Wireless carriers using traffic studies as an alternative to paying USF safe harbor percentages must submit the studies to the Commission, the FCC decided. There was doubt last week as to whether the FCC would toughen its stance in this area, when the Commission approved a report and order and NPRM addressing interim steps the agency is taking to shore up the USF. Text of the order was released at our deadline. “We take an additional step to ensure the accuracy of reported revenue data,” the FCC said: “Mobile wireless providers have incentives to bias any traffic studies to minimize their amount of interstate and international end-user revenues and thereby minimize their fund contributions; there are no countervailing market forces to offset these incentives. Consequently, we now require any mobile wireless provider that uses a traffic study to determine its interstate end-user revenues for universal service contribution purposes to submit the study to the Commission and to USAC for review.” In the order the Commission also raised the wireless safe harbor from 28.5% to 37.1%. Carriers are allowed to submit traffic studies to show the actual percentage of interstate calls versus intrastate calls made by subscribers falls below the safe harbor.
People under 25 would be hit hard if the FCC adopted a system based on phone numbers or “connections” to fund universal service, the Keep USF Fair Coalition warned Tues. The coalition, made up of consumer groups, said younger people tend to have more communications devices, each with a phone number or telephone line. The group, a long-time foe of the proposal, has issued similar warnings about the impact on the elderly and the poor of basing Universal Service Fund (USF) contributions on numbers. The current system is based on interstate revenues.
The FCC moved 2 universal service responsibilities from the Wireline Bureau to the Inspector Gen. and Managing Dir. Oversight of an annual outside audit of the Universal Service Administrative Co. was moved to the Inspector Gen. and the calculation of the quarterly Universal Service Fund contribution factor went to the Managing Dir. The Commission said the changes “better align these USF functions with the divisions within the Commission that can execute them most effectively.”
Rural telecom providers oppose capping the Universal Service Fund (USF) due to the “serious impact” that could pose to rural carriers’ 18 million consumers, said a letter sent Senate Commerce Committee Chmn. Stevens (R-Alaska). “Mandating a cap on the fund will prevent many companies from continuing to build out and upgrade their networks throughout their service territories,” the Coalition to Keep America Connected, which includes NTCA, OPASTCO, the Independent Telephone & Telecom Alliance and the Western Telecom Alliance, said: “Rural telecom providers respectfully call upon you to publicly take every step possible to dispel the idea that a cap of any sort on the universal service program is a positive development.”
CTIA met with Wireline Bureau Chief Tom Navin to recommend how to address the distribution side of Universal Service Fund (USF) reform. CTIA said high-cost support should be based on “one mechanism that calculates support based on the most efficient technology,” though wireless carriers are willing to explore other possibilities, including reverse auctions. CTIA pointed out that while support for wireless carriers has grown significantly wireline support is climbing more rapidly. “From 2000 to 2005, incumbent local exchange carriers accounted for roughly 2/3rds of growth in the size of the high-cost universal service mechanisms,” CTIA said. “In fact, incumbent LECs continue to receive roughly 80% of federal high-cost universal service support, even though there are now more mobile wireless subscribers than wireline switched access lines.”
Eighteen months of talks on broad telecom reform paid off with a comprehensive draft incorporating input from all members of the Senate Commerce Committee, Chmn. Stevens (R- Alaska) said Thurs. during opening statements before the bill’s markup. The draft folds in recommended language and in some cases entire bills backed by committee members from both parties, he said. But after starting promptly, the committee abruptly ended markup after only 2 hours. Work resumes Tues.
Correction: The NTCA said in a statement that the FCC should have used its USF order to extend universal service obligations to all broadband providers. The remarks were attributed to NCTA (CD June 22 p2).
Senate Commerce Committee negotiations on a hefty manager’s amendment to pending telecom reform legislation were expected to continue “well into the night and tomorrow,” a committee spokesman told us Wed. The committee is scheduled to markup Chmn. Stevens’ (R-Alaska) 3rd draft of the bill today (Thurs.). Some Hill watchers said the marathon meeting could spill into next week. The broad draft contains hot topics like net neutrality and preemption of state wireless regulation (CD June 21 p1), as well as issues like video franchising and Universal Service Fund (USF) reform.
The FCC Wed. placed universal service obligations on VoIP providers, setting a “safe harbor” of 64.9% of interstate revenue for their payments -- a figure based on the percentage of interstate revenue wireline toll providers report. The FCC also raised the wireless safe harbor from 28.5% to 37.1%. As wireless carriers already can, VoIP operators will be able to submit traffic study data to show they should pay less than the safe harbor percentages. FCC officials declined to comment on whether they will impose new rules on how such studies should be done.
House Commerce Committee Chmn. Barton (R-Tex.) took another swipe at the Universal Service Fund (USF), regaling onlookers at a hearing Wed. with examples of questionable use of USF support by seemingly flush rural telecom companies in Tex. A company in Big Bend, Tex., with 6,000 customers got $9.6 million in USF money, posted a 12.8% return on equity and paid $3 million in dividends to shareholders, he said: “It also runs a hunting ranch to entertain rural phone lobbyists.” A Tex. panhandle company got $2.6 million in federal USF money and “paid back more in dividends than it charged customers,” Barton said: A small telecom operating outside Houston gets “huge subsidies” to serve wealthy customers.