Stifel Nicolaus, handing out its annual tongue-in-cheek awards, gave FCC Chairman Kevin Martin a special prize for helping stimulate the economy. He “starts sudden effort for big reform of long-running intercarrier compensation combined with USF,” the firm said. “No vote, but generates huge lawyers’ fees just as economy requires Keynesian jolt. Like the National Recovery Act, Mr. Martin did his part.” AT&T got several awards, including a special one for “not quite eating their own dog food": “Telecom giant that preaches virtues of connecting everyone through telecommunications, moves headquarters from San Antonio to Dallas to ‘gain better access to its customers and operations.'”
Two associations for small rural carriers urged the FCC to reject the agency’s reverse auctions plan for Universal Service Fund distribution. Earlier this month, FCC Chairman Kevin Martin voted for that proposal, which is the second of three FCC plans to overhaul USF now out for comment (CD Dec 15 p3). Other commissioners haven’t voted yet. In a Thursday ex parte letter to the FCC, the Western Telecommunications Alliance and the Organization for the Promotion and Advancement of Small Telecommunications Companies said reverse auctions would thwart broadband investment in rural areas. Auctions “would generate significant unpredictability for rural carriers, which is the enemy of network investment,” OPASTCO and WTA said. And major lenders to rural incumbent local exchange carriers have said “the uncertainty of rural carriers’ cost recovery under a reverse auction mechanism would cause them to restrain the amount of debt made available,” they said. Also, auctions are a “'race to the bottom’ that will drive carriers to submit bids that are well below what they actually need to maintain and upgrade their networks to provide an evolving level of quality services in high-cost rural areas,” they said.
Rural phone companies met Tuesday with members of the Obama-Biden transition team to discuss proposals for broadband incentives in the economic recovery package, executives said. Verizon, AT&T, Qwest, and USTelecom met with the team last week to offer suggestions, company officials said. Documents from the meetings are starting to make their way to Change.gov, the transition team’s Web site. President-elect Barack Obama has promised to publicize meetings with business representatives, to post summary documents and solicit public commit.
Concerns are growing that the FCC faces additional sanctions from the U.S. Court of Appeals for the District of Columbia Circuit unless it provides an additional response to that court on the ISP remand beyond its interim order released last month, FCC and industry officials said this week. The FCC on Nov. 5 issued an order responding to the court’s long-standing remand by providing additional justification for the original 2001 ISP-bound traffic rule, without changing compensation rules overall.
Improved audit processes would improve distribution of Universal Service Fund money, the National Exchange Carrier Association said in reply comments to an October FCC inquiry into how it might strengthen USF management, administration and oversight (CD Nov 17 p6). The FCC Office of Inspector General has identified “a large portion of payments … as erroneous due to documentation issues or audit disclaimers,” NECA said, citing a recent OIG report that the high-cost fund has a 23.3 percent error rate: “Reporting these as ‘erroneous’ appears to materially overstate the extent of actual incorrect or improper high cost disbursements.” In separate reply comments, the Independent Telephone & Telecommunications Alliance agreed that USF audits are in a bad state. “While some [ITTA members] identified few discrete problems, others described audits that, when held against multiple state commission audits spanning three decades … were the ‘worst … ever seen,'” ITTA said. Members had common criticisms, including auditors’ knowledge of telecom, unclear FCC document retention rules and an inefficient audit process, it said.
The Wyoming Public Utilities commission is to consider at its meeting Tuesday a Qwest filing for authority to enter into an agreement with QuantumShift Communications on unbundled network elements, ancillary services and resale interconnection (Docket 70000-1404-TK-08 and 70054-7-TK-08). The commission also is to decide on a TCT West filing for authority to make an interconnection agreement with Bresnan Broadband (Docket 70114-23-TK-08 and 70014-24- TK-08), a Qwest filing for continued waivers of some requirements of telecom service quality rules and request for confidential treatment (Docket 70000-1399-TA-08), and an Embarq tariff filing for authority to increase the federal Universal Service Fund debit applied to local service access line charges and to raise associated rates for consumer and business bundles (Docket 70009-316-TT-08).
Carrier contributions to the Universal Service Fund will decline 16.7 percent in Q1 2009, due mostly to falling high- cost support requirements, the FCC said on Monday. Next quarter, carriers must contribute 9.5 percent of their long distance revenue to USF. That’s 1.9 percentage points less than Q4, and 0.7 less than Q1 last year. To set the carrier “contribution factor,” the agency divides projected carrier revenue by expected USF subsidies for a given quarter. Of an estimated $1.84 billion in Q1 subsidies, about $1.06 billion is for the rural high-cost program, $525.74 million for the E-rate program, $204.89 million for low-income support and $49.49 million for the rural health-care program. Support requirements for the high-cost program dropped most, falling $120 million from Q4. The interim cap on the competitive eligible telecom carrier (CETC) portion of the high-cost fund is partially responsible for the drop, said Curt Stamp, president of the Independent Telephone & Telecommunications Association. An industry official estimated that the CETC cap reduced demand on the high-cost fund by about $64 million. The five-month CETC cap took effect in August, but apparently took an extra quarter to kick in, Stamp said. The contribution factor decline could relieve some of the short-term emergency behind USF reform efforts, but ITTA hopes the FCC and Congress won’t lose focus, he said.
Incorrect payments continue in the universal service schools and libraries E-rate program and low income fund, the FCC’s inspector general said Friday. These are payments that shouldn’t be made or are for the wrong amount. The E-rate program had a rate of payment errors of 13.9 percent in audits just completed, up from 12.9 percent in 2007, the IG said. The incorrect payments totaled $232.7 million, compared to $210 million in 2007. The problem puts the program “at risk,” according to Office of Management and Budget guidelines that set 2.5 percent as the highest acceptable rate.
Regional wireless carriers and the Public Interest Spectrum Coalition urged the FCC to reconsider and clarify several conditions that the agency imposed on the Verizon Wireless-Alltel merger. The requests came in six reconsideration petitions last week. In a joint petition, MetroPCS and nTelos asked the FCC to extend the time that Verizon must honor Alltel’s roaming agreements to seven years from four to give carriers a chance to roll out Long Term Evolution wireless technology. LTE will allow CDMA carriers to roam on networks that aren’t compatible now, they said. The carriers also asked the FCC to require Verizon to provide automatic data roaming for seven years. In another joint petition, U.S. Cellular and three other wireless carriers asked the FCC to require Verizon to reduce its universal service support in equal amounts annually over five years, until it’s gone or the FCC defines a new USF mechanism. Separately, Leap Wireless asked the commission to clarify that roaming partners can choose to apply their existing roaming agreements with Alltel or Verizon in full, not just the rates. And the FCC should confirm that the roaming agreement chosen will apply to the future service areas and spectrum bands of each carrier, Leap said. Public Service Communications urged the commission to strengthen roaming conditions, temporarily ban handset exclusivity arrangements and require Verizon to sell additional Alltel cellular properties, “where overlapped by Verizon cellular operations and/or where the merger would result in an excessive concentration of spectrum.” The Public Interest Spectrum Coalition asked the FCC to reconsider including broadband radio service spectrum (BRS) in its spectrum screen and to impose a condition requiring an open network allowing customers to access legal content, attach devices and run applications of their choice. The coalition previously made its BRS argument in a reconsideration petition on the Sprint Nextel and Clearwire partnership (CD Dec 10 p8). A sixth petition, by the Rural Telecommunications Group, was filed earlier last week (CD Dec 11 p8).
The FCC posted on its Web site how much universal service high-cost fund support competitive eligible telecom carriers will get while the agency’s interim USF cap applies. The support amounts reflect USF money ETCs received in March. “Competitive ETCs should confirm their March 2008 high-cost support amount information with [the Universal Service Administrative Co.] and file any corrections” by Dec. 31, the FCC said. USAC won’t accept changes after that date, unless the CETC is granted a waiver by the FCC, the commission said.