How universal service fits into Congress’ planned rewrite of the Telecom Act is expected to come up at a Senate Commerce Committee hearing Thursday on the Universal Service Fund, industry lobbyists said Monday. The Senate hearing opens a new avenue of Hill dialog on USF, an issue that lately has been mainly the domain of the House. House and Senate Commerce Committee staff meetings on the telecom law revamp start Friday (CD June 21 p8).
Federal Universal Service Fund
The FCC's Universal Service Fund (USF) was created by the Telecommunications Act of 1996 to fund programs designed to provide universal telecommunications access to all U.S. citizens. All telecommunications providers are required to contribute a percentage of their end-user revenues to the Fund, which the FCC allocates for four core programs: 1. Connect America Fund, which subsidizes telecom providers for the increased costs of offering services to customers in rural and remote areas 2. Lifeline, which directly subsidizes low-income households to help pay for the cost of phone and internet service 3. Rural Health Care, which subsidizes health care providers to offer broadband telehealth services that can connect rural patients and providers with specialists located farther away 4. E-Rate, which subsidizes rural and low-income schools and libraries for internet and telecommunications costs The Universal Service Administrative Company (USAC) administers the USF on behalf of the FCC, but requires Congressional approval for its actions. Many states also operate their own universal service funds, which operate independently from the federal program.
Nexus Communications’ Reachout Wireless isn’t entitled to federal universal service funds in Tennessee because its Eligible Telecommunications Carrier (ETC) designation there only applies to wireline, the Regulatory Authority ruled Monday. “Nexus has misled our legislators and consumers that the TRA has the power to prevent Nexus from providing wireless service,” authority chair Sara Kyle said. “The TRA does not have jurisdiction over wireless providers, and because Nexus never applied to the FCC for proper certification, Nexus does not qualify for reimbursement from federal universal service funds.” The ruling reaffirms that Nexus “is not and has never been” approved under Tennessee law for federal USF reimbursement on 68 free minutes per month it was offering wireless customers qualifying for the Lifeline program, the regulator said. “Nothing in the TRA’s decision interferes with the ability of Nexus to continue to provide wireless service to its customers,” the authority said. “It merely precludes federal reimbursement to the company for the phones and free minutes it gives to its wireless Lifeline customers.” Nexus still can ask the FCC for ETC status, the state agency said. That would qualify the company for federal USF reimbursement for its “free” offerings in Tennessee, the authority said. The regulator advised low-income Tennesseans wanting Lifeline or Link-up service that Tracfone and Virgin Mobile are designated as ETCs and operate in the state.
Cable operators large and small largely are unified on many issues that affect the industry, some of them high profile, that are pending before the FCC, our survey of executives found. Retransmission consent deals, where pay-TV operators contend broadcasters force them to pay unfair carriage fees, are the latest example of a unified message across operators of all sizes (CD May 20 p4) and the NCTA, representing big operators and programmers, and the small-operator lobbying group American Cable Association (ACA). Concern about FCC Chairman Julius Genachowski’s plan to reclassify broadband transport under parts of Title II and a desire to use cheap HD set-top boxes with integrated navigation and security features are shared by many cable system owners.
Rural telephone companies are bracing for a less sympathetic Congress in 2011, said executives from rural telco associations. They spoke with reporters at the annual legislative and regulatory conference of the Western Telecom Alliance and the Organization for the Promotion & Advancement of Small Telecommunications Companies. WTA and OPASTCO members from around the country arrived in droves to lobby Washington policymakers about their concerns with the National Broadband Plan. They heard remarks Tuesday from long-time rural advocate Sen. Byron Dorgan, D-N.D., who’s set to retire this year, as well as Sen. Mike Johanns, R-Neb., and Rep. Doris Matsui, D-Calif.
Expanding Lifeline and Link-Up programs to spur broadband adoption by those who can’t afford it should be part of comprehensive Universal Service Fund revamp legislation, said House Communications Subcommittee Chairman Rick Boucher, D-Va. At a hearing on the FCC’s adoption recommendations made in the National Broadband Plan, Boucher said he wants to work with Rep. Doris Matsui, D-Calif., to integrate her adoption-focused USF bill with his own comprehensive USF bill. Boucher urged the FCC to accelerate its process to finalize details on an intended pilot program, saying the time frame for introducing his bill with Rep. Lee Terry, R-Neb., is “fairly near term.”
The Title II sections of the Communications Act the FCC would apply to broadband under Chairman Julius Genachowski’s reclassification plan could still burden operators with cumbersome rules and expose them to costly legal challenges, communications attorneys said Friday. Statements from Genachowski and FCC General Counsel Austin Schlick Thursday indicated Sections 201, 202, 208, 222, 254 and 255 would remain in place after a substantial forbearance from other Title II elements (CD May 7 p1). Sections 201 and 202 “are the key provisions of the Communications Act that have sort of kept behavior in check for almost 80 years,” said telecom lawyer Glenn Richards of Pillsbury Winthrop. “Anything that folks do, they're always thinking about it in terms of ‘Will it cause a 201 or 202 issue?'"
The time has come for the FCC to formally seek comment on whether it should “reclassify” broadband as a Title II service, subject to common carrier regulation, Public Knowledge Legal Director Harold Feld said Tuesday in a debate sponsored by the New America Foundation. Hank Hultquist, vice president of federal regulatory affairs at AT&T, countered that the FCC has plenty of authority regardless of the recent Comcast decision, and reclassification would be a mistake.
A Universal Service Fund revamp and additional public funding are needed to bring broadband to small businesses and encourage adoption, top government and broadband industry officials said Tuesday. At a hearing of the Senate Small Business Committee, FCC Chairman Julius Genachowski said high prices, sparse availability and low digital literacy are the largest barriers keeping broadband from small businesses. And NTIA Administrator Larry Strickling called continued funding in fiscal 2011 critical to ensuring a successful broadband stimulus program under the American Recovery and Reinvestment Act.
In a surprise, CenturyLink agreed to buy Qwest in a $22.4 billion deal, including a $10.6 billion all-stock transaction and $11.8 billion debt, the companies said Thursday. The deal is expected to close in the first half of 2011. It’s likely to be approved by regulators within a year with attached conditions, such as an obligation to expand broadband access or to provide it at certain prices, analysts said.
The FCC won’t undertake Universal Service Fund reform specifically for the non-rural high cost support mechanism, it said in an order. The commission decided it has met its statutory obligation to provide sufficient support, it said late Friday. The FCC also found that “rural rates are reasonably comparable to urban rates if they fall within a reasonable range of the national average urban rate. … The current non-rural high-cost support mechanism comports with requirements of Section 254” in the Communications Act.