WilTel petitioned the FCC to reduce or adjust its proposed 8.9% 4th-quarter Universal Service Fund (USF) contribution factor, used by carriers to compute their USF contributions. The factor, routinely set by the Wireline Bureau, will go into effect Sept. 30 unless the Commission steps in. WilTel challenged the “legitimacy” of issuing the factor without doing something to “eliminate discrimination” in the way the contributions are recovered. WilTel took exception to the fact that AT&T hasn’t been making contributions the USF for enhanced prepaid calling cards services while competitors continued to pay. WilTel said it thought the AT&T situation was just part of the problem and “the rest of a large ‘non- contributor iceberg’ lies just below the surface.” The 8.9% factor becomes discriminatory when it’s not being recovered equally from all competitors, the company said.
The Senate Commerce Committee approved legislation Wed. that would reform the “non-rural high cost” portion of the universal service fund, which goes to RBOCs and other large ILECs serving rural areas. The bill, S-1380, which would restructure the formula under which the fund is distributed, passed 13-9. Much of the non-rural fund goes to Miss. and W. Va. but that could change under the restructuring. Bill sponsor Sen. Smith (R-Ore.) said he would try to work with Sen. Lott (R-Miss.) to look for ways to help “specific states like Mississippi.” Lott opposed the bill, saying Miss. would go from receiving $133 million yearly to just $33 million. “It’s particularly punitive to my small rural state,” Lott said. The bill would calculate support based on wire centers, as opposed to calculating a state average, which critics said favored some states and prevented others from receiving any of the $277 million fund. The bill is known by many as the “Qwest bill,” since Qwest would be a major beneficiary of the formula change. Qwest on Wed. said it “applauded” the senators for passing the bill and that it would create investment in rural telecom infrastructure. BellSouth, which receives the funding in Miss., said comprehensive USF reform was needed, not a piecemeal approach. Sen. Dorgan (D-N.D.), an ardent supporter of USF reform, said he would reluctantly vote for the measure but added that comprehensive reform was needed during the next Congress. Rep. Terry (R-Neb.) has similar legislation in the House. “The momentum created by the Senate Commerce Committee will hopefully carry over to the House so we too can see some meaningful movement on this issue. We need to ensure that this money is allocated to the rural areas this fund was designed to help,” Terry said Wed.
The Senate Commerce Committee will tackle several issues this week, including the Wireless 411 Privacy Act (S-1963), introduced by Sen. Specter (R-Pa.), which would set restrictions on wireless carriers implementing a wireless telephone directory. Tues, at 2:30 in room 253 Russell Building, the Committee plans a hearing on the bill. The session will feature: Dennis Strigl, Verizon Wireless CEO; Steve Largent, CTIA pres.; Patrick Cox, Qsent CEO; Marc Rotenberg, Electronic Privacy Information Center (EPIC) exec. dir. On Wed., the Committee will mark up S-1963. The Committee will also consider S-1380, from Sen. Smith (R-Ore.), which would redirect portions of the universal service fund’s (USF) “nonrural” fund that goes to RBOCs and large ILECs that serve rural areas. The mark up is 9:30 a.m. in room 253 Russell Bldg.
Many industry and Hill sources said an amendment to the Senate Commerce Justice State (CJS) appropriations bill that would prevent the FCC from adopting a primary line restriction on the Universal Service Fund (USF) (CD Sept 16 p1) is still a long shot. But while they acknowledged Thurs. the bill still had a long road to travel, it was certainly possible it could pass.
The Senate Appropriations Committee voted Wed. to prevent the FCC from imposing a primary-line restriction on Universal Service Fund (USF) support. With no discussion or objection, the amendment to the Senate Appropriations Commerce Justice State bill will forbid the FCC from expending any funds for a USF system in which funds could be distributed only for “primary lines.” The amendment was pushed by Senate Communications Subcommittee Chmn. Burns (R-Mont.) and supported by Sens. Dorgan (D- N.D.), Stevens (R-Alaska), Hollings (D-S.C.), Gregg (R- N.H.), Brownback (R-Kan.), and Durbin (D-Ill.), sources said. Burns said the joint board proposal would hurt Mont.’s economy, which depends on small business. “In short, if the FCC moves forward with this potentially devastating recommendation, rural America would have a harsh winter of economic isolation,” Burns said.
The Ida. PUC refused to reconsider its July denial of eligible telecom carrier (ETC) status to 2 wireless carriers, leaving them ineligible to receive federal universal service subsidies for their southeastern Ida. service areas. The PUC had denied ETC status to Clear Talk Communications because it appeared the carrier planned to serve only the low-cost, high-revenue portions of its study area, leaving wireline incumbents to serve the remote remainder. Nextel Partners had been denied ETC status after the PUC concluded that it had no facilities to serve the remote portions of its study area. The PUC said neither carrier presented any evidence to warrant rehearings. Comr. Marsha Smith dissented from the denial of reconsideration to Nextel. She said Nextel had presented new plans for building 9 new cell sites if it received ETC subsidies, thereby demonstrating its commitment to expand its service area with federal USF subsidies.
New Edge Networks asked for a waiver of the FCC’s universal service contribution rules “to eliminate the effect of the first quarter 2003 projection errors in the annual true-up process.” New Edge said it had underestimated first quarter 2003 revenue and, without a waiver, as a result would pay a higher amount into the Universal Service Fund (USF) than warranted. AT&T, SBC and Verizon faced a similar problem and received a waiver, New Edge said. The problem stemmed from the FCC’s adoption of a new method of calculating service providers’ contributions to the USF. Although there’s a true-up process, “because the change became effective after the first quarter of 2003, carriers that under-projected the first quarter revenues… will pay more than the ‘appropriate amount’ unless the Commission changes the true-up process for the first quarter 2003 or grants a waiver,” New Edge said. CTIA recently made a similar request (CD Aug 20 p8).
ASPEN, Colo. -- VoIP is exposing the flaws of the Universal Service Fund, but lobbyists here from various industries moving into VoIP had different thoughts on what the program should look like. A panel on regulating the physical layer of the Internet at the Progress & Freedom Foundation Aspen Summit agreed only that universal service is broken and needs fixing.
VoIP providers are forming the Global IP Alliance to demonstrate to state, national and international regulators that the industry is capable of self-governance. The alliance, expected to be formally announced in the next several weeks, will be led by Pulver.com and consist of ILECs, CLECs, IXCs and pure VoIP providers from around the world. “We want to make sure we represent all points of view globally,” said Pulver.com Gen. Counsel Jonathan Askin, who will be exec. dir. of the alliance. He said the group has attracted “a lot of” U.S. VoIP providers and “a couple of” European ones, but he said “we need to get more Asian” companies. The initial members will include SBC, Global Crossing, Skype, KMC, Volo and Pulver.com.
Correction: T-Mobile USA didn’t receive money from the federal USF fund 2nd quarter (CD Aug 13 p9). The carrier collected $38 million from its customers to satisfy its USF contribution obligations. T-Mobile USA doesn’t have ETC status and can’t receive funds through the USF program.