The Federal-State Joint Board on Universal Service issued long-awaited recommendations for reforming the Universal Service Fund late Tuesday that generally followed an outline released in September. The goal of the wide- ranging group of proposals is to reform the high-cost portion of the USF, which subsidizes service in rural areas. The FCC has a year to act on the recommendations.
The AT&T-Dobson Communications merger order could have long-term effects on the wireless marketplace, creating as it does a new, higher screen level for when a merger raises market power concerns, industry officials said. The order (CD Nov 16 p10) states that with the addition of 700 MHz spectrum to be auctioned next year, a merged carrier can hold up to 94 MHz of spectrum in a given market without triggering more detailed FCC review. The previous standard was 70 MHz. Sources said the provision was made part of the order at the suggestion of Wireless Bureau Chief Economist Walter Strack.
The Federal-State Joint Board for Universal Service has agreed to a permanent cap for the high cost part of the Universal Service Fund, most likely at 2007 levels, regulatory and industry sources said Wednesday. The proposal would also create separate funds for wireline, wireless and broadband.
More than 70 percent of Americans polled back capping the high-cost portion of the Universal Service Fund, and 62 percent oppose using USF subsidies to widen broadband access in rural areas, said Cap the Fund, a group opposing more USF spending. “This program requires us to trust the government not to throw money to services that could be better provided by non-subsidized companies,” said Mac Haddow of the Seniors Coalition, a Cap the Fund member.
The Federal-State Joint Board for Universal Service may be ready to present its long-term reform proposals to the FCC as soon as week’s end, said board co-chairman Ray Baum of the Oregon Public Utility Commission. Baum said he was “cautiously optimistic” about the timetable, although members are working on “final details” such as preparing their public statements on the recommendations. The proposal will be “close to the outline” the board released in September, Baum said in a phone conversation. The board had announced agreement then on key issues such as making USF subsidies available for broadband services and ending the equal support rule that gave competitive rural carriers the same level of subsidies as incumbents. Asked whether the recommendation will be unanimous, Baum said he didn’t know.
FCC Commissioners Robert McDowell and Jonathan Adelstein likely will come in for intense lobbying in coming weeks, as wireless carriers seek to beat a cap proposed for Universal Service Fund payments. The carriers want to know why they're getting special attention as the FCC tries to curb the fund.
FCC Chairman Kevin Martin has circulated an order and two notices of proposed rulemaking on Universal Service Fund reform, sources said. The items started circulating Oct. 26. The order, based on the Alltel merger order, would cap USF payments at June 2007 levels, unless a carrier filed cost data showing its per-line costs are less than the capped funding level. Martin also circulated two rulemakings. One would provide for reverse auctions for USF payments, the other would eliminate the identical support rule. The items could be taken up at the Nov. 16 FCC agenda meeting. The notices could prove touchy because they sidestep the Joint Board on Universal Service in making long-term changes, sources said Thursday. Ray Baum, an Oregon regulator who serves as state chairman of the joint board, told a CTIA conference last week he worries that the joint board’s work may come to naught. “We might not be able to get anything out,” he said.
The Justice Department cleared AT&T’s purchase of Dobson, but will require AT&T to sell assets in seven rural markets in Pennsylvania, Texas, Kentucky, Missouri, and Oklahoma and give up the Cellular One brand. The merger still must clear the FCC. FCC Chairman Kevin Martin has asked the FCC to set on Dobson the same Universal Service Fund cap imposed in the Alltel privatization (CD Oct 29 p1). Analyst firm Stifel Nicolaus doesn’t expect the FCC to set conditions other than the USF cap, it said in a research report.
BOSTON -- Prepare for more VoIP regulation as the FCC more often treats VoIP as it does traditional phone service, panelists said Tuesday at the VON conference. The VoIP industry must pay more heed to rules emerging at the federal, state and international levels, they said. “You need good legal counsel to navigate these kinds of things,” said VON Executive Director Jim Kohlenberger.
Telecommunications infrastructure in rural America could deteriorate unless the Universal Service Fund is overhauled to reduce growing payments to competitive eligible telecom carriers, said McLean & Brown. The consultants wrote and paid for the study, publicized by the Coalition to Keep America Connected, a rural telecom group backing a cap on payments to CETCs, which mainly are rural wireless providers. “Payments to CETCs have skyrocketed, growing by more than 1,000 percent in the past six years,” said the coalition. The report concluded that USF growth as a result of increases in the number of CETCs renders “the existing system unsustainable.”