Kill the high-cost universal service fund identical support rule because it’s no longer sound policy, Sen. Byron Dorgan, D-N.D., said Wednesday in a letter to FCC Chairman Kevin Martin. It no longer makes sense for USF rules to tie competitive eligible telecommunications carriers’ support to what incumbent local exchange carriers receive, rather than ETCs’ own costs, the letter said. Nor is the reverse auction model the solution, the letter said. “Reverse auctions leave too many unanswered questions about stranded investment and the lack of incentive for a carrier to improve and expand their network, let alone maintain their current systems,” Dorgan said. “With winning bidders receiving the least amount of universal service support, this would in all likelihood leave Americans living in rural and high-cost areas without adequate, affordable communications services.”
Other countries’ experiences “demonstrate convincingly that reverse auctions can bring down [universal service] subsidies,” Scott Wallsten of the Technology Policy Institute said in a paper. The FCC proposed using reverse auctions in one of three USF reform proceedings. Wallsten studied reverse auctions in Australia, Chile, Colombia, India, Nepal and Peru. “Not all of the auctions were successful,” but reverse auctions “can be an effective tool for revealing information about the true cost of providing universal coverage,” Wallsten said. For example, in India’s first reverse auction, the incumbent won and the country failed to reduce the subsidy, he said. “India persisted, and its most recent auction ended with firms bidding for no subsidy and even to pay to provide service rather than to receive subsidies,” he said.
Kill the identical-support rule but don’t impose reverse auctions as a way to bring more equity into the high-cost universal service fund, 35 House members from both parties told FCC Chairman Kevin Martin in a Monday letter. Competitive local exchange carriers now get the same high- cost USF support as incumbent local exchange carriers, though their fixed costs may be lower, the letter said. “This policy has greatly contributed to the explosive growth of the USF,” it said. The FCC needs a cost recovery approach basing support for CETCs on their needs, not others’, it said. But implementing an agency proposal of the “untested mechanism” of reverse auctions would “stymie infrastructure build-out to the most rural areas,” the letter said. It would be better to pursue reforms “not at cross purposes with basic universal service policy,”, it said. Nor does it make sense to require rural carriers to provide service in high-cost rural areas while advancing proposals that “would pull the rug out from under their investments,” the letter said. The FCC approach could leave rural residents without adequate, affordable communications, it said.
The FCC should comply with a 2005 remand by the U.S. Court of Appeals for the 10th Circuit and change universal service high-cost support rules governing non-rural incumbent local exchange carriers, Qwest said Monday in an ex parte letter sent to commissioners and the Wireline Bureau. Three years ago, the appeals court said FCC USF high-cost support rules for Qwest and other non-rural incumbent local exchange carriers were unlawful. Non-rural ILECs get “little, if any,” federal high-cost assistance, Qwest said. “Despite the rural nature of much of the 14 western states it serves, Qwest received only about $27 million in federal high-cost assistance in 2007,” with no money for Iowa and North Dakota, it said. Meanwhile, wireless carriers got “more than four times that amount… just in Mississippi -- serving areas where consumers already have a wireline alternative,” it said. The FCC should replace its non-rural ILEC support mechanism with one targeting support to the highest-cost wire center, it said. That would raise non-rural support about $1.2 billion, it said. If the FCC decides that’s too much, it could give wire-based support only to “smaller non-rural ILECs,” Qwest said. “Namely, those other than AT&T and Verizon.”
The FCC, as expected, approved a cap on payments to competitive eligible telecommunications carriers under the high-cost Universal Service Fund program. Also as expected, wireless carriers voiced deep concern about the cap exerting a chilling effect on their efforts to participate in the USF program. Wireless attorneys said some carriers may challenge the order in federal court. An accompanying FCC statement issued Friday said the cap clears a path for further reform.
Six telecom groups asked for three extra weeks to file reply comments on FCC universal-service proceedings. The groups want the reply deadline moved to June 9 from May 19, according to a petition filed by USTelecom, the National Exchange Carrier Association, the Independent Telephone and Telecommunications Alliance, the National Telecommunications Cooperative Association, the Western Telecommunications Alliance, and the Organization for the Promotion and Advancement of Small Telecommunications Companies. The time is needed “to develop well-considered and thorough responses to the substantial record amassed in this proceeding,” they said. More than 90 parties commented last month, filing more than 1,000 pages to sift through, they said. In March, the FCC extended by two weeks the deadlines for USF comments and replies (CD March 26 p9).
The FCC sought comments on an Ascent Media Group request to reverse a Universal Service Administrative Co. decision. USAC refused to accept an amended August 2007 Form 499-Q used to determine Ascent’s universal service contribution. Ascent said it inadvertently gave its entire projected revenue instead of projected billed USF revenue, but didn’t realize the mistake until after the 45-day revision window. Comments are due May 13. Replies are due May 20.
Affordable voice service for those in need, not financial support for carriers, would be the “paramount” aim of the universal service program, according to draft legislation released Monday at a Free State Foundation panel discussion. Proposed by House Commerce Committee ranking member Joe Barton of Texas, the bill drew panelists’ praise as embodying proposals with widespread support.
FCC Chairman Kevin Martin circulated late Friday changes in an order approving a Universal Service Fund cap that likely mean approval of a cap within days, we've learned. Counting Commissioner Robert McDowell’s support, Martin has three votes for the high-cost fund cap. Commissioner Deborah Tate backed the cap while Commissioner Michael Copps cast a no vote.
The most important FCC aides on telecom are Wireline Bureau Chief Dana Shaffer and Wireless Bureau Chief Fred Campbell, along with Chairman Kevin Martin’s wireline adviser Ian Dillner and wireless adviser Aaron Goldberger, said sources including current and former FCC staff.