Three automobile makers urged the FCC to reject a numbers-based system for Universal Service Fund contributions. In comments last week on three FCC proposals to revamp the fund (CD Dec 1 p2), Volvo, Toyota and General Motors subsidiary OnStar said separately that the FCC’s plan could hurt vehicle telematics companies and by extension public safety. Earlier last week, APCO and the National Emergency Number Association also warned the FCC about the issue (CD Nov 28 p1). The FCC proposals “ignore the special circumstances of telematics companies, assess contributions far greater than the telecommunications revenues associated with the service, and mistakenly treat telematics companies as telecommunications providers rather than end users,” OnStar said. Toyota agreed, “The drastic cost increases that would flow from the proposals … would threaten the very existence of life-saving telematics services.” OnStar suggested that the FCC instead “assess USF contributions on services that wireless carriers provide to telematics companies either on a per-minute of use basis, as the draft orders appropriately propose for prepaid wireless services, or based on a percentage of revenues.”
“Closer scrutiny” of the Universal Service Fund is needed, the FCC’s Office of Inspector General said in a report to Congress released Monday. An audit of the high- cost fund released last week concluded that the program is “at risk” because of an error rate of 23.3 percent in payments (CD Nov 28 p7), well above the 2.5 percent considered the most acceptable. The Inspector General’s Office said the commission’s Wireline Bureau needs to work more closely with the Universal Service Administrative Co., which oversees the funds, to reduce payment errors.
Universal Service Fund subsidies should be automatically available to rural carriers using satellite broadband, Hughes, Inmarsat and the National Rural Telecommunications Cooperative said. In comments on the FCC’s three plans to revamp USF (see separate report in this issue), the groups condemned a proposed rule that would require a commission waiver for USF recipients before they could use satellite broadband to fulfill new deployment requirements. “The economic challenges of deploying terrestrial-based communications infrastructure will mean that it could take many years for customers in hard-to-serve areas to have access to terrestrially provided broadband services, and in some cases terrestrially provided services will never be available,” Hughes and Inmarsat said in joint comments. “These customers deserve the option of being able to choose satellite-delivered broadband, even if it is available at slower speeds than the speeds that may be available using terrestrial-based services.” The satellite companies supported the FCC’s proposed USF contribution proposal, which would base payments to USF on the carrier’s quantity of residential phone numbers. However, the companies “are very concerned that the proposed contribution rate of $35 per assessable business connection over 64 kbps would have a punitive effect on satellite broadband providers who have lower user to connection ratios than terrestrial broadband providers,” they said.
Largely reiterating past arguments, telecom interests fought over when and how to revamp the Universal Service Fund and intercarrier compensation. In comments last week, carriers, states and others dissected three FCC overhaul plans, known as Appendices A, B and C. Appendix A is FCC Chairman Kevin Martin’s Oct. 14 revamp plan, B is a proposal addressing USF only, and C a revised Martin plan incorporating changes sought by the Organization for the Promotion and Advancement of Small Telecommunications Companies and other groups. Earlier this month, Martin said a revamp this year is unlikely (CD Nov 19 p2). But other commissioners have said they want to vote on an order at the December meeting. (See separate story on the FCC agenda in this issue.)
The Universal Service Fund high-cost program has an unacceptably high rate of erroneous payments, said the FCC Office of Inspector General in a Wednesday report on the IG’s second round of USF audits. After studying USF high-cost distributions, the OIG estimated that the high-cost program’s erroneous payment is 23.3 percent, resulting in $971.2 million in improper payments, the FCC said. A program is considered to be “at risk” if the rate exceeds 2.5 percent. The OIG report looked at 384 audits of high-cost recipients performed by commercial audit firms contracted and managed by the Universal Service Administrative Co. with FCC OIG oversight. The commission is collecting industry feedback on how to improve USF management and administration. In comments last week, USF payers and recipients said they wanted more clarity, administrative efficiency and audit consistency (CD Nov 17 p6).
Adoption of numbers-based system as part of Universal Service Fund reform would have a negative effect on “important emergency communications services” if the fee is imposed on vehicle telematics services, such as OnStar or ATX, APCO and the National Emergency Number Association warned the FCC. Telematics companies were also at the FCC for recent meetings to ask the FCC not to impose the fee on their lines, a step proposed in all three rulemakings on USF reform now before commissioners.
The Alaska Telephone Association agrees that Alaska and Hawaii should be exempted from pending changes to Universal Service Fund distribution, the association said in meetings last week with FCC Commissioners. However, “the identical support rule should not remain in effect indefinitely,” it said. The association is concerned that “a broadband standard that did not apply to the non-contiguous states could result in our citizens being left without comparable access.” The association met with Commissioners Robert McDowell and Deborah Tate, and aides to Commissioners Kevin Martin, Michael Copps and Jonathan Adelstein, according to an ex parte. Comments on three plans to revamp USF and intercarrier compensation are due Wednesday.
AT&T urged revisions to the contribution aspect of an FCC Universal Service Fund overhaul plan known as Appendix B, one of three overhaul plans for which the agency has sought comment. In a late Friday ex parte letter, AT&T also rejected the contribution approach detailed in Appendices A and C, plans that additionally tackle intercarrier compensation. All the plans would move USF contribution from a revenue-based approach to one based on the quantity of phone numbers and business connections that a carrier owns. AT&T wants a numbers-only contribution method. But if the FCC determines that there should be an additional assessment based on business connections, the agency should modify its proposed assessment measurements to make them “more technology neutral and forward-looking insofar as they are not based on legacy ILEC speed breakpoints,” AT&T said. Also, AT&T believes the FCC’s definition of “assessable number” is “confusing, introduces -- without explanation -- terminology not previously used by Congress or by the Commission, and is unnecessarily overreaching,” it said. AT&T wants a simple definition saying an assessable number is “a North American Numbering Plan (NANP) telephone number that enables a Final Consumer to make or receive calls.” The FCC definition left room for a post-number call identifier, but AT&T wants the FCC to instead seek further comment on that point, the carrier said. AT&T also asked the commission to expand the implementation period for contribution change to at least one year, from six months, plus an extra six months during which providers would “report numbers while continuing to contribute based on revenues.” AT&T also proposed edits related to other exemptions, subsidy funds, reseller certifications and Universal Service Administrative Co. invoices. Comments on the FCC’s three draft plans are due Wednesday. All FCC members other than Chairman Kevin Martin have said they want to vote on an overhaul at the Dec. 18 meeting, but Martin said last week it’s unlikely that that will happen (CD Nov 19 p2).
Panelists differed Friday on U.S. models for international broadband competitiveness and domestic competition at a forum of the Innovation Technology & Information Foundation. They did agree that a new national broadband policy that promotes competition is needed from the new presidential administration.
Rep. Henry Waxman, D-Calif., wrested the Commerce Committee chair from John Dingell of Michigan in a 137-122 Democratic Caucus vote Thursday that stunned many of the closest observers of the hard-fought race. Waxman would not preview his plans for telecom policy, but he brings a strong technology background to his new post. He also is said to be more inclined than Dingell to back net neutrality legislation, a campaign promise of President-Elect Barack Obama. Waxman likely will look hard at the universal service fund. As Oversight Committee chairman, he investigated the top 24 major telecom companies receiving USF subsidies. He completed that investigation in the summer but announced no action.