FCC officials voiced frustration over new delays in the commission’s overhauls of the Universal Service Fund and intercarrier compensation. At PLI’s annual telecom conference Thursday, Wireline Bureau Chief Dana Shaffer, Commissioner Robert McDowell and Scott Deutchman, an aide to Commissioner Michael Copps, wouldn’t predict when the FCC would finally act. McDowell and Deutchman said they were disappointed no vote would happen at the Dec. 18 FCC meeting. Meanwhile, Hill officials said some in Congress are looking to move on a USF revamp, but the prospects are unclear.
The FCC will vote Dec. 18 on an order to establish a free wireless Internet service using AWS-3 spectrum, Chairman Kevin Martin said in a press briefing Wednesday. The plan’s technical specifics are similar to the plan the agency considered in May, but includes revisions desired by another commissioner, Martin said. Martin has gotten positive feedback from some commissioner offices and is “hopeful” he'll get three votes, he said.
The Arizona Corporation Commission wants more time to file reply comments on the FCC’s pending overhaul for the Universal Service Fund and intercarrier compensation, the ACC said Monday. The Arizona commission backed a motion filed by the National Association of State Utility Advocates (CD Dec 1 p2), asking to extend the reply deadline three weeks to Christmas Eve. “The Arizona Commission is a relatively small agency and was unable to file initial comments because of the abbreviated comment cycle established by the FCC and the Thanksgiving holiday.” If the FCC thinks a three-week extension is too long, the agency should extend the deadline two weeks to Dec. 17, the state commission said. Replies are currently due Wednesday, an already problematically tight deadline because it’s less than three weeks before the FCC’s Dec. 18 meeting. A Dec. 17 or Dec. 24 reply deadline would effectively prevent the FCC from tackling USF or intercarrier compensation at its meeting.
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.