The FCC confirmed that Chairman Julius Genachowski will circulate a proposed order that he hopes will lead to reform the universal service and intercarrier compensation regimes. The FCC called a briefing with reporters where agency officials spoke on the condition they not be named and said Genachowski will deliver a speech Thursday laying out some of his proposals. FCC officials declined to discuss specifics in Tuesday’s briefing, set for Thursday at 10:30 a.m. at FCC headquarters, instead reiterating their talking points about why reform was necessary.
Assurance Wireless started selling service in Rhode Island, said the company which runs a Lifeline Assistance program supported by federal Universal Service Fund. The company will offer eligible residents a free cellphone and 250 free monthly voice minutes. Customers can pay for additional minutes, texting, international calling and more, Assurance said.
The FCC might not adopt any existing plan to revamp the Universal Service Fund in its entirety, state officials said at a webinar by the National Regulatory Research Institute Monday. Even if the commission is to adopt an order for the Oct. 27 meeting, it might not be a final order, said James Cawley, chair of the state member of the Federal/State USF Joint Board.
The FCC should shuck the cost-based model of the Universal Service Fund and adopt “a value-based approach” as it transitions USF to a national broadband fund, the Technology Policy Institute argued in a white paper released Friday. Senior Fellow Scott Wallsten said the current high-cost fund “does not incorporate how much consumers value the services” and doesn’t measure “the incremental, rather than average, effects of the program.” The new broadband fund, dubbed the Connect America Fund, “can overcome both problems and operate far more efficiently than the existing high-cost program ever could,” Wallsten argued. Moving to a value-based approach would require “regular studies” on what customers will pay for broadband services, he said. “This information would be used to help determine what types of service should be subsidized in unserved areas, which areas to fund, and the maximum amount that should be spent on subsidies."
Universal service lobbying was intensifying at the FCC as the deadline for the October open meeting drew near, filings on docket 10-90 showed. Comcast, Cox Communications, Northeast Colorado Cellular, U.S. Cellular, USTelecom, NTCA, NECA, Free Press, Dish Network and CompTel posted ex parte notices Friday. If the commission is to adopt an order for the Oct. 27 meeting, drafts must circulate by Thursday. Most industry observers expect such an order, but weren’t certain how many changes staff would make from the incumbent-backed ABC and rural consensus plans. The most-contested provisions remained the right-of-first-refusal provision for wireline carriers and the size of the mobility fund, but Free Press also filed a lengthy denunciation of the plans.
Wireless carrier officials say they see some willingness on the FCC’s part to make changes to the final Universal Service Fund/intercarrier comp order to address wireless concerns. Numerous small and mid-sized carriers have been at the commission in recent days to make clear their concerns. One discussion point has been the size of the fund, industry officials said. A second has been putting in place rules that would guarantee a dedicated fund for wireless buildout.
Rep. Jo Ann Emerson, R-Mo., urged the FCC to move forward with its overhaul of the Universal Service Fund and intercarrier compensation. In a letter dated Tuesday to FCC Chairman Julius Genachowski, Emerson cited “a serious problem with broadband connectivity in rural America.” Emerson chairs the House Appropriations subcommittee that oversees the FCC. “The Commission needs to continue with reform of these two programs in a manner that is aimed at meeting the objective of accelerating broadband deployment to rural areas -- and doing so in a fiscally responsible way -- by carefully targeting support and keeping the high-cost Universal Service Fund within its current budget,” Emerson said. In a separate letter to Genachowski dated Sept. 23, the congressional delegation from Idaho applauded the FCC and the industry’s overhaul efforts. “We are encouraged by the recent discussions with Idaho stakeholders,” said Sens. Mike Crapo and James Risch and Reps. Mike Simpson and Raul Labrador, all Republicans from the state. “You have already received a careful review process and feedback that gives you and the FCC an opportunity to reform and update the USF and its core mission mandate and goals."
Rate-of-return carriers would receive more than $13 billion in Universal Service Fund cash over the next six years under the ABC plan, executives from the incumbent companies behind the plan said last week in a meeting with FCC staff. USF support for rate-of-return areas would start at $2 billion in 2012 and reach $2.3 billion in 2017, executives said, according to an ex parte notice posted Wednesday to docket 10-90. The program would generate $161 million in budget surplus over the next five years, the executives said in their presentation (http://xrl.us/bmesfk). Under the ABC plan, the “legacy” high cost Universal Service Fund would spend a little more than $2 billion over four years, starting with $821 million in 2012 before dropping to zero in 2016, the ABC executives said. The Connect America Fund would start by spending $440 million in 2012 and reach more than $2.2 billion by 2017, the executives said. The executives were from AT&T, Frontier, USTelecom, Verizon, Windstream and CenturyLink.
The America’s Broadband Connectivity (ABC) plan for Universal Service Fund reform would “disenfranchise consumers -- particularly those in rural areas -- who stand to benefit from the availability of broadband technologies like satellite broadband,” said Dish Network. It and sister company EchoStar recently met with an adviser to FCC Commissioner Mignon Clyburn (http://xrl.us/bmerve), an ex parte filing said. The agency is considering ways to reform USF, including the ABC plan. That plan “would misallocate USF support, undermine competition, and deprive rural customers of high-quality and cost-effective services offered by competitive providers,” Dish said. It pointed to the success of the Rural Utilities Service Broadband Initiative Program that partly subsidized satellite broadband service through a $58.7 million grant to EchoStar subsidiary Hughes Network Systems. Hughes saw more than 95,000 orders for the satellite broadband service from eligible customers, said Dish.
CTIA’s top priority is getting Congress to pass spectrum legislation, and the association thinks it’s not a question of if, but when a bill will be approved, CTIA President Steve Largent said during a press conference Wednesday. CTIA officials also said Universal Service Fund reform remains a significant issue for wireless carriers, with the FCC poised to take up an order at its Oct. 27 meeting. Largent said he’s confident the 1755-1780 MHz band will be reallocated for wireless broadband.