CTIA Pres. Steve Largent predicted an active year on Capitol Hill and at the FCC for wireless carriers in 2005. Largent said Tues. that after the battles that ended 2004, including passage of the spectrum transition bill (HR 5419), he sent a warning note to CTIA’s 90 staffers.
Concerns about E-rate funding have “received considerable attention,” FCC Inspector Gen. Walker Feaster told Congress in a report. He said both the Commission and Congress have paid more attention to potential problems in the E-rate grant distribution process, but the IG’s office needs more resources to conduct more comprehensive audits. “Until resources and funding are available to provide adequate independent oversight for the USF program, we are unable to give the Chairman, Congress, and the public an appropriate level of assurance that the program is protected from fraud, waste and abuse,” the report said. There have been 135 E-rate audits, said the report, done by the FCC IG’s office and Universal Service Administrative Co. internal and contract auditors. The audits found that E-rate beneficiaries weren’t compliant in 36% of the cases, leading to recommended fund recoveries of nearly $17 million. The IG reported that in its 5 audits of E-rate recipients, 4 were noncompliant. In one case, the IG said $934,000 could be recovered from the United Talmudical Academy in Brooklyn, N.Y. The school didn’t pay “the entire non-discounted portion of FY 1999 funding on a timely basis,” the IG said. The office also said there was no documentation supporting a competitive bidding process and the school was over-billed for some services. The IG found similar problems with other schools, including the Children’s Storefront School in Harlem, N.Y., where $491,000 in potential recoverable funds were found.
President Bush signed legislation (HR 5419) on Dec. 23 that created a spectrum relocation trust fund that will guarantee that auction revenue can easily be used to move Dept. of Defense and other govt. users off the 1710-1755 MHz parts of the band. The legislation also provides funding for state and local govts. for wireless E911, and resolves accounting issues that had been causing some problems for the universal service fund (USF). Specifically on the last issue, the act provides a one-year exemption from the application of govt. accounting rules to USF programs, including E-rate. The next step on the spectrum trust fund is the transmittal of a letter from the FCC to NTIA asking it to start the process of clearing the spectrum. After the notification is sent, the govt. has 12 months to calculate costs and set a schedule for relocation and must notify the FCC 6 months before an auction.
With the incoming 109th Congress expected to pass telecom reform legislation, wireline and wireless lobbyists see issues of state jurisdiction playing a role in the debate. Edward Merlis, USTA senior vp-govt. and regulatory issues, said state jurisdictional concerns are one reason he believes Congress, not the FCC, is the only body able to make the needed changes to the telecom regulatory regime. Bobby Franklin, CTIA vp-govt. affairs, said the issues raised in the VoIP debate during the last Congress are likely to be raised in other telecom contexts next year, including wireless.
T-Mobile, Western Wireless and Dobson called on the FCC to ask detailed questions about the Intercarrier Compensation Forum (ICF) plan before circulating a proposal to fix the intercarrier compensation regime. Wireless carrier sources said they expect pressure to grow in coming weeks as the FCC nears circulation of an order on the issue. The Wireline Bureau has predicted a vote on an intercarrier compensation item in mid-2005.
Sen. Sununu (R-N.H.), in a remarkably candid Phoenix Center session said Thurs. comprehensive telecom legislation covering the DTV transition could be ready for members’ votes by June 2006. Sununu, who spoke about 90 min. and answered dozens of questions from attendees, said telecom reform would be a difficult process with many issues to deal with, most notably universal service fund reform. “Nothing will be agreed to until everything is agreed to,” he said of the bill’s prospects: “It will be one very large vehicle.”
Telecom Act revision should be legislation of few words and fewer regulations, BellSouth Chmn. Duane Ackerman told an American Enterprise Institute/Brookings Institution forum Tues. If Congress concludes competition between multiple facilities-based networks works better than traditional regulation -- which Ackerman believes it will -- telecom reform “could be dealt with in a very short bill in a matter of months, not years. This is not complicated.” Ackerman emphasized that telecom reform must be simple, to avoid lengthy litigation like that over the Telecom Act of 1996.
The FCC Wireline Bureau issued the first double-digit contribution factor for carriers paying into the Universal Service Fund (USF) -- 10.7% for first quarter 2005, up from 8.9%. The factor is a percentage of carriers’ interstate revenue and usually is passed on to customers as a line item on phone bills. It reflects USF costs but not costs caused by the FCC’s decision to apply the Anti- Deficiency Act to the USF. Congress recently passed legislation exempting the USF from the Act’s requirements until the end of 2005. SBC Senior Vp James Smith said the double-digit USF figure “clearly highlights the need for comprehensive reform of how the program is funded” through measures such as the changes proposed by the Intercarrier Compensation Forum. The USF increase also could have been lessened if the FCC required AT&T “to pay its lawful share into the fund,” Smith said. AT&T hasn’t been making USF contributions on revenue from its enhanced prepaid card services. SBC contended the amount AT&T is withholding represents about 1/2 the contribution factor increase. An AT&T spokeswoman said SBC’s comments were “self-serving rhetoric.” She said it would be “misguided policy” to impose USF obligations on enhanced prepaid cards because it would “shift more of the costs of the fund to those least able to afford it.” AT&T is the largest contributor to the USF. The FCC is expected to act on the AT&T card issue early next month.
CTIA called for completely neutral rules for deciding when a carrier can be classified as an eligible telecom carrier (ETC) under the federal USF program. “The rules should be modified so that competitive ETCs should begin receiving support upon designation,” CTIA said. CTIA also said any new guidelines should be applied retroactively.
The Senate sent telecom legislation to President Bush on Wed. evening in a literal 11th-hour vote. By approving HR-5419, the Senate approved 3 legislative measures and ended weeks of political infighting about everything from Congressional Budget Office scoring to appropriators’ authority and boxing regulation. Sources said the White House would sign the act, which includes the spectrum relocation trust fund, E-911 funding and a temporary fix to accounting problems in the E-rate program. The junk fax bill, HR-4600, was the only legislation that had a reasonable chance to pass and didn’t. “The legislation brings needed changes that will promote homeland security and increase wireless broadband opportunities,” FCC Chmn. Powell said.