Rural telcos and state regulators worry the pending universal service and intercarrier compensation regime reforms will result in consolidation in their sector. Earlier this week, ex-FCC commissioner Harold Furchtgott-Roth accused the agency of pushing rural telcos toward consolidation in the Universal Service Fund rulemaking notice (CD Sept 26 p13).
House Democrats urged a focus on broadband adoption as the FCC considers an overhaul to the Universal Service Fund. Rep. Doris Matsui, D-Calif., circulated the letter last week (CD Sept 22 p16) and got signatures from 34 Democrats, including House Commerce Committee Ranking Member Henry Waxman, D-Calif., Communications Subcommittee Ranking Member Anna Eshoo, D-Calif., and Rep. Ed Markey, D-Mass. Matsui sent the letter Tuesday to FCC Chairman Julius Genachowski. The letter “makes the crucial point that in reforming USF, the FCC must give a greater priority to adoption efforts than it has in the past,” Aspen Institute fellow Blair Levin, author of the National Broadband Plan, said in a statement. “Some at the FCC have said that dealing with adoption now is ‘putting the cart before the horse,’ but if the current USF Reform effort results in excessive spending in high cost areas, as some have urged, we will have a lavish cart but no money for a horse, and end up stuck on the side of the road.” The FCC welcomes Matsui’s “leadership in support of broadband adoption and fiscally responsible reform of the high-cost fund,” an FCC spokesman said. “In reforming all components of the Universal Service Fund, the Commission is focused on helping American consumers by increasing broadband availability and adoption and limiting the burden of USF contributions."
Cablevision became the latest cable operator to lobby the FCC on Universal Service Fund reforms, with its first such meetings on the subject since May, filings posted in docket 10-90 show (http://xrl.us/bmem2c). The agency should eliminate a subsidy to ILECs where an unsubsidized company sells service or begins doing so after there’s a USF broadband fund, the company said. The Dec. 31 cutoff proposed in the ILEC-backed USF reform plan “would effectively lock in a subsidy for any area that lacks a competing broadband provider today,” Cablevision recounted executives having told Wireline Bureau staffers and aides to all four FCC members. “Cablevision proposed that the forward-looking cost model proposed to identify high-cost areas and the level of support should be based on the most efficient available terrestrial technology rather than on the incumbents’ costs,” the company said. “In persistently high-cost areas where USF subsidies will remain necessary, we suggested that the Commission mandate portable subsidies that can be used with either the ILEC or a new entrant.” NCTA meanwhile sought “expeditious” USF high-cost support and intercarrier compensation reform, in a meeting with an aide to Commissioner Mignon Clyburn, the association said. “The Commission should provide certainty regarding the ability of providers to receive compensation for terminating calls, regardless of the technology used by the end user of the call.” NCTA said its executives told an aide to FCC Chairman Julius Genachowski of “the importance of ensuring that broadband is deployed to unserved areas as quickly as possible in a competitively neutral and nondiscriminatory manner.” Alaskan cable operator GCI also reported meeting with Wireline Bureau officials about its Alaska Broadband Plan, as the agency may vote on a USF and intercarrier comp order on Oct. 27 (CD Sept 27 p1).
Don’t dip into the Universal Service Fund, rural telecom associations wrote the Joint Select Committee on Deficit Reduction. The super committee is mandated to seek $1.5 trillion in savings. USF is federally mandated, but privately funded and maintained outside the U.S. Treasury, OPASTCO, the NTCA and the Western Telecom Alliance wrote Monday. “Legal precedents and guidance definitively confirm that the USF monies do not constitute ‘public monies’ that are received for the use of the United States, but rather are private funds that are merely derived and distributed at the discretion of federal statute,” they said. “Any taking of money from the Universal Service Fund would not result in an actual cut in the federal deficit,” said OPASTCO Vice President Randy Tyree. “This sort of taking would only result in job loss and inadequate communications services."
Executives from major cable operators met with FCC officials on the Universal Service Fund last week, docket 10-90 shows (http://xrl.us/bmeh8a). The industry was at the commission and on Capitol Hill to make its case against some aspects of the ILEC-backed USF and intercarrier compensation reform plan (CD Sept 22 p2). Comcast/NBCU Washington President Kyle McSlarrow told Commissioner Robert McDowell that reforming ICC should include eliminating “the disputes and controversies between voice service providers that have plagued the current regime,” said a filing posted in the docket Monday. “The Commission can accomplish this principal objective by making clear that terminating exchange access and termination under section 251(b)(5) includes the termination of voice calls to an end user or to an affiliated or unaffiliated voice provider that in turn delivers the call to a retail end user and by adopting conforming changes to the Commission’s rules.” Rules on transport and termination of voice traffic should have no effect on current deals on tandem transit services, Comcast said. Cox Communications and Time Warner Cable were among the other cable operators to lobby agency officials, filings posted to the docket late last week show.
The FCC delayed the October meeting until Oct. 27 largely at the urging of staff working on universal service/intercarrier compensation, so they'd have more time to work out the details on a final order, agency officials said. Officials said they would prefer not to let a vote slip until Nov. 30, the Wednesday after Thanksgiving. Meanwhile, state members of the Federal/State USF Joint Board are not expected to make any additional recommendations before the October meeting date and have many continuing concerns about proposals now before the agency, especially the America’s Broadband Connectivity Plan.
Cable’s lobbying against the right-of-first-refusal sections of the incumbent-backed ABC plan appears to be gaining traction at the FCC, with staff pressing incumbents with concerns about the proposals, telecom officials told us Friday. Wireless and satellite companies have also lashed out at the plan, but cable has been the most aggressive, they said. Cable has stormed Capitol Hill and the commission in the past few weeks with objections to right-of-first-refusal that would let ILECs be the first to be able to refuse USF funds and other parts of the plan (CD Sept 22 p2). “It’s definitely on the radar screen at the commission, as an issue,” a telecom lobbyist said.
Google said there’s enough consensus on Universal Service Fund and intercarrier compensation system reform that the FCC should move forward quickly. “There is broad support in the record for targeted accountability measures on USF support, including build-out and reporting obligations,” the company said in an ex parte notice (http://xrl.us/bmd6yd). “Requiring accountability will help ensure that subsidies are well spent and assist in preventing waste, as well as fraud and abuse.” The FCC must also take care, as it reforms intercarrier compensation, that “the enormous capabilities of IP networks” are “not shoehorned into the limited functionality of TDM,” Google said in the letter posted to docket 10-90. “Although many of the parties diverge on the specifics, there is widespread agreement on many key points,” it said. “Google respectfully urges that the extensive base of record support provides a solid foundation for the FCC to move forward with an orderly transition of USF and ICC to create the next generation of networks and services for all Americans."
Experts were divided on what kind of impact a government shutdown would have on the pending universal service and intercarrier compensation regime reforms. House Republican leaders have promised to avoid a shutdown after a continuing resolution was surprisingly defeated Wednesday. But the threat of a shutdown was enough to make some wonder whether it would keep the FCC from acting on universal service by October’s meeting. “It definitely puts the timetable at risk,” Aspen Institute’s Blair Levin said of a potential shutdown. “The debate is literally just starting. Universal service, the details matter so much.” Public Knowledge Legal Director Harold Feld said the impact might be “a wash.” He told us in an email: “The short answer is: I think delay works to the advantage of those trying to mobilize opposition to the ABC plan. On the other hand, if there is a shut down for any extended period, it will make it very hard to get members of Congress (who are the chief point of leverage at this point) engaged on this issue.” But MF Global analyst Paul Gallant said he didn’t think a shutdown would affect anyone’s lobbying position. “A shutdown might push back a final FCC vote, but I doubt it would prevent the Commission from getting to USF this fall,” he said: “There’s just been too much invested by too many parties to get to this point.”
Customer subsidies for universal access to telephone and broadband must provide results at a reasonable cost and more accountability for “the companies that stand to gain,” wrote Simon Ffitch, consumer advocate member of the Federal/State USF Joint Board, in a Seattle Times op-ed. The ABC Plan is contrary to a major goal of the Universal Service Fund revamp -- to ease the burden that customers pay to support the system, he said. The plan would eliminate the states’ authority over consumer protection and to act as watchdogs over the use of funds, he said. The FCC doesn’t have the resources to effectively take over these functions for all the states, he said. The ABC Plan also made no real commitment to make broadband available to unserved and underserved communities, he said.