Federal Universal Service Fund

States have concerns about a revamp of the Universal Service Fund, Indiana Utility Regulatory Commission member Larry Landis said Tuesday. The Republican supported the FCC’s undertaking a USF overhaul that could reallocate some money to broadband service. Some states are worried about how companies that rely on the high-cost part of the fund will be affected by a revamp, Landis said at an American Cable Association conference. Some providers get a large chunk of their revenue from that part of USF, he noted. “The one concern that would be shared by many of my colleagues” is that whenever intercarrier compensation and USF overhauls are done, “you are bound to have some unexpected challenges that come up,” Landis said.

The FCC has many tools at its disposal to tackle spectrum constraints, whether it’s improving spectrum efficiency or freeing up more spectrum, Wireless Bureau Chief Ruth Milkman said at the Wireless Communications Association conference. The commission is looking at spectrum sharing and harmonization opportunities, and is willing to work with industry to come up with a solution to better inform consumers on throughput, she said Wednesday. It takes time to bring spectrum to auction, so “we have to start now” to avoid a spectrum crunch that will result in poor quality of service for consumers, Milkman said.

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A dismal budget climate shouldn’t preclude support for broadband in tribal lands, Sen. Daniel Inouye, D-Hawaii, said at a Senate Commerce Committee hearing Tuesday. Inouye, the Appropriations Committee’s chairman, signaled that he would support increased FCC funding for that purpose. Advocates for Native American communities sought additional broadband funding, including through the Universal Service Fund and a new Native Nations Broadband Fund.

AT&T and USTelecom are trying to revive dormant efforts to create an industry-wide proposal on Universal Service Fund and intercarrier compensation regime reforms ahead of the FCC’s rigid schedule, multiple industry officials told us. Similar efforts have foundered in the past -- including a concerted attempt in 2006-07 -- but this time, “I think there is a possibility for a very broad industry coalition on this,” said USTelecom Vice President Jon Banks. “The FCC knows we're trying to do this,” he added. “Everybody -- ILECs, CLECs, cable wireless, rurals -- is trying to put together a path for the FCC to follow.”

AT&T will have a “steep climb” if it wants to take over T-Mobile, FCC Commissioner Michael Copps said. “You will remember in the Comcast merger that I said at the outset that it would have been a very steep climb for me. I ended up voting against it,” he said in a videotaped interview for C-SPAN’s The Communicators. “This is maybe even a steeper climb from the standpoint of a lot of power, a lot of influence given to one company in a world where two companies are going to control, like, 80 percent of the spectrum.” Copps worries about “what residue of competition will be left if the merger is approved,” what impact it will have on U.S. jobs and whether the bulk of the proceeds will flow into Europe’s telecom market, he said. T-Mobile’s parent is based in Germany.

A recent audit that criticized the FCC for not following federal guidelines on tracking public spending (CD March 28 p11) “may come up” when Chairman Julius Genachowski testifies before a House appropriations subcommittee, said a spokesman for Rep. Jo Ann Emerson, R-Mo. The chairman of the subcommittee on Financial Services and General Government “is aware of the situation,” her spokesman said. Managers at both the FCC and the Universal Service Administrative Co. were recently ordered to “update and reinforce” rules for entering expenses into the federal accounting system, after outside auditors labeled the commission’s accounting system “a significant deficiency."

Two similar Texas bills would define VoIP and prohibit state regulation for IP-enabled services and VoIP. SB-980 also seeks to exempt telecom companies from reporting requirements. It and SB-985 are sponsored by Republican Sen. John Carona.

CenturyLink and Qwest promised that if their proposed deal is approved by the FCC, the new company will offer discount broadband with download speeds of at least 12 Mbps to 60 percent of their customers within seven years of the transaction being completed. The merged company will also phase out accepting federal support for local switching by 2014, forgo federal safety net additive payments and come up with a plan to freeze interstate common line support “on a per-line basis” by the beginning of 2012, CenturyLink and Qwest said. Chairman Julius Genachowski’s staff has been working on an order approving the transaction for at least two weeks, FCC officials said. Qwest spokesman Tom McMahon said the letter is the product of meetings with “FCC staff and the chairman’s office over a number of days, and we believe they reflect what the FCC will find to be in the public interest.”

Sprint Nextel has lost its effort to stay an Iowa order requiring payment of intrastate access of interconnected VoIP. That may be the beginning of a series of battles over VoIP as the FCC moves ahead with its Universal Service Fund revamp, said state and industry officials. Meanwhile, the U.S. District Court for the Eastern District of Virginia recently ruled that by refusing to pay access charges for VoIP traffic, Sprint Virginia is in violation of 19 interconnection agreements with CenturyLink business units.