Congress has had “substantial” discussions with the Obama administration on crafting appropriate rules for the broadband stimulus grant program, due out in two weeks, House Communications Subcommittee Chairman Rick Boucher, D-Va., said Thursday at a Pike & Fischer conference. It’s pivotal how the agencies define “unserved” and “underserved” for purposes of awarding grants, Boucher said. “It is important we have a common-sense definition,” he said, suggesting that the absence of competition, prices out of reach of consumers and low speeds should be taken into account in defining “underserved.” “Unserved” should apply to areas with no service, he said, but the definition should be flexible enough not to penalize counties where a few people can get broadband service -- a situation that he dealt with when a county in his district was trying to get RUS grants. Stimulus funding will help deploy more broadband, but federal policymakers also need to consider other steps, such as revamping the universal service program to include broadband. Boucher said he is close to finalizing bipartisan USF legislation that has the support of many carriers and stakeholders. He told reporters he hopes Congress can pass that bill this year. He said he also plans to co-sponsor a bill introduced by Rep. Anna Eshoo, D-Calif., that would require new federal highway projects to include conduit for broadband, a measure that may get included in federal highway reauthorization legislation. The Senate has a bill like Eshoo’s that was introduced this week by Democratic Sens. Amy Klobuchar of Minnesota and Mark Warner of Virginia. -- AV
The FCC should block the imposition of a 12.9 percent universal service fund contribution factor, the highest in history, David Bergmann, chair of the National Association of State Utility Consumer Advocates telecom committee, said in an interview Tuesday. The FCC, which released the proposed new factor Friday (CD June 16 p4), has until June 26 to act before the percentage request is deemed granted. The higher factor could mean $1-$2 hikes on some consumers’ phone bills, Bergmann said. In a filing last week at the FCC, NASUCA said the commission could reduce the factor by directing USAC to dip into $1 billion in unused USF E-rate funds, or nearly $6 billion in assets held for the federal fund. NASUCA believes that that’s a good temporary fix but that the FCC ultimately must revamp USF distribution to limit payouts to companies that don’t actually need subsidies, Bergmann said. Moving to a numbers-based system for USF contribution, which has been suggested by wireline companies big and small, isn’t the answer, he said. The existing system of basing contribution on carrier revenue works because it means people who use long distance service more also pay more to USF, he said. However, if the FCC wants to direct USF funds to broadband, NASUCA supports requiring all broadband providers to pay into USF, he said.
Carriers must pay 12.9 percent of their long-distance revenue to the Universal Service Fund in the third quarter, 1.6 percentage points more than this quarter. Big phone companies were quick to note that’s the highest figure in the fund’s history. But some small rural carriers disputed that the high factor shows that a thorough revamp of USF is needed.
The FCC should bar nonrural local exchange carriers from getting money from the universal service nonrural high-cost fund in states where rates have been deregulated, said the Mississippi Cable Telecommunications Association. In reply comments at the FCC on a 2005 remand by the 10th U.S. Circuit Court of Appeals (CD May 12 p3), the cable association said such a rule would be a good “first step” in revamping the non-rural fund. The association’s members compete with non- rural LECs, but don’t get USF subsidies. A state will deregulate incumbent LEC rates if it determines that competitors will keep the ILEC prices in check, the association said. “If an ILEC’s competitors … can provide services without subsidy, then there is no reason to continue a subsidy to the non-rural ILEC, absent a showing of need.” Deregulated ILECs in Mississippi “have obtained a lion’s share of the fund,” it said. But there’s no evidence that the money “has even been used to subsidize service.”
Wisconsin legislators should reject a proposal to charge residents 56 cents a month on wireless service to fund the state universal service fund, and 75 cents a month for police and fire protection, consumer advocacy group MyWireless.org said Wednesday. The proposal appears in a state budget being considered this week. More than 4 million Wisconsin residents use wireless services, paying more than 11 percent on average in combined monthly taxes, fees and surcharges, the group said. The state universal service fund has no bearing on wireless service, it said. “The state USF funds currently collected from Wisconsin’s consumers are not being used for their original intended purpose, which was to pay for enhancing consumer telecommunications systems in rural and underserved areas,” it added. “This new USF hike would be on top of a blatant disregard to a promise made previously to wireless consumers by the state, such as an old E9-1-1 fee that had a $20 million surplus - and that was supposed to be refunded to Wisconsin consumers in $5.00 increments - will in fact not be refunded. Instead, that money was diverted by the state to be used for general revenue purposes.” The group also slammed a proposed 75-cent fee to be charged on landline and mobile service “to pay for so-called ‘police and fire protection services,’ which could also simply be used to fill a revenue hole in the general budget.” The group calculates that the new fees would add $1.31 per month to wireless phone bills, a total cost to wireless consumers exceeding $60 million a year. “Wisconsinite cell phone users are being asked once again to bear more than their fair share, with an excessive 32% total combined increase in new fees on their monthly bills,” said Brian Johnston, the group’s communications director. “Wisconsin should be seeking to eliminate regressive taxes on communication services at this time, in order to relieve consumers of excessive tax burdens rather than expanding bad policy to wireless services.” State Senate Republican leader Scott Fitzgerald has attacked the budget as pork-riddled and Gov. Jim Doyle and his fellow Democrats as anti-consumer. “Our state is struggling to dig out of a recession, yet Gov. Doyle and legislative Democrats seem to think that raising $3 billion in taxes and fees will help solve the problem?” he asked. “It goes against common sense.”
The FCC should set a goal for everyone in the U.S. to have broadband access by early 2014, major phone companies said late Monday as comments for the commission’s national plan continued arriving. There was wide agreement that overhauling the Universal Service Fund must be a high priority.
The Ad Hoc Coalition of International Telecommunications Companies received support on two proposed declaratory rulings it said are needed to end discriminatory universal service obligations imposed on international carriers and prepaid calling-card providers (CD May 8 p11). The coalition complained that international long distance companies considered de minimis providers exempt from paying USF often face indirect USF obligations resulting from pass-through charges from their underlying carriers. In comments Monday, international carriers agreed the FCC should stop such charges. The Ad Hoc Coalition also received support on its objections to an FCC rule requiring prepaid calling card providers to report revenue based on the price that the end- user pays the distributor, rather than the discounted price the distributor pays the provider. The FCC has no basis to force prepaid calling card providers to report more than actual revenue received, said iBasis, an international VoIP carrier. “In no case other than prepaid calling cards are carriers required to report revenues greater than those they actually collect.”
The FCC should reject the 12.9 percent contribution factor proposed by the Universal Service Administrative Co. for the universal service in the third quarter, said the National Association of State Utility Consumer Advocates. The new factor takes effect July 1 unless the FCC acts to modify it. In a request filed at the FCC late Tuesday, NASUCA said the FCC could reduce the factor by directing USAC to dip into $1 billion in unused USF E-rate funds, or nearly $6 billion in assets held for the federal fund. “With high unemployment levels, foreclosures across the nation and everyone’s household budgets being stretched thin, we call on the FCC to reduce the proposed hike in the Universal Service Fund’s contribution level,” said NASUCA President David Springe. “The goals of the universal service fund are extremely important, but to demand that consumers pay the highest contribution level in history is to hurt the very customers we are trying to help.”
The FCC Wireline Bureau overstepped its bounds when it required multiprotocol label switching providers to contribute to the Universal Service Fund, Sprint Nextel and other providers of MPLS services said in comments Monday on a petition by Masergy Communications. Masergy, an MPLS provider, sought clarification of a recent edit to the FCC’s form 499A characterized by the bureau as a “nonsubstantive” change. “The imposition of such an obligation is beyond the Bureau’s delegated authority,” Sprint said. “MPLS services are information services not subject to USF obligations, and the Bureau did not have the authority to determine that MPLS information service providers should be treated otherwise.” BT Americas agreed, saying “MPLS is not a type of telecommunications but is in fact a technology used to offer services that constitute information services.” But big phone companies said the FCC has already clarified it’s not requiring contributions on an information service. In separate filings, AT&T and Verizon cited an April letter (CD April 3 p15) from the FCC to the Universal Service Administrative Co., in which the bureau said companies need only pay a universal service contribution for the telecom service aspects of multi-protocol label switching. “It is clear that the addition of MPLS to the list of services that might be subject to contribution did not alter in any way the Commission’s rules and policies, or expand in any way carriers’ obligation to contribute on revenues derived from MPLS services,” AT&T said. The bureau’s letter to USAC was only somewhat enlightening, said NTT America. “In the absence of a more formal and definitive clarification issuing from the Commission itself, regulatory uncertainty will persist for Form 499 filers that may use MPLS technology in some of their service offerings.”
The Universal Service Fund is “unsustainable” in its current format, and the public should be notified about the program’s sources of revenue and spending obligations, the two top Republicans on the House Commerce Committee said in a letter Tuesday to FCC acting Chairman Michael Copps. “American consumers should not bear the burden of paying more and more to support a broken system while universal service reform languishes,” said the letter from Reps. Joe Barton of Texas and Cliff Stearns of Florida. The members asked the FCC to include in each quarterly public notice of the proposed USF contribution factor: A statement of whether any sources of revenue other than industry affected the contribution factor, and if so, the sums from each source; a summary of why the projected demand increased or decreased from the previous quarter; and a summary of why the projected industry revenue decreased or increased from the previous quarter. Barton and Stearns asked the FCC to begin providing the information with the public notice for the third quarter of 2009. If the commission declines to include it in the public notice, the congressmen asked that the FCC provide it to the Commerce Committee “no later than the date of the release of each Public Notice of a proposed contribution factor.”