Based on 2007 wireless market data, “Qwest’s calculations reflect an estimated Universal Service Fund savings of $463 million if USF high-cost support were limited to one handset per wireless family plan.” To perform its calculations, Qwest assumed that all competitive eligible telecommunications carriers receiving high-cost support are wireless providers.
An order circulated for a vote at the Feb. 11 FCC meeting proposes changes to the E-rate program to allow participating schools to open their networks to the general public after school hours without reducing the school’s level of Universal Service Fund support. Currently, schools are permitted to allow the public to access their computers, but they have to cost validate and reduce the amount of USF they receive.
Policymakers must address “end-user equity issues” on the Internet while keeping the platform “open and accessible to everyone,” said Sen. Claire McCaskill, D-Mo., at a Third Way lunch Tuesday. She backed ISP price models that would force heavy users to pay more. Later, Rep. Doris Matsui, D- Calif., said government must provide money to spur broadband adoption among low-income Americans.
An FCC decision to maintain non-rural rules should not result in increased costs for Universal Service Fund high- cost support, some telecom companies and trade associations told the FCC in comments on a remand order by the 10th U.S. Appeals Court by April 16. In 2005, the court called the commission’s rules unlawful and said they affect high-cost area carriers that are considered non-rural because they have too many lines. Some groups backed the interim proceedings as a way to avoid increased high-cost support.
Public Knowledge formally asked FCC commissioners to reclassify broadband as a Title II service as part of the National Broadband Plan, in reply comments on the plan. Public Knowledge Legal Director Harold Feld had meetings at the FCC scheduled for Wednesday afternoon on the proposal, he told us.
Rep. Rick Boucher, D-Va., plans to circulate a discussion draft “soon” on planned privacy legislation to create safeguards for Internet users, the House Communications Subcommittee chairman told the State of the Net conference Wednesday. Whether companies and privacy advocates support the bill will depend on the details, representatives said in a later panel. They agreed that any legislation must strike a balance between consumers’ privacy rights and companies’ business plans, and should apply to both online and offline marketing. Companies said it’s important to encourage industry self-regulation.
Applicants for RUS broadband money who lost in the first funding round should try again in the second, RUS Administrator Jonathan Adelstein said at the winter conference of the Organization for the Promotion and Advancement of Small Telecommunications Companies. Adelstein announced $309 million in broadband grants, including one to OPASTCO member TDS Telecom’s Butler Telephone Co. He assured attendees that the RUS will soon spell out completely who succeeded and who fell short in the first round. Industry officials have expressed concern about the RUS’ and the NTIA’s slow pace in making awards (CD Jan 22 p1).
Allocating the AWS 3 spectrum block for a free national broadband plan would help the commission keep the cost of the Universal Service Fund under control, M2Z said in meetings with Wireline Bureau Chief Sharon Gillett, Wireless Bureau Chief Ruth Milkman and other FCC officials. M2Z’s website says its mission is to provide free wireless broadband access to 95% of the U.S. population. M2Z “discussed several scenarios that show how the free broadband proposal could constrain the growth of the USF Low Income program should the Low Income program be expanded to cover broadband services,” M2Z said in an ex parte filing. “According to M2Z’s analysis, based on certain assumptions, the free broadband service proposal could potentially reduce the cost of an expanded Low Income broadband program by at least $1.8 billion annually.”
Congress should ensure that broadband efforts maintain support for rural telcos, executives of four major rural telco associations told congressional staff at a closed meeting Monday of the Rural Telecommunications Task Force, a subcommittee of the House Rural Caucus. Reps. Bart Stupak, D-Mich., and Lee Terry, R-Neb., are the co-chairmen of the task force, but didn’t attend the briefing. The Independent Telephone & Telecommunications Alliance, National Telecommunications Cooperative Association, Western Telecommunications Alliance and the Organization for the Promotion and Advancement of Small Telecommunications Companies asked Congress to ensure that rural broadband providers continue to receive support from the Universal Service Fund, intercarrier compensation “or some combination,” ITTA President Curt Stamp said in an interview after the meeting. It’s hard for rural carriers to justify investing in very remote areas without “something to fill in the gap,” such as stimulus money, USF “or some other mechanism,” he said. The rural carriers had approached the task force about holding a briefing last year, but today’s meeting didn’t come together until a few weeks ago, said ITTA Vice President Paul Raak. The task force is expected to invite the cable and wireless industries in for later briefings, Stamp said. Meanwhile, the rural telcos hope to hold more briefings with other congressional groups and plan to meet separately with every rural member, Raak said. He expects broadband to be a big issue for Congress this year. “Once you get past energy and healthcare … broadband is next.” But the Hill seems to be waiting for the National Broadband Plan before moving, Stamp said. “I don’t get the sense that there are a lot of members who are trying to influence the content of the plan.” But they'll likely have questions and suggestions when it’s delivered, he said.