Federal Universal Service Fund

Federal universal service support for wireless carriers should be limited to one connection per household to help support broadband deployment to unserved areas, Qwest said in an ex parte filing. Fifty-two percent of wireless lines are in family plan packages and on average there are 2.8 handsets per wireless family plan, the telco said. Based on 2007 wireless market data, “Qwest’s calculations reflect an estimated Universal Service Fund savings of $463 million if USF high-cost support were limited to one handset per wireless family plan.” To perform its calculations, Qwest assumed that all competitive eligible telecommunications carriers receiving high-cost support are wireless providers.

An FCC decision to maintain non-rural rules should not result in increased costs for Universal Service Fund high- cost support, some telecom companies and trade associations told the FCC in comments on a remand order by the 10th U.S. Appeals Court by April 16. In 2005, the court called the commission’s rules unlawful and said they affect high-cost area carriers that are considered non-rural because they have too many lines. Some groups backed the interim proceedings as a way to avoid increased high-cost support.

Applicants for RUS broadband money who lost in the first funding round should try again in the second, RUS Administrator Jonathan Adelstein said at the winter conference of the Organization for the Promotion and Advancement of Small Telecommunications Companies. Adelstein announced $309 million in broadband grants, including one to OPASTCO member TDS Telecom’s Butler Telephone Co. He assured attendees that the RUS will soon spell out completely who succeeded and who fell short in the first round. Industry officials have expressed concern about the RUS’ and the NTIA’s slow pace in making awards (CD Jan 22 p1).

Tennessee should keep separate state funding to speed broadband deployment and any state universal service fund, the Tennessee Regulatory Authority said Friday in a report on legislation proposed to remedy problems caused by diminishing revenue from intrastate switched access. The Tennessee Rural Affordability Fund (TRAF), authorized but not yet mandated into existence, would be funded much as the federal universal service fund is, the report said. The proposed legislation covers phone companies serving the most remote areas -- rural incumbent local exchange carriers and rural phone cooperatives with fewer than a million lines. The bill would require such carriers to reduce their intrastate switched access rates to their interstate switched rate levels. “The revenue loss resulting from these reductions will be recovered from funds paid into the TRAF,” the report said. The authority urged legislators to focus on “keeping local phone rates affordable” and to make sure that “any funding to support rural broadband deployment should be established as a separate portable fund.” Legislators should not set a statewide benchmark rate for local phone service “as a litmus test to determine support from TRAF,” the authority said. The bill should include a sunset provision requiring a report and recommendation from the authority before legislators consider extending the fund’s life, it said. The fund should be capped as determined by the state regulator, the report said. Recipients of money from the new universal service fund should be designated “carriers of last resort” and should have to provide Lifeline, Link-up and other “social and safety services,” it said. Companies electing market regulation should not be allowed to draw from the fund, the authority said. “Because a carrier operating pursuant to market regulation can adjust its rates to respond to competition, the need for specific subsidies such as that from the TRAF would become unnecessary,” it said. “Therefore it is appropriate to cease such TRAF assistance if the carrier elects Market Regulation.” Carriers paying into the federal USF also should pay into the TRAF, the authority said, asking that the Legislature empower the regulator “to assess and collect fees” and “establish criteria and procedures for assessing, collecting and dispensing fees, and for monitoring the operation of the TRAF.” If the bill is enacted, it should include a provision delaying implementation for a year to give the authority time to write procedures and criteria for running the fund, the report said.

With a deadline next week on the latest inquiry on special access prices, a Sprint Nextel executive said Tuesday the FCC appears ready to address the company’s long standing complaints. Sprint is also asking the FCC to act quickly to reallocate spectrum bands totaling 100 MHz, which the company believes could be addressed well ahead of eventual decisions about broadcast spectrum or spectrum in federal government hands.

Availability of universal service funds for broadband access should focus on disadvantaged users where areas with low adoption rates can be attributed to an “inability to pay for service, lack of computer literacy, unavailability of computers, social factors, lack of subscriber interest,” and lack of perceived value, said ViaSat in an ex parte filing. Because ViaSat-1, scheduled for launch in 2011, will be able to serve remote users and bypassed users, disadvantaged users should be the focus, the company said. The FCC should develop nationwide “price benchmarks” for broadband installation, user education and monthly service and then choose among different levels of federal support for customers who meet state eligibility requirements, it said. The USF program should continue to be technology neutral and should promote the development of new technologies for users, said ViaSat.

State commissions urged the FCC to ignore Vonage threats that the company would go to court if the regulator modifies without a rulemaking proceeding a 2004 declaratory ruling preempting state regulation of interconnected VoIP. In a letter Wednesday to the FCC, the Nebraska Public Service Commission and Kansas Corporation Commission said no administrative law bars the FCC from immediately issuing a fresh declaratory ruling saying VoIP must pay state Universal Service Fund fees. “The prospect of judicial review should not prevent the FCC from reaching the right decision, which is to act expeditiously to protect universal service and fair competition (currently nomadic VoIP is the only category of provider not paying state USF assessments) by issuing a second declaratory ruling supplementing, clarifying (or if necessary modifying) the first declaratory ruling issued in 2004,” they said. The Kansas and Nebraska regulators also rejected arguments by the VON Coalition that state USF assessments are “economic and entry regulation” preempted by the 2004 decision (CD Dec 14 p12). State USF assessments create no conflict between federal and state policies that would necessitate preemption, the states said. “Both the FCC and the State Petitioners share the common policy that nomadic VoIP providers, like all their competitors, must do their part to support the paramount statutory mandate of ensuring universal telephone service throughout the Nation.”

Comprehensive FCC action by July on jurisdictional separations may be a long shot, given a short time frame and ongoing work on the National Broadband Plan, said officials for state commissions and state consumer advocates. The FCC may again extend the nearly nine-year-old freeze on separations, which expires June 30, they said. “Another freeze is certainly a possibility,” said Commissioner John Burke of the Vermont Public Service Board. If the FCC chooses to go in that direction, state regulators believe “interim changes to key factors are an absolute pre-requisite to extending final comprehensive review beyond June of this year,” he said.

AT&T asked the FCC to set a deadline to move telecom from circuit-switched to IP-based networks. The request came in comments this week on an FCC National Broadband Plan public notice that proposed the release of a notice of inquiry (NOI) on the transition. Small rural carriers cautioned the commission not to move too fast. Meanwhile, competitive carriers fought with Verizon over whether interconnection and traffic exchange requirements under Sections 251 and 252 of the Communications Act apply to IP networks. Wireless carriers said the rules should ensure regulatory parity.

Spectrum audit legislation will be a high priority for the House and Senate Commerce Committees when Congress reconvenes next year, industry and Hill sources said. Work likely will start in the House Communications Subcommittee with markup of two bills that address the scope of a spectrum inventory (HR-3125), and strategy for relocating holders of federal agency spectrum, freeing it for commercial use (HR- 3019). The Senate Communications Subcommittee also has an audit bill (S-649). Negotiations are ongoing among congressional staff and the administration on a comprehensive approach, industry sources said. There’s strong bipartisan support for an inventory bill.