Idaho’s Public Utilities Commission told eight rural phone companies to adjust their rates closer to the statewide average if they want to keep receiving state universal service funds. The commission’s announcement Friday listed annual USF subsidies to Fremont Telecom ($66,636), ATC Communications ($63,850), Cambridge Telephone ($29,218), Midvale Telephone ($28,875), Direct Communications Rockland ($19,446), Inland Telephone ($15,557), Rural Telephone ($13,907) and Silver Star Telecom ($7,424). Idaho supports its fund by charging phone customers 10 cents monthly per residential line, 17 cents a business line and one-third of a cent a long-distance minute. To get USF money, a rural telco’s average residential and business local exchange rates must exceed 125 percent of the weighted statewide average rates for the services. Since 2005, when Idaho started allowing carriers to remove themselves from price regulation, the weighted average rates for customers of the two largest
Uncertainty and complexity in the intercarrier compensation system have held back broadband investment, Verizon said. In an ex-parte meeting last week with the FCC broadband team, the carrier said access fees for advanced services vary widely and “may depend on unresolved regulatory classifications and jurisdictional determinations that are unknown or irrelevant.” Verizon showed the team its September 2008 revamp plan for intercarrier compensation. The commission should “make clear in its National Broadband Plan that intercarrier compensation reform should ultimately result in a regime that includes a reasonable transition to a uniform default terminating rate for all carriers, provides opportunities for companies to recover a portion of lost revenues from their own end users, and ensures that a portion of other lost revenues may be recovered through a time- limited new recovery mechanism that would be part of the Universal Service Fund,” the carrier said. The FCC is considering USF spending cuts (CD Dec 10 p1). Verizon said it supports high-cost support for “truly high cost” areas that don’t “have competitive providers serving without support.”
FCC staffers will meet this week to discuss a proposed policy framework for the National Broadband Plan that will take up universal service and spectrum, said Bruce Gottlieb, Chairman Julius Genachowski’s chief counsel. “Currently the staff is in the process of talking with a lot of folks on the eighth floor on these issues,” he said on a Practising Law Institute panel. The meeting will explore USF and spectrum “in more detail than people have seen so far,” Gottlieb said.
Carriers would have to pay a record 14.1 percent of their long-distance revenue to the Universal Service Fund in the fourth quarter, if the FCC adopts the contribution factor proposed Friday. The figure is 1.8 percentage points higher than the fourth quarter, and 1.2 points higher than the third quarter’s 12.9 percent, which was the previous record. The announcement came as the FCC broadband team considers several cuts for the Universal Service as recommendations for the National Broadband Plan (CD Dec 10 p1). The Universal Service Administrative Co. said it would need to collect $2.1 billion from carriers in Q4. To set the carrier “contribution factor,” the commission divides the amount needed by projected carrier revenue. Of $2 billion in anticipated USF support, about $1.1 billion is projected for the rural high-cost program, $544.3 million for the E-rate program, $310 million for low-income support and $51.8 million for the rural health-care program. The low-income program saw the largest increase in support, rising about $48.3 million from last quarter.
Former FCC Chairman Michael Powell said the commission should give “serious consideration” to re-purposing the Universal Service Fund to help pay for broadband. Powell answered questions Friday during a live online chat in his capacity as honorary co-chairman of Broadband for America. “The USF is really about subsidizing phone service, but increasingly and eventually, broadband will become more important and more indispensable,” Powell said. “The USF should recognize that and adjust.” Neither the government nor the private sector acting alone can make broadband universal in the U.S., Powell said. “This is a massive and very expensive project,” he said. “The FCC estimates that it might cost as much as $350 billion to deploy a single fiber network to every home in America. In a public deficit environment one cannot imagine government ponying up that kind of money. So, private investment will be critical. At the same time, private industry needs government support in many ways -- developing a proper regulatory environment, helping secure rights of way and local access to build infrastructure are examples. Also, both sides want to increase adoption.” Asked how to increase adoption rates, Powell said the U.S. “needs to do a better job of showing and demonstrating why and how these connections can improve every day lives, advance educational opportunity for their kids, increase their options for career enhancement, and manage their health.” Powell also stressed the importance of getting more spectrum online for commercial use. “Wireless broadband is going to be a huge component of the broadband world,” he said. “For example, African-Americans have one of the lowest adoption rates for wireline service, but one of the highest rates of using data on mobile phones. Getting more spectrum and increasing efficiency of its use is critical.” Powell, along with the other honorary co-chairman of the group, former U.S. Rep. Harold Ford, D-Tenn., made a commercial that started airing in some markets Dec. 6 -- www.broadbandforamerica.com/video.
The FCC needs to make solving the digital divide a high priority for its broadband plan, Commissioner Michael Copps said at a Practising Law Institute conference Thursday. People are starting to realize that the broadband plan is not just “technospeak from broadband geeks” but can lead to policies that improve peoples’ lives, said Copps, who was introduced at the conference by Chairman Julius Genachowski. But if policymakers don’t get it right, the result could be “more and even wider divides in this country,” Copps said.
The FCC broadband task force is considering some cuts for the Universal Service Fund that it will recommend in the National Broadband Plan due in February, a commission official said Wednesday. The FCC wants to change the focus of USF to broadband, but realizes simply adding broadband as a supported service would raise the already exorbitant contribution factor that carriers use to pay into the fund, the official said. Commissioners haven’t seen the proposals, but some industry players are already sounding alarm bells. FCC eighth floor staff were briefed on several aspects of the broadband plan as it is evolving late Wednesday, but were asked not to share the details.
A Universal Service Fund overhaul should be “calibrated to ensure the equitable treatment of satellite” services, which have an important role in broadband policy and public safety, Iridium Satellite said in comments to the FCC. The current USF contribution process is too complex and expensive to run and needs revamping, it said. Iridium asked the FCC not to charge business services based on “assessable numbers” and “assessable connections” and said if it does take that approach it should ensure that the charges don’t unfairly burden satellite providers. Increased USF fees would probably hurt the growth of satellite services in underserved regions, the company said. New rules should also take into account the “global nature of many satellite networks and avoid overly broad definitions that would inappropriately extend the reach of the United States USF fee to users or entities not under its jurisdiction,” Iridium said.
The Telecommunications Industry Association asked the FCC to remake the Universal Service Fund into a broadband fund, in comments on National Broadband Plan Public Notice #19, on USF and intercarrier compensation issues. Five mid- sized incumbent telcos offered a proposal for revamping both. Most filers agreed that USF and ICC overhauls should be included in the plan, due to be submitted to Congress in February. Many comments built on those filed in previous comment rounds.
Small cable operators’ lobbying group proposed to cap the Universal Service and the high-cost fund at their Dec. 31, 2009, levels. A new broadband fund for unserved and underserved areas should be created, said the group, the American Cable Association, in comments to the FCC on the role of the USF in the National Broadband Plan. (See the separate report in this issue.) The plan “evolves and reforms Universal Service to support broadband in an efficient non-discriminatory manner where 1) one industry segment is not favored over another and 2) one technology is not favored over another,” said the filing Monday. “ACA supports the consideration of a Universal Service mechanism to fund broadband but only if it is competitively and technologically neutral and is precisely targeted to users that lack access in areas that are unserved or underserved.”