The Senate Commerce Committee approved a permanent Internet tax moratorium Thurs., although a few senators expressed concern that the definition of Internet access needed to be more precise. The Committee passed on voice vote a substitute bill (S-150) that was supported by Sens. Allen (R-Va.), Wyden (D-Ore.), Stevens (R-Alaska), Sununu (R- N.H.), Brownback (R-Kan.) and Dorgan (D-N.D.). But Dorgan also emphasized that language in the bill needed to be tweaked so it couldn’t be interpreted to apply to telecom services as well as Internet access. And the bill included provisions supported by rural telecoms that would protect the universal service fund (USF.)
“Regulators must resist the urge to regulate [voice- over-Internet-protocol -- VoIP] unless and until there are compelling reasons to do so,” Richard Whitt, WorldCom dir.- federal law & public policy, said at an FCBA lunch Wed. in Washington. He said telecom service regulatory policies, in particular the current intercarrier compensation regime, were “bloated, untenable and inequitable and harm the public interest in numerous ways… The worst thing to do is to extend this bloated mess to nascent, innovative IP-based technologies such as VoIP.”
Several telecom companies and associations wrote to House and Senate Commerce Committee members urging a comprehensive approach to universal service fund (USF) reform. The letter specifically targeted USF legislation that would alter distribution of a narrow slice of USF distributions. The letter said the bills (HR-1582 by Rep. Terry (R-Neb.) and S-1380 by Sen. Smith (R-Ore.)) were “too divisive and narrow in their scope.” The legislation would change the distribution equation for a $234 million fund that goes to RBOCs and midsized carriers that serve rural and poor areas. Under the current distribution, Miss. gets more than half of the funds and only 7 other states receive any. The bill is supported by Qwest, which would receive increased funding under the proposed distribution method, and opposed by BellSouth, which probably would lose funding. The letter was signed by USTA, BellSouth and several smaller telecom firms.
The most important part of the FCC decision issued Mon. on what services are eligible for universal service support (CD July 15 p1) is what the Commission chose not to do, observers said, as did the Commissioners themselves in separate statements issued as part of the order. The FCC voted to defer action on whether “equal access” should be on the list of eligible services. Placing it on the list would have required competitors, such as those that provide wireless service in rural areas, to offer equal access service before they could be eligible for universal service, a move they opposed but rural ILECs supported.
The FCC adopted the recommendation of the Federal-State Joint Board on Universal Service to retain the existing list of services supported by federal universal service funds. In an order issued late Mon., the agency made no decision on whether equal access should be added to the list of services. The Joint Board also was unable to reach agreement on the issue, which is very important to rural ILECs. “We agree with the Joint Board that, with the possible exception of equal access,” no new service satisfies the statutory criteria… or should be added to the list of core services,” the FCC said.
The universal service bill (S-1380) by Sen. Smith (R- Ore.) picked up an influential co-sponsor Thurs. evening when Senate Commerce Committee Chmn. McCain (R-Ariz.) signed on. His support increases the bill’s co-sponsors to 11, with Committee members Allen (R-Va.) and Fitzgerald (R-Ill.) also supporting the measure that would change the formula used to distribute universal service funding (USF). It would distribute a $254 million portion of USF funding to RBOCs in more states, including many in Qwest territory (CD July 10 p6), and is similar to HR-1582 by Rep. Terry (R-Neb.). Qwest serves Ariz.
Sen. Smith (R-Ore.) introduced a universal service fund (USF) reform bill similar to one by Rep. Terry (R-Neb.) (HR- 1582). Sources said that Smith’s USF bill, while similar, wasn’t identical to Terry’s, which is designed to spread more evenly USF funding for RBOCs and midsized carriers that serve rural areas (CD April 4 p1). The formula used to distribute the $254 million spreads money to just 7 states, critics said, with more than half going to Miss. A spokesman for Terry said the formula took statewide averages, so states with both urban and rural areas often couldn’t receive USF funding for rural areas. The bill is pushed by Qwest and opposed by both USTA and BellSouth. “Senator Smith’s bill does not address the overarching challenges threatening universal telephone service,” USTA Pres. Walter McCormick said: “This approach picks winners and losers and pits state against state. What is needed is a unifying approach.” BellSouth said the bill didn’t address the crucial question of USF reform: “Where does the money come from? It is the funding side of the universal service equation that is in peril; the distribution side should not be addressed separately.”
Low-volume, low-income consumers who depend on “lifeline” phone services will have to pay a “disproportionate” amount into the Universal Service Fund (USF) if the FCC adopts a connection-based contribution methodology, a new report by the New Millennium Research Council (NMRC) said. “A per-line charge would be harmful to the very population the fund seeks to help,” as low-volume long distance service callers, who represent 40% of consumers, would be “required to pay the bulk” of the universal service funding, said Jeffrey Kramer, senior legislative representative for AARP.
Internet service providers (ISPs) should be immune from Universal Service Fund (USF) contributions because they use, rather than “provide,” telecom services, the Information Technology Assn. of America (ITAA) said in an FCC ex parte filing. That means the FCC doesn’t have the authority to require ISPs to make USF contributions, it said, and “concerns about ’sufficiency’ or ‘competitive neutrality’ do not provide a basis to require” ISP contributions to USF. The ITAA also said the FCC should retain the ILECs’ Computer II unbundling obligations, while eliminating unnecessary regulations. Without Computer II, it said, ILECs could charge ISPs unfairly high prices, resulting in a duopoly of ILEC-affiliated ISPs and cable modems. ILECs remain dominant in provision of wholesale broadband services that ISPs use, ITAA said. The ex parte filing dealt with May 22 meetings with the FCC Wireline Bureau staff.
The Mass. Dept. of Telecom & Energy (DTE) set a June 20 deadline for public comment on whether it had legal authority to establish a state universal service fund. The DTE acted in response to a petition by Richmond Connections that sought creation of a state USF to advance access to affordable telecom services in a competitive marketplace. The DTE (Case 03-45) said it wasn’t sure whether its enabling statutes gave it such authority and asked carriers and the public to comment on whether it legally could implement a formal proposal for a state USF.