Federal Universal Service Fund

CHICAGO - Network neutrality rules could slow or “halt” progress toward a fully connected world, Verizon CEO Ivan Seidenberg said in a keynote speech Wednesday at Supercomm. “While this future is imminent, it is not inevitable, and the decisions we make today - as an industry and as a country - will determine whether the benefits of these transformational networks will be felt sooner or much, much later.”

ORLANDO, Fla. -- The FCC plans to seek more information on the Universal Service Fund (USF) as part of its development of a national broadband plan, said Jennifer McKee, acting chief of the FCC Wireline Bureau’s telecommunication access policy division. On a panel Tuesday at the CompTel show, she said she expects an FCC public notice on how USF fits into the plan to surface in “the next couple of weeks.”

Work on comprehensive emergency communications legislation will come next year when the FCC finishes its broadband plan and perhaps takes up revamping the Universal Service Fund, House aides said at an E-911 Institute meeting Thursday. The need for a nationwide strategy and funding for next-generation E-911 services could be taken up in a USF bill or some other broadband-related vehicle, aides said. Some of this year’s broadband stimulus awards could go to public-safety projects, as called for in the Recovery Act, but much more money will be needed to fulfill longstanding plans for a nationwide interoperable network, people at the conference said.

All federal universal service support payments must be made by electronics funds transfer, the FCC said Friday. USF recipients should provide their financial information on FCC Form 498. The requirement will become effective this fall when the FCC releases a revised form, it said. “Eliminating the mailing of paper checks will minimize the possibility that payments are lost in transit or delivered to the wrong addresses, and reduce the chance that payments are misappropriated,” the FCC said.

Interconnected VoIP providers should be required to pay state universal service fees, said states and rural wireline carriers in comments filed at the FCC Wednesday on a petition by the Nebraska Public Service Commission and Kansas Corporation Commission (CD Sept 4 p6). But Verizon and Google fought the concept of VoIP having an intrastate component subject to state jurisdiction. Vonage and some other VoIP providers didn’t object to paying state USF, but said the FCC must open a separate rulemaking first.

NTIA and RUS unveiled a new searchable database late Wednesday that provides public information on broadband grant applications. The database is intended to provide “a useful tool for the public that will provide transparency” while highlighting the benefits of projects, applicants were told in a recent e-mail. The database is searchable by organization, keywords, project type, program and state. Search results additionally list applicant contact information, project title, grant money requested and a project description. Those who want to protect proprietary information have until Monday to provide a redacted copy of their executive summary.

Some small rural phone companies are asking if Google and other content providers should contribute to the Universal Service Fund. In filings and meetings this summer at the FCC, the National Telecommunications Cooperative Association has urged the FCC to open a rulemaking on the subject (CD Aug 31 p9). Content providers impose significant costs on companies’ networks, and charging them for USF would further the FCC’s broadband deployment goals, said NTCA Vice President Dan Mitchell in an interview. But a Google spokesman disputed the credibility of NTCA’s evidence. And some phone companies aren’t sure the proposal can be implemented.

Oversight hearings on the broadband stimulus program and the Genachowski FCC are the first order of business in the House Communications Subcommittee as Congress returns. Other matters will have a tough time getting on the agenda as lawmakers resume work on health care and climate change legislation. Few expect major telecom enactments this year, other than must-pass satellite reauthorization legislation and possibly a cybersecurity bill, according to lobbyists, trade associations and Hill sources.

The FCC could cite existing wireless universal service contribution mechanisms to justify requiring interconnected VoIP providers to contribute to state universal service funds based on intrastate revenue (CD Aug 26 p8), said the National Association of Regulatory Utility Commissioners. NARUC Telecom Committee Chairman Ray Baum and General Counsel Brad Ramsay met separately on Tuesday with aides to Commissioner Robert McDowell and FCC General Counsel Austin Schlick, an ex parte said. Commercial mobile radio services are “if anything, more portable” than nomadic VoIP services, and CMRS companies contribute to both federal and state USF, noted NARUC. “This suggests the FCC could cite to existing wireline and CMRS contribution mechanisms to clarify/interpret the existing regulations and specify State mechanisms that, are based on billing addresses, like wireline carriers, that assess no more than the 35.1 percent complement to the federal safe harbor amount -- necessarily do not double recover costs and also therefore necessarily ‘do not burden the federal program.'”

The highest priority in the FCC’s national broadband plan must center on strengthening and preserving universal service policies, the National Telecommunications Cooperative Association said in a commission filing. The $7.2 billion broadband stimulus package and Universal Service Fund support are “woefully insufficient,” it said. The group urged the commission to increase the “high-cost USF support” substantially and include all broadband Internet service providers in the pool of USF contributors. The pool should also include content providers like Google, which impose “tremendous costs” on the broadband providers that make up the public Internet. The group also urged the FCC to define broadband based on high-speed Internet access capabilities during peak-hour or busy-hour load that are generally available in a significant sample of service offerings in urban areas to establish a standard of comparability and affordability in urban and rural areas; include “broadband Internet access service” in the definition of “universal service;” open a proceeding to define and identify “Market Failure Areas” throughout the U.S. and target these areas for future high-cost broadband USF; define a “Market Failure Area” as an area that doesn’t have the population base or economic foundation for any provider to justify broadband facilities build-out and ongoing maintenance without external monetary support. The commission must require interconnected VoIP service to pay intercarrier compensation during comprehensive USF, IC and broadband reform. State commissions should be allowed to voluntarily move intrastate originating and terminating access rates and rate structures. The FCC should adopt an alternative high-cost USF cost recovery mechanism prior to the implementation of USF and IC reform, regulate broadband access service providers under Title II common carrier regulation and apply a Title II earnings review to all broadband providers who voluntarily receive federal high-cost broadband USF support. The regulator should require all vertically integrated Internet backbone and special access transport provider rates to be cost-based and non-discriminatory. The broadband plan should eliminate the identical support rule and base support on competitive eligible telecommunications companies’ actual costs within five years. Meanwhile, enhancing rural health care and offering broadband to low-income consumers should be part of the plan. NCTA also urged the FCC to strive to apply Regulatory Flexibility Act and establish alternative rules to reduce the economic impact on small broadband providers.