Three lawmakers urged FCC Chairman Kevin Martin to adopt a temporary cap on universal service subsidies to competitive eligible communications carriers, a move proposed by the Joint Universal Service Board. The Monday letters reflect a dogged campaign by the Coalition to Keep America Connected, lobbying for 4 rural telecom trade groups and about 800 small to mid-size communications companies. Since May, when the Joint Board backed the cap, coalition representatives have been meeting steadily with members of Congress (CD May 2 p1). The coalition hopes to get Congress to pressure the FCC to adopt a permanent cap, which wireless carriers oppose. The letters to Martin from Sen. Tom Coburn, R-Okla., and Reps. Lloyd Doggett, D-Texas, and Collin Peterson, D-Minn., said “virtually all of the growth in the USF is occurring in the competitive eligible telecommunication carrier (CETC) portion of the fund.” Earlier, 18 lawmakers urged the FCC to keep the cap, but no date is set for a decision. “I support the temporary cap if that will lead to reforms that will fix the broken subsidy structure,” Sen. Coburn said.
Hearings and letters to the FCC and NTIA on DTV consumer education will multiply in September, when Congress returns, Hill aides said in interviews this week. Senate Commerce Committee Chairman Daniel Inouye, D- Hawaii, told reporters he will convene a fall hearing on the DTV transition, saying a July 26 session convinced him “more needs to be done.” House Telecom Subcommittee Chairman Ed Markey, D-Mass., also will scrutinize consumer education efforts, an aide told us.
A study concluding that competitive telecommunications providers serve small towns but not more isolated rural areas (CD July 16 p12) “raises far more questions than it answers,” a coalition of competitors operating in Texas told the Federal-State Joint Board on Universal Service. The Texas USF Reform Coalition said the study, sponsored by four midsized carriers, should be “disregarded” until reviewed by Texas regulators considering a related universal service case in the state. The coalition of the Texas Cable & Telecommunications Association, Time Warner Telecom of Texas and Sprint Nextel said much material in the study is dubbed confidential, so outsiders cannot see it. The study is based on data from the four sponsors, but claims of industry harm - - from being unable to average costs across town and countryside -- do not jibe with the companies’ financial success, the coalition said. The study was sponsored by CenturyTel, Consolidated Communications, Embarq and Windstream. The coalition said it “is not suggesting that the Joint Board should attempt to reconcile the claims.” Instead, it should wait for the outcome of the Public Utility Commission of Texas’s “contested case” taking up the same questions: “In that forum, the critical tools of discovery and cross-examination will be available to look beyond the curtain of confidentiality that masks the methodology… used in the study.”
State regulators at their summer meeting advanced four more telecom policy resolutions, on numbering, broadband data collection, IP relay fraud and broadband over power line cost accounting. The Telecom Committee of the National Association of Regulatory Utility Commissioners (NARUC) decided against resurrecting a fifth policy matter, a controversial resolution narrowly defeated by its staff subcommittee that would have urged that federal Universal Service Fund reforms be neutral regarding providers and technologies.
Competitive telecommunications providers increasingly are serving rural towns but they are not going to surrounding areas where providing service costs more, said a study of universal service funding sponsored by four telecommunications companies that operate in rural areas. Competition in small towns boosts the need for Universal Service Fund (USF) support in surrounding areas because it cuts incumbent phone companies’ ability to ease financial burdens by averaging, consultants Balhoff & Rowe said in the report. CenturyTel, Consolidated Communications, Embarq and Windstream filed the study with the Federal-State Joint Board on Universal Service, now studying ways to improve the universal service program. The four companies serve small and midsized communities nationwide. The study, based on Texas Universal Service Fund operations, concluded that competitors “appear unlikely to offer services” in outlying areas soon, with significant potential effects on the universal service program. “Competitors are making the financially rational choice to avoid serving high-cost areas altogether, but carriers of last resort, like the four sponsors of the study, are compelled to serve the areas outside rural towns -- often at a significant loss,” the companies said in a release. With increased competition in towns taking lines from rural incumbents, “internal cross- subsidy systems” used to average costs “will prove inadequate,” the study said. “Historically, policymakers have relied at least in part on monopoly-based support systems founded on internal company cross-subsidies to maintain affordable rates in uneconomic service areas,” the study said. “Those internal cross-subsidy systems almost certainly will prove inadequate to cope with emerging competitive patterns.” A wireless industry representative, speaking on condition of anonymity, said the study did not provide data on wireless costs or coverage patterns, relying mainly on data about cable and competitive wireline overbuilders.
The National Association of Regulatory Utility Commissioners (NARUC) faced a heaping plateful of telecom resolution proposals at its summer meeting in New York City, set to open Sunday, July 22. Proposed resolutions address Universal Service Fund (USF) reform, VoIP number use, broadband over power lines, wireless termination fees, the digital television transition and IP relay fraud.
Qwest on Monday gave the FCC details of its plan to reform the Universal Service Fund (USF). Qwest wants to divert USF subsidies from rural wireless carriers by limiting distribution to a grant per household rather than per connection, and use the proceeds to fund rural broadband deployment (CD June 28 p6).
The FCC should impose the proposed temporary cap on subsidies to competitive carriers from the high-cost Universal Service Fund (USF), several members of Congress said in letters to the FCC the past few weeks. The letters came as wireless carriers worked the Hill seeking political support for encouraging the FCC to tweak a May 1 Federal- State Joint Board proposal to place an interim cap on funding for competitive eligible telecommunications carriers (CETC), who mostly are wireless providers. Most lawmakers writing the FCC said consumers will see higher costs without the cap.
Verizon agreed to pay $500,000 to the U.S. Treasury as a “final settlement” of a case involving debt to the Universal Service Fund and other regulatory funds owed by MCI before its 2005 merger with Verizon. Announcing the decree Tuesday, the FCC said MCI voluntarily reported the deficits in January 2006 after an internal review. Verizon has made payments to cover MCI deficits since 2003 owed the USF and Telecommunications Relay Service Fund, plus unpaid numbering administration, local number portability and regulatory fees. Verizon agreed to create a “compliance training program” and audit controls on its revenue reporting process, the basis for assessing such fees.
AT&T’s acquisition of Dobson Cellular likely faces few regulatory hurdles at the FCC or Justice Department, analysts and industry sources agreed Monday. AT&T announced a deal late Friday to buy Dobson for $2.8 billion. Dobson sells service to some 1.7 million customers under the Cellular One brand. Both use GSM-based technology, simplifying system integration. And Dobson has 850 MHz spectrum well-suited to serving rural areas, analysts said. AT&T and Dobsons hope to close the deal this year.