George Mason U. Prof. Thomas Hazlett deserves a D for poor research, said 2 rural telecom officials unhappy with his characterization of rural telecom companies as high- spending (CD July 20 p7). Michael Fox of RT Communications and Jeffry Smith of GVNW Consulting issued a “response” to Hazlett: (1) “Rural is different,” with facilities costs that can’t be compared to urban areas. (2) The Universal Service Fund is needed to build rural infrastructure. (3) The USF isn’t a tax. (4) Growth in the USF “has been fueled by competitive entrants” not incumbents. (5) “Erroneous assumptions… lead to bad conclusions.” The authors who said they produced the response on their own -- concluded: “If the professor were a student, he might receive an A or B for his carefully-crafted writing style. However, we mark his paper with a C for logical flow and a D for veracity of research.” In a July paper for the Seniors Coalition, Hazlett said USF subsidies to rural companies encourage inefficiency and block adoption of advanced technologies.
The FCC fined Local Phone Services (LPS) $529,000 for not contributing to the Universal Service Fund. The FCC said LPS began offering long distance service in Kan. in 2002. The company registered to pay into the USF but its 2002 and 2003 revenues were considered “de minimis” and exempt from contributing under the program rules. However, in 2004 the company “no longer qualified for that exemption… but failed to file worksheets and make contributions to the USF for that year as required,” the FCC said. The Commission said LPS didn’t file worksheets through the end of 2005 and made no universal service contributions until May 26, 2006.
Comments on using reverse auctions for universal service support are due at the FCC Sept. 20 and replies Oct. 20, said a Federal Register notice Fri. The Federal State Joint Board seeks comments on many questions about USF auctions (CD Aug 15 p2).
The FCC Fri. sent a letter to Verizon asking why it hit customers with a new DSL fee just as a federal fee of about the same amount lapsed. However, the agency decided not to question BellSouth, which said Fri. afternoon it was killing plans for such a fee. FCC Martin reportedly was upset by the companies plans for replacement fees. “We generally prefer regulation be done by the marketplace but we will act to insure consumers’ interests are protected,” an FCC official said.
ASPEN, Colo. -- Verizon won’t seek a federal franchise bill next Congress if the telecom bill (HR-5252) fails to pass this year, Verizon Exec. Vp Tom Tauke said Tues. at the annual Progress & Freedom Foundation conference here: “We aren’t going to be starting out from the same place -- the appeal of video is going to be less.” Verizon’s state-level success with franchise laws significantly weakens demand for federal reform, Tauke said.
“The need for the $7 billion Universal Service Fund (USF) is less now than it was in 1998 when it was $3 billion,” said Thomas Hazlett Fri. The former FCC chief economist, a professor at George Mason U., answered questions about his views on the telecom industry on a call-in interview on C-SPAN. Hazlett echoed many of the conclusions in his study (CD July 20 p7) ‘Universal Service Telephone Subsidies: What does $7 billion buy?’ Telephone users are paying taxes to fund subsidies that go to inefficient rural telcos, Hazlett said. “These small rural companies,” who are given billions in USF subsidies, “are charging their customers the same rates, and occasionally more for their subsidized services,” said Hazlett. As a result many rural consumers are ditching land-lines for less expensive wireless services, he said.
Deregulating the Bells broadband transmission services would hurt rural telephone companies that rely on them for Internet backbone service, the National Telecom Co-op Assn., told the FCC in comments filed Thurs. The Bells are the only Internet backbone providers available to rural telephone companies in many areas, NTCA said: “NTCA is concerned for its members who will rely on BellSouth and Qwest for access to the IP backbone.”
Resurrecting an idea first aired several years ago, the Federal-State Joint Board asked for comments on using “reverse auctions” to distribute universal service funds in rural and other high-cost areas. The idea gained currency earlier this year when FCC Chmn. Martin voiced interest in letting phone companies bid to provide universal service in rural areas (CD March 30 p6). The term “reverse auction” sometimes is used to indicate that low bidders, not high bidders, get contracts.
The FCC should keep in mind that wireless carriers are following a LEC model in how they perform traffic studies sometimes submitted as an alternative to paying the safe harbor total to support the USF program, CTIA told the agency. In comments on a notice of proposed rulemaking on USF rules, CTIA said the FCC shouldn’t impose more restrictive rules for traffic studies, but instead allow carriers to rely on estimates based on “originating/terminating cell sites, NPA-NXX, a combination of these methods, or any other similarly reliable data” in calculating the percentage of calls on their systems that are interstate and thus subject to USF payments. “Wireless carriers… have always struggled with the segregation of revenues and traffic because they provide a service that is inherently mobile.” The association said that in the current world, where the actual location of calls is sometimes not clear, LECs also have difficulty tracking traffic on their systems. “Even some incumbent LECs, who once were able to use originating and terminating area codes to determine the jurisdiction of calls, no longer can segregate traffic precisely, since calls to or from mobile or VoIP numbers cannot necessarily be jurisdictionally classified with precision,” CTIA said. A carrier source said CTIA’s message is that “all flavors of telecom carriers need an ability to make some assumptions here and can’t be held to a 100% standard.”
USTelecom’s lobbying bill was 8 times higher in 2005 than in 2002, thanks to telecom reform bills, filings with the Secretary of the Senate showed. NCTA lobbying outlays rose 68% in the same period, a notable gain for a sector typically not maintaining a strong presence on Capitol Hill because it’s lightly regulated. The lobbying disclosure reports, which must be filed twice a year, list contacts with House and Senate members and federal agencies.