FCC and Hill policymakers should consider the role private investment plays in broadband penetration as work goes forward on a national plan, analysts said at an American Consumer Institute (ACI) seminar Tuesday. The plan needs to weigh how public policy goals of increasing broadband speed and access are tied to industry’s financial underpinnings, said panelists. “Much of the debate at the FCC so far has been very general … there have been no big ideas,” said Larry Darby of ACI, a non-profit that supports research into market solutions when analyzing consumer issues.
Oversight hearings on the broadband stimulus program and the Genachowski FCC are the first order of business in the House Communications Subcommittee as Congress returns. Other matters will have a tough time getting on the agenda as lawmakers resume work on health care and climate change legislation. Few expect major telecom enactments this year, other than must-pass satellite reauthorization legislation and possibly a cybersecurity bill, according to lobbyists, trade associations and Hill sources.
Some small rural phone companies are asking if Google and other content providers should contribute to the Universal Service Fund. In filings and meetings this summer at the FCC, the National Telecommunications Cooperative Association has urged the FCC to open a rulemaking on the subject (CD Aug 31 p9). Content providers impose significant costs on companies’ networks, and charging them for USF would further the FCC’s broadband deployment goals, said NTCA Vice President Dan Mitchell in an interview. But a Google spokesman disputed the credibility of NTCA’s evidence. And some phone companies aren’t sure the proposal can be implemented.
The FCC could cite existing wireless universal service contribution mechanisms to justify requiring interconnected VoIP providers to contribute to state universal service funds based on intrastate revenue (CD Aug 26 p8), said the National Association of Regulatory Utility Commissioners. NARUC Telecom Committee Chairman Ray Baum and General Counsel Brad Ramsay met separately on Tuesday with aides to Commissioner Robert McDowell and FCC General Counsel Austin Schlick, an ex parte said. Commercial mobile radio services are “if anything, more portable” than nomadic VoIP services, and CMRS companies contribute to both federal and state USF, noted NARUC. “This suggests the FCC could cite to existing wireline and CMRS contribution mechanisms to clarify/interpret the existing regulations and specify State mechanisms that, are based on billing addresses, like wireline carriers, that assess no more than the 35.1 percent complement to the federal safe harbor amount -- necessarily do not double recover costs and also therefore necessarily ‘do not burden the federal program.'”
The Universal Service Fund’s payment error rate increased to 19.2 percent in fiscal 2008 from 14.9 percent in 2007, a Congressional Research Service report said. It called the increase “significant.” It put the error rate for all programs in 2008 at 3.9 percent. Incorrect USF payments were $1.3 billion, up from $906 million the previous year, the report said. “Progress in reducing improper payments has been uneven, with rates rising and falling over time,” the report said. The USF program was among those with double- digit error rates reported for the first time in fiscal 2007, the Service said. The report blamed the errors on claims with insufficient information and on clerical errors in processing paperwork. Agencies are required under a 2002 law to report the steps they're taking to fix payment errors. But a recent Government Accountability Office report found that only four agencies supplied the information. The FCC wasn’t among them. Bills in Congress, S-1508 and HR-3393, take up the problem. The bills would raise reporting requirements and call for a possible appropriations freeze if problems aren’t dealt with.
The highest priority in the FCC’s national broadband plan must center on strengthening and preserving universal service policies, the National Telecommunications Cooperative Association said in a commission filing. The $7.2 billion broadband stimulus package and Universal Service Fund support are “woefully insufficient,” it said. The group urged the commission to increase the “high-cost USF support” substantially and include all broadband Internet service providers in the pool of USF contributors. The pool should also include content providers like Google, which impose “tremendous costs” on the broadband providers that make up the public Internet. The group also urged the FCC to define broadband based on high-speed Internet access capabilities during peak-hour or busy-hour load that are generally available in a significant sample of service offerings in urban areas to establish a standard of comparability and affordability in urban and rural areas; include “broadband Internet access service” in the definition of “universal service;” open a proceeding to define and identify “Market Failure Areas” throughout the U.S. and target these areas for future high-cost broadband USF; define a “Market Failure Area” as an area that doesn’t have the population base or economic foundation for any provider to justify broadband facilities build-out and ongoing maintenance without external monetary support. The commission must require interconnected VoIP service to pay intercarrier compensation during comprehensive USF, IC and broadband reform. State commissions should be allowed to voluntarily move intrastate originating and terminating access rates and rate structures. The FCC should adopt an alternative high-cost USF cost recovery mechanism prior to the implementation of USF and IC reform, regulate broadband access service providers under Title II common carrier regulation and apply a Title II earnings review to all broadband providers who voluntarily receive federal high-cost broadband USF support. The regulator should require all vertically integrated Internet backbone and special access transport provider rates to be cost-based and non-discriminatory. The broadband plan should eliminate the identical support rule and base support on competitive eligible telecommunications companies’ actual costs within five years. Meanwhile, enhancing rural health care and offering broadband to low-income consumers should be part of the plan. NCTA also urged the FCC to strive to apply Regulatory Flexibility Act and establish alternative rules to reduce the economic impact on small broadband providers.
The FCC should without delay require interconnected VoIP providers to contribute to state universal service based on intrastate traffic revenue, said the National Association of State Regulatory Utility Commissioners. Brad Ramsay, the association’s general counsel, met last week with an aide to Chairman Julius Genachowski, said an ex parte filing late Monday. Not even Vonage has disagreed with the view that nomadic VoIP providers should contribute to state funds, the association said. Vonage contends that the FCC’s 2004 preemption order concerning the company said the commission was preempting states charging, but this month said the commission is “free to revisit its decision” by opening a rulemaking (CD Aug 18 p4). But the association said there’s “no legal or policy reason to delay issuing the requested declaration.” Without further proceedings, the FCC could clarify that a June 2006 order provided a method for assessing a state USF charge, it said. In that order, the commission created a “safe harbor” for setting federal USF contributions, because of the difficulty of separating intrastate and interstate revenue with VoIP. The FCC said 64.9 percent of VoIP revenue is subject to federal USF contribution. The association asked the FCC to clarify that the order “necessarily assumes a complementary State safe harbor of 35.1 percent without any additional proceedings.”
The FCC should ask whether nonrural carriers should be denied further universal service high-cost subsidies in states with “substantially deregulated” phone rates, said Cable One and Metrocast. In meetings last week with the Wireline Bureau and Commissioners Michael Copps, Robert McDowell and Meredith Baker, the cable companies asked the FCC to include the question in a coming notice of proposed rulemaking on a remand by the 10th U.S. Circuit Court of Appeals (CD Aug 11). In 2005, the court ruled unlawful the FCC’s current nonrural rules, which concern carriers like Qwest that serve high-cost areas with too many lines to meet a statutory definition of “rural.” Cable One and Metrocast said the money “could be redirected to the low-income program” to bring broadband to the unserved. “With funds available for low- income eligible recipients, broadband providers could bridge the broadband gap by providing computers and high speed internet connectivity under an expanded low-income USF program.”
AT&T saw wide support from other carriers on its appeal of a decision by the Universal Service Administrative Co. (USAC), which found that the telco submitted inaccurate line count filings during an audit. USAC uses line counts to determine USF support for carriers. In separate comments last week, Verizon, Qwest, USTelecom and the Independent Telephone & Telecommunications Alliance urged the FCC to revise the quantitative standard that USAC used when it determined that three regional AT&T companies’ noncompliance with FCC rules was “material.”
The National Association of State Utility Consumer Advocates opposed a forbearance petition by Consumer Cellular, the latest prepaid wireless provider seeking an FCC exemption so it can take part in the USF Lifeline program. NASUCA “fully supports increasing the options available to Lifeline-eligible consumers,” but “it does not appear that the Commission can find that forbearance is in the public interest here without more specificity as to how CCI plans to apply the federal support it will receive upon designation” as an eligible telecom carrier, the association said.