Sen. Jim DeMint, R-S.C., is “not optimistic” Democratic senators will support Republicans’ Congressional Review Act effort to kill FCC net neutrality rules, the ranking member of the Communications Subcommittee said Wednesday. Until the election, DeMint hopes to “minimize the damage” of the Democratic-controlled Senate and executive branch, he said. In other speeches also at a Free State Foundation event, Reps. Marsha Blackburn, R-Tenn., and Cliff Stearns, R-Fla., also railed against regulation. Stearns supported the FCC effort to revamp the Universal Service Fund, but said Congress should take the next steps of revamping USF contribution rules and updating the 1996 Telecom Act.
Rural telecommunications companies contributed $14.5 billion to the economies of the states in which they operated in 2009, said a Hudson Institute study prepared for the Foundation for Rural Service (FRS). Of that amount, about $10.3 billion was through their own operations and $4.2 billion was through the follow-on impact , the study said. Rural carriers improve economic development in urban areas as well, it said. Some 34 percent of the $14.5 billion final economic demand generated by rural telecom companies accrues to rural areas; the other two-thirds redounds to the growth of urban areas, it said. The rural telecom sector supported 70,700 jobs in 2009, both through its own employment and the employment that its purchases of goods and services generated, the study said. The study argued that the level of economic activity and employment is consistent with the values of access to advanced telecom services, as supported by the Universal Service Fund. If USF support declined or disappeared, companies would raise prices paid by customers and rural users would pay more for telecom services, the study said. Companies would also cut investment, affecting network quality overtime, it said.
Cable and rural telecom industry executives headline at Wednesday’s Senate Commerce Committee hearing on revamping the Universal Service Fund. Testifying are: NCTA President Michael Powell, National Telecommunications Cooperative Association President Shirley Bloomfield, U.S. Cellular President Mary Dillon and Frontier Communications Chief Legal Officer Kathleen Abernathy, the committee said Tuesday. Washington state Utilities and Transportation Commissioner Philip Jones also plans to testify, the committee said. The hearing is 2:30 p.m. in Room 253, Russell Senate Office Building. Cable companies “strongly support” efforts to update USF and intercarrier compensation, Powell said in written testimony that circulated among lobbyists Tuesday. Powell urged tweaks to the ABC plan. VoIP and circuit-switched calls must be treated the same, Powell said. He criticized telcos for “refus[ing] to pay the appropriate intercarrier compensation on VoIP traffic” that cable exchanges with them. Powell also supported capping the USF high-cost fund at its current level, $4.5 billion. And USF distribution should be technology-neutral, he said. “The FCC should put in place support mechanisms that harness marketplace competition, like competitive bidding or reverse auctions, to award subsidies to the most efficient provider, regardless of what type of technology that provider uses,” Powell said. “At that point, legacy high-cost support should end.” Frontier’s Abernathy urged adoption of the original ABC plan. “It is a carefully negotiated proposal among the carriers with the most history and involvement in universal service and intercarrier compensation,” she said.
Cable lobbied the FCC last week on the Universal Service Fund and intercarrier compensation, before Chairman Julius Genachowski circulated an order on the topics (CD Oct 7 p1), filings in docket 10-90 show (http://xrl.us/bmfj53). Comcast, Cox Communications, Time Warner Cable and American Cable Association executives had conversations with Wireline Bureau Chief Sharon Gillett and others in the bureau, an Office of General Counsel staffer and/or Zac Katz, aide to Genachowski who helped write the order. GCI and NCTA also wrote the agency about the ILEC-backed ABC plan. “Many incumbent providers are unwilling to interconnect and exchange traffic in IP format, yet also are unwilling to pay the applicable access charges when the traffic is exchanged in traditional Time Division Multiplex (TDM) format, with the cable operator bearing the additional cost of converting the TDM traffic to IP,” NCTA said (http://xrl.us/bmfj6u). “There is broad support for the end result proposed in the ABC Plan -- a unified termination rate of $0.0007 that applies to all traffic exchanged between telecommunications carriers in TDM format, without regard to the format in which it is originated or terminated.” The ACA asked that “any distribution of Connect America Fund” being set up to help pay for broadband be “consistent with the Commission’s objective to deploy broadband to unserved areas in a manner that is effective, efficient, and competitively neutral.” The group cited its “alternative” to the plan that was submitted to the agency with the NCTA (CD Oct 5 p13). Comcast, Cox and Time Warner Cable want USF reformed “in a manner that brings stability and predictability to ICC arrangements and eliminates on a going-forward basis wasteful ICC disputes between” ILECs and VoIP networks, the three companies said (http://xrl.us/bmfj64). They want “a seamless transition from the current system to a unified transport and termination rate for all voice traffic.” GCI, which seeks a plan for Alaska, where it’s the No. 1 cable operator, that may be different from the USF order for the continental U.S., said (http://xrl.us/bmfj7a) the ABC plan needs some changes “for the rules to achieve the objectives of unified and harmonized intercarrier compensation rates and reduced arbitrage.”
NCTA CEO Michael Powell sees signs from Universal Service Fund stakeholders that USF and intercarrier compensation can be reformed, as FCC Chairman Julius Genachowski seeks (CD Oct 7 p1). Industries with different proposals to use some of the USF to pay for broadband and to make changes to ICC generally understand they won’t get everything they want, he said in his first news conference. Powell said Capitol Hill is giving the commission room to work on the order that Genachowski wants voted on at the Oct. 27 meeting, and FCC members seem inclined to engage.
A number of Hill letters to the FCC in recent days focus on Universal Service Fund revamp issues like controlling the size of the fund. Reps. Mike Doyle, D-Pa., and Anna Eshoo, D-Calif., urged the FCC to ensure that consumers are protected. They urged the FCC to ensure that carriers demonstrate a need for any increase in the monthly bills of telephone customers as result of the reform. Doyle and Eshoo also said the agency should pursue technologically neutral solutions to encourage efficiency and strong competition among support recipients. The two emphasized that the FCC’s National Broadband Plan urges the agency to pursue special access reform in concert with reforming USF and ICC. Meanwhile, members of the House from Florida urged the agency to enact USF revamp that places “meaningful and enforceable” controls on the size of the fund, said 10 lawmakers in a joint letter. It’s time for the FCC to consider the input from all parties and implement USF and intercarrier compensation rules that “stringently control costs, encourage competition, reduce arbitrage, and focus the fund on serving rural consumers who need it,” said Rep. Fred Upton, R-Mich., and Rep. Greg Walden, R-Ore. The commission should set an annual spending cap of $4.5 billion for high-cost support, said a joint letter signed by 14 lawmakers including Reps. Joe Barton, R-Texas, and Marsha Blackburn, R-Tenn. Subsidies in areas served by unsubsidized providers should be eliminated, the joint letter said. High-cost support should be determined through the use of technology-neutral market-based mechanisms, it said.
FCC Chairman Julius Genachowski offered reassurance Thursday, in a speech at FCC headquarters as he prepared to circulate the FCC’s version of Universal Service Fund and intercarrier comp overhaul, most likely late Thursday evening. Genachowski’s speech was short on details on how his proposal differs from plans already before the commission, particularly the ABC plan. Instead, he reassured consumers they have nothing to fear and that the proposed reforms will, in the long run, drive down the size of their monthly phone bills.
Open Range Communications filed for bankruptcy Thursday despite receiving the largest loan commitment under the Agriculture Department’s Rural Development Broadband Loan and Loan Guarantee Program. The Rural Utilities Service approved a loan of $267 million for Open Range in March of 2008, under President George W. Bush appointee RUS Administrator Jim Andrew. Open Range owes RUS about $74 million in secured debt, said the company.
U.S. Cellular has taken a major financial hit because of the FCC’s current cap on payments to competitive eligible telecommunications carriers, the carrier said in a filing at the FCC (http://xrl.us/bmfeqx). The company said it expects to receive an estimated $227,000 per year in federal high-cost support, which is “roughly 13 percent of what U.S. Cellular would receive in the absence of the CETC cap.” As a result, “U.S. Cellular’s ability to improve service in many portions of its ETC area is severely restricted,” the carrier said. “Moreover, although U.S. Cellular opposes drastic reductions in high-cost support, U.S. Cellular has built in the assumption that its support will be phased down over the next five years as a result of pending USF reforms."
Reps. Lee Terry, R-Neb., and Mike Ross, D-Ark., gave the thumbs up to the incumbent-backed ABC plan and the complementary rural plan that goes with it. In a letter released Tuesday, the legislators said “details remain to be fleshed out by the FCC,” but “this framework clearly creates a path forward for comprehensive USF and intercarrier compensation reform.” The pair “strongly urge the FCC to maintain the key elements of the America’s Broadband Connectivity and Joint Rural Association proposals as you consider other proposals to revise the plan.” Echoing the talking points of the ABC plan proponents, Terry and Ross said they “believe the FCC should [pursue] a USF reform framework that is fiscally responsible, enforceable, and sustainable, providing opportunities for a wide range of robust broadband technologies to compete."