The Rural Utilities Service should halt its broadband loan program while the FCC is overhauling the universal service system, said a study sponsored by NCTA. “By tying RUS loans directly to USF support, RUS effectively creates a vicious circle: The more a firm invests in inefficient infrastructure, the more it gets in USF support; the more it gets in USF support, the more it can qualify for in RUS loans; the more it can qualify for in RUS loans, the more it can invest; and, the more it invests, the more it gets in USF support,” said study author Jeffrey Eisenach of Navigant Economics. Efforts to reach officials at RUS for response were unsuccessful.
The FCC is likely to get the Universal Service Fund revamp done in 2011, panelists said during a Regulatory 2.0 workshop Thursday. Congress should give the FCC as much flexibility as possible as it considers legislation giving the commission authority for incentive auctions for broadcast and other spectrum, they said.
TracFone Wireless is proposing changes to the FCC’s Lifeline program, to guard against fraud, said an ex parte filing (http://xrl.us/bmdeov). Among its proposals are requiring all eligible telecom carriers to collect date of birth and Social Security numbers from applicants, to verify, under penalty of perjury, that all Lifeline customers remain eligible and to put in place policies for de-enrolling subscribers that don’t use the service or don’t pay their bills. “The best way to minimize waste, fraud, and abuse of USF resources is to identify Lifeline enrollment and program processes that effectively prevent fraudulent and wasteful use of USF funds and to require all ETCs to use those processes,” the carrier said. “There is no rational basis for treating ETCs differently based on whether they are wireless or wireline, facilities-based or resellers, prepaid or post-paid (billed service) providers or based on any other distinction.” TracFone’s SafeLink program has 3.7 million customers, the company said.
FCC Chairman Julius Genachowski has asked cable lobbyists about what the commission should do with carrier of last resort (COLR) obligations as it contemplates universal service reform, cable executives told us Wednesday. Wireline staff have also asked questions about whether cable companies would be willing to go through the eligible telecommunications carrier process if the commission gets rid of the provision for ILEC right-of-first refusal in the proposed America’s Broadband Connectivity plan, executives said in a reporters’ briefing Wednesday at NCTA headquarters in Washington.
CTIA said any Mobility Fund created as part of FCC Universal Service Fund reform must be sufficient to meet the needs of wireless subscribers in high-cost areas. The remarks came in meetings with various FCC officials, including aides to all four FCC commissioners (http://xrl.us/bmc7ou). CTIA did not file reply comments in the USF rulemaking, though it did offer initial comments questioning whether the $300 million proposed for the fund in the ABC Plan is adequate (CD Aug 25 p8). CTIA again questioned during the meetings whether proposed funding levels are sufficient. “Consumers are rapidly migrating to mobile broadband, and a sufficient mobility fund that ensures that Americans have access to those services is consistent with the goals of Congress, the National Broadband Plan, and the Commission,” CTIA said. “In determining the appropriate size of a proposed Mobility Fund, the Commission must engage in a fact-based analysis and take account of the fundamental nature of mobile networks, which must be available wherever Americans live, work, and travel.” CTIA’s two biggest members, Verizon Wireless and AT&T support the ABC Plan and CTIA has been relatively quiet on the issue (CD Aug 25 p1). CTIA officials were last at the FCC in July to discuss changes to the USF, according to on ex parte filings at the agency.
Package bidding, as proposed in the FCC’s Mobility Fund notice of proposed rulemaking, would be bad for smaller carriers, said Rural Cellular Association General Counsel Rebecca Thompson in a call with Wireless Bureau officials (http://xrl.us/bmc7kr). Package bidding “typically benefits the larger carriers with nationwide footprints and resources to outbid another applicant for the sole purpose of blocking competition or off-setting contributions,” RCA said. “Use of reverse auctions to distribute USF funds, whether the FCC includes package bidding or not, perpetuates a monopoly at the expense of market-based competition, innovation, consumer choice, competitive prices and new technology.”
The FCC should abolish access charges immediately, George Washington University telecom professor Gerald Brock argued in a paper published by the Free State Foundation. He said wireless carriers have “prospered and pioneered important innovations such as distance insensitive rates” because of their exemption from rates in the 1990s. He also said the current system “retards technological progress,” and creates “high transaction costs as companies seek ways to profit from access charge arbitrage.” The early access charges were designed as a subsidy, but “identifiable subsidies have already been removed from access charges and the previous subsidy revenue incorporated into USF payments,” Brock said. He’s also concerned that because “the same facilities can be used for regulated telephone service and unregulated services, the regulatory procedures used to compute access charges cause them to sometimes subsidize competitive services or provide windfall profits."
The FCC should follow the industry, state government and public interest commenters that reject the universal service fund reform plans brokered by incumbent local exchange carriers, which represent the “parochial interests of a very narrow industry segment,” said satellite broadband providers in joint comments (http://xrl.us/bmcq7u). The providers, which include Spacenet, ViaSat and ViaSat’s subsidiary WildBlue, Dish Network, its sister company EchoStar, and EchoStar subsidiary Hughes, filed reply comments in docket 10-90 on USF proposals. (See separate story this issue). Suggestions that satellite broadband is inferior to terrestrial are based on satellite offerings that are congested due to oversubscription, they said. Coming ViaSat and Hughes high-throughput satellites will add speed, quality and capacity, they said. Satellite broadband will meet the requirements of the program and has been recognized by the agency as qualified for universal service support, they said.
Wireless carriers other than AT&T and Verizon Wireless, which signed the ABC Plan for Universal Service Fund and intercarrier compensation reform, hope to win concessions as proposed changes to the program move forward at the FCC. With the wireless industry presenting a divided front, it’s unclear how much leverage smaller wireless carriers will have and what changes they will be able to push through at the commission.
State regulators took aim at the industry-endorsed proposals for universal service and intercarrier compensation regime reforms, in reply comments on docket 10-90. Drawing the heaviest fire was the incumbent-backed America’s Broadband Connectivity plan. Regulators from Maine to Alaska blasted the proposals. State regulators have formed themselves into a task force hoping to convince the FCC that it’s too early to create uniform compensation rates (CD Sept 2 p7).