Federal Universal Service Fund

Cellphone tax law, public safety, cybersecurity and universal service are among issues expected to get Congressional attention when members return from recess next month, Hill and industry officials said. But with elections in early November, Congress is quickly running out of time to finish pending legislation on those and other matters. “On telecom, the final few weeks will mostly be about laying the groundwork for a busy 2010-11 in areas like spectrum, privacy and broadband regulation,” said Concept Capital analyst Paul Gallant.

A Universal Service Fund overhaul “would best be grounded on classification of broadband Internet connectivity as a telecommunications service” by the FCC, said the Media Access Project in a meeting last week with the Wireline Bureau. “Such a decision would minimize the chance of an anomalous and undesirable outcome in which the Commission plausibly might require contributions from broadband providers but have no authority to provide explicit support for broadband deployment and adoption.” MAP can’t yet endorse either revenue-based or numbers-based contribution to USF, because of the current legal uncertainty about the commission’s broadband authority, it said. Whatever method is chosen, the group said it shouldn’t “increase the relative contribution burden passed through to providers’ residential subscribers, nor promote more regressive assessments."

Sorenson was alone seeking one compensation rate for all video relay service providers under the interstate Telecom Relay Service fund, in comments at the FCC last week. Sorenson is the biggest VRS provider and is paid the least under the current system. Responding to a notice of inquiry about taking a “fresh look” at the VRS program and reducing fraud, Sorenson’s rivals and consumer groups representing the deaf urged the FCC to maintain the current tiered approach, with some minor changes.

In what could be a messy November election for Democrats, telecom industry lobbyists are closely watching the re-elections of several members active on their issues. Those races include House Communications Subcommittee Chairman Rick Boucher, D-Va., and subcommittee members Zack Space, D-Ohio, and Lee Terry, R-Neb. They also include Senate Agriculture Committee Chair Blanche Lincoln, D-Ark., and Senate Commerce Committee member Barbara Boxer, D-Calif. Boucher has a large financial advantage over his Republican opponent and political analysts and others give him the edge.

Rural carrier associations urged the FCC to expand the contribution base for the Universal Service Fund. The Wireline Bureau met Tuesday with officials representing the Rural Alliance, National Exchange Carrier Association, National Telecommunications Cooperative Association, Western Telecommunications Alliance and the Organization for the Promotion and Advancement of Small Telecommunications Companies, a Thursday ex parte filing said. The rural incumbent local exchange carriers seek USF contributions from all broadband providers, regardless of their means of transmission.

Imposing Universal Service Fund obligations on satellite providers that don’t receive USF support isn’t a “fair or rational way” to provide broadband to remote areas, a group of satellite companies said at a meeting with the Wireline Bureau’s Telecommunications Access Policy Division. Inmarsat, Iridium, Intelsat, SES World Skies, Spacenet and WildBlue representatives were at the meeting, an ex parte filing said. The satellite companies urged the bureau to “think broadly about alternative contribution methodologies,” though each would raise definition and classification questions, the filing said.

USA Mobility asked the FCC not to change how it collects Universal Service Fund fees in a way that imposes significantly higher charges on users of paging systems. “Many of USA Mobility’s customers pay less than $.10 per month in USF charges, and even most higher-revenue customers pay less than $.25 per month,” the company said in an ex parte filing about a meeting with commission officials. “Accordingly, a numbers-based or connections-based contribution methodology that imposed flat monthly charges in the neighborhood of $1.00 would inflict dramatically higher costs that would adversely affect USA Mobility’s ability to retain its price-sensitive subscriber base."

Wireless has already faced deep cuts in universal support and the goal of the FCC now should be to encourage more deployment of mobile broadband, CTIA said in replies on an inquiry and rulemaking on changes to the high-cost universal service program. As a result of the 2008 cap on support for competitive eligible telecom carriers, wireless carriers and other CETCs have already lost $800 million in funding, the group said. The notices follow up on recommendations in the National Broadband Plan that the Universal Service Fund be restructured to pay for broadband.

Issuing a retroactive declaratory ruling is “the least transparent way” of addressing the states’ request to charge Universal Service Fund fees to interconnected VoIP providers, said Vonage in a meeting with the FCC Tuesday. Vonage said the “regulatory certainty” which the commission offered in its 2004 preemption order should not be undermined by the FCC’s consideration of a petition from the Kansas and Nebraska commissions. Furthermore, any imposition of retroactive USF obligations would be “manifestly unjust and unlawful,” the company said. The Voice on the Net Coalition also opposed a retroactive declaratory ruling on interconnected VoIP regulation in a subsequent meeting with the FCC Wednesday. The group urged the FCC to launch a rulemaking to limit states’ powers to charge USF fees, it said. To make any declaratory ruling that betrays the “Vonage Preemption Order” would hurt consumers and prevent the innovation and growth of the VoIP industry, the VON Coalition said. Instead, the FCC should seek comment on the best way to assess state USF fees and how much it would cost VoIP providers to modify their billing systems to account for USF fees, said the VON Coalition. Furthermore, any rulemaking should not be imposed retroactively, the group said, because VoIP providers would be unable to collect fees directly from past customers.

The FCC shouldn’t subject VoIP to state universal service fees without first seeking comment, said House Commerce Committee Ranking Member Joe Barton, R-Texas, and Communications Subcommittee Ranking Member Cliff Stearns, R-Fla. In a letter Tuesday to Genachowski, the Republicans said the FCC should “afford this issue due consideration in a notice of proposed rulemaking, rather than just address it in a declaratory ruling.” Levying state fees “would alter settled expectations and could have a significant impact on investment, economic growth, and broader universal service reform,” they said. “Addressing this in a declaratory ruling would not only provide short shrift to a matter of consequence, it could also raise additional issues about retroactive applicability of such fees.” The FCC circulated an item July 22 responding to a petition by the Nebraska Public Service Commission and the Kansas Corporation Commission for declaratory ruling that states may assess Universal Service Fund (USF) fees on VoIP intrastate revenue (CD Aug 9 p9). States “disagree with any suggestion that a rulemaking is necessary,” said Brad Ramsay, general counsel of the National Association of Regulatory Utility Commissioners. Vonage has stated it doesn’t object to paying state USF fees, and the FCC previously agreed that the statute requires Vonage to pay, he said. “Blocking these assessments can only increase pressure on the already burdened federal USF programs."