Vonage and other traditional VoIP providers don’t have to pay into the Nebraska Universal Service Fund, the 8th U.S. Circuit Court of Appeals said Friday. The St. Louis-based court was upholding a district court decision that Nebraska officials had appealed. As the lower court had, the appeals court accepted Vonage’s claim to be an information service rather than a telecom service (CD Sept 15 p8).
Companies and interest groups are rethinking their FCC lobbying strategies as the likelihood seems to grow that Michael Copps will remain the acting chairman well into the summer. Industry sources said Wednesday they're still looking for issues that could be addressed before Julius Genachowski’s nomination to become the chairman clears the Senate.
States asked the FCC to promptly adopt a three-year Lifeline and Link-Up pilot program for broadband. In a letter Friday to the FCC commissioners, the National Association of Regulatory Utility Commissioners said the new Universal Service Fund program should be open to all broadband providers. Participating carriers shouldn’t automatically be designated eligible for other USF programs, but the FCC should require any provider receiving USF from another program to participate and contribute to the pilot program, NARUC said. The Federal-State Joint Board on Universal Service should study how the program is carried out and decide whether to expand the pilot into a national program. States should handle the eligibility and verification for low-income participants, it said.
The FCC must overhaul jurisdictional separations before revamping the Universal Service Fund and intercarrier compensation, said the National Association of State Utility Consumer Advocates. In reply comments on whether the FCC should extend the eight-year-old freeze on separations (CD April 21 p3), NASUCA rejected arguments by associations of rural incumbent local exchange carriers. They said separations reform should come last. Compensation and USF levels “are dependent on proper separations between jurisdictions, not the other way around,” it said. The Independent Telephone & Telecommunications Alliance, which didn’t file initial comments, sided with other rural associations. The separations freeze should continue until at least one year following USF and ICC reform, it said. “This approach will ensure that future modification of any separations requirements will be to complement, rather than complicate, the Commission’s ongoing efforts to ensure that regulatory frameworks reflect current competitive market conditions.”
The FCC must fix its audit program for the Universal Service Fund high-cost program, USTelecom and CTIA said Friday in a scathing letter to commissioners. The associations queried the accuracy of a November audit report from the FCC Office of Inspector General, which said the high-cost fund had an error payment rate of 23.3 percent. “The current audit program … results in misleading statistics generated as improper payments under the” 2002 Improper Payments Information Act, “which undermines the credibility of the audits and the USF,” they said.
The FCC should allow rate-of-return carriers to allocate federal audit expenses completely to interstate jurisdiction, said small carriers supporting a petition by the National Telecommunications Cooperative Association. The change would make recovery of audit expenses more certain, and save small companies time and money, they said. However, Verizon condemned the petition as having “no basis,” and urged the FCC to do away with jurisdictional separations altogether.
An FCC rule has created a “one-way ratchet” effect that’s reduced USF support to carriers that need it, small rural companies said in comments Monday on a petition by the Coalition for Equity in Switching Support. Under the commission’s dial-equipment-minute weighting rule, a small ILEC’s LSS support is reduced when its number of access lines climbs above a specified threshold. The coalition complained that a small ILEC won’t get more support if its access-line count falls below the threshold. In comments this week, no party opposed the coalition, which wants the FCC to apply the threshold rule in both directions. With access line loss intensifying, many companies are now “receiving less LSS than other companies with a comparable number of lines and comparable switching costs,” said the National Exchange Carrier Association, National Telecommunications Cooperative Association and three other coalitions of small incumbent local exchange carriers, in joint comments. The problem is particularly severe for small ILECs, which face high per- subscriber switching costs “because they lack the number of subscribers or the concentrated subscriber population that would enable them to take advantage of economies of scale and scope,” they said. The rule is hurting consumers in South Carolina, said Randy Mitchell, a commissioner of the state’s public service commission, in separate comments. Affected companies there completely lost LSS support, and as a result are having difficulty keeping rates low and maintaining and developing infrastructure, he said.
The FCC needs more time to finish an overdue revamp of jurisdictional separations, said states, carriers and consumer advocates. In comments last week, they supported the commission’s tentative conclusion to extend the eight- year-old freeze on separations, but fought over how much longer the “interim” measure should last. Without FCC action, the freeze will expire June 30.
The FCC will likely get lengthy input on a vast array of controversial telecom issues, as it attempts to develop a national broadband plan, said industry officials we polled for reaction Thursday. In a 52-page notice of inquiry released Wednesday (CD April 9 p1), the FCC asks questions on universal service reform, open networks and nondiscrimination, the role of competition, how to define broadband, and several other big issues. The FCC is required under the American Recovery and Reinvestment Act to deliver its national broadband plan to Congress by Feb. 17.
The FCC opened a rulemaking to revamp universal service high-cost support for non-rural carriers. In a notice of inquiry adopted 3-0 Tuesday and released Wednesday, the FCC asked how it should respond to a 2005 remand by the 10th U.S. Circuit Court of Appeals. In 2005, the court called unlawful the FCC’s current non-rural rules, which address carriers like Qwest that serve high-cost areas with too many lines to be considered “rural” by the statutory definition.