Federal Universal Service Fund

The FCC should without delay require interconnected VoIP providers to contribute to state universal service based on intrastate traffic revenue, said the National Association of State Regulatory Utility Commissioners. Brad Ramsay, the association’s general counsel, met last week with an aide to Chairman Julius Genachowski, said an ex parte filing late Monday. Not even Vonage has disagreed with the view that nomadic VoIP providers should contribute to state funds, the association said. Vonage contends that the FCC’s 2004 preemption order concerning the company said the commission was preempting states charging, but this month said the commission is “free to revisit its decision” by opening a rulemaking (CD Aug 18 p4). But the association said there’s “no legal or policy reason to delay issuing the requested declaration.” Without further proceedings, the FCC could clarify that a June 2006 order provided a method for assessing a state USF charge, it said. In that order, the commission created a “safe harbor” for setting federal USF contributions, because of the difficulty of separating intrastate and interstate revenue with VoIP. The FCC said 64.9 percent of VoIP revenue is subject to federal USF contribution. The association asked the FCC to clarify that the order “necessarily assumes a complementary State safe harbor of 35.1 percent without any additional proceedings.”

Affordability, PC ownership issues and lack of broadband content are barriers for broadband adoption among low-income families, children and others, panelists said at the FCC Broadband Workshop late Wednesday.

Eliminating telephone excise and Universal Service Fund taxes are options that the Congressional Budget Office suggests lawmakers consider as they works on future federal budgets, a new report said. The options are two of 188 in a report sent to the House and Senate Budget Committees last week to help Congress set priorities in its annual budgets, said CBO Director Douglas Elmendorf. The ideas in the report aren’t recommendations and they aren’t given in order of priority, he said in the report’s preface.

Residents of northern Mississippi are being surveyed on cellphone access, to help persuade carriers to improve service in that part of the state. Public Service Commissioner Brandon Presley, who represents the region, began a Zap the Gap campaign to pinpoint places where wireless access doesn’t match demand, he said. He isn’t trying to impugn the performance of carriers, he told us. “We just need more input. With the kind of Universal Service Fund money that the companies are getting, you should be able to get a good cell phone signal and not have dropped calls anywhere in Mississippi. The question is, why isn’t service better? Until now we've had to rely totally on the companies to monitor access and service quality, and they're not always right. But consumers know where the problems are, and we hope that by collecting that information and informing the companies we can get them to fix the situation.” He said carriers providing cellphone service in Mississippi have received more than $512 million since 2004 in federal USF payments. Presley said the money is supposed to go toward increasing rural deployment of cellphone services. “Yet we still have many places in the state, especially rural areas of North Mississippi, that don’t have service,” he said. “In today’s world, having reliable, dependable cellphone coverage is an important factor in the safety and quality of life.” The survey is at www.psc.state.ms.us/commissioners/northern/zapthegap.html. Presley said he’s talking up the survey in personal appearances and may produce public service announcements about it.

The FCC’s inspector general is investigating the Universal Service Fund low-income program and plans to submit a report to the commission and Congress, acting Inspector General David Hunt said Tuesday. In a letter to various committee chairmen and ranking members in the House and Senate, he said his office has withdrawn the previous IG’s December finding that all payments by the program were incorrect, because it may not provide a “meaningful and accurate” picture.

Verizon Wireless said it would support legislation or an FCC rule mandating roaming agreements under certain conditions for a minimum of two years. The commitment came in a letter it sent to House Commerce Committee Chairman Henry Waxman, D-Calif., late Wednesday. Waxman didn’t have a response to the letter, a spokeswoman said Thursday. Verizon said its offer came after a “dialogue” with committee staff on in-market roaming arrangements. Waxman wants carriers to expand roaming, he’s made clear at hearings and in past legislation.

Congress has had “substantial” discussions with the Obama administration on crafting appropriate rules for the broadband stimulus grant program, due out in two weeks, House Communications Subcommittee Chairman Rick Boucher, D-Va., said Thursday at a Pike & Fischer conference. It’s pivotal how the agencies define “unserved” and “underserved” for purposes of awarding grants, Boucher said. “It is important we have a common-sense definition,” he said, suggesting that the absence of competition, prices out of reach of consumers and low speeds should be taken into account in defining “underserved.” “Unserved” should apply to areas with no service, he said, but the definition should be flexible enough not to penalize counties where a few people can get broadband service -- a situation that he dealt with when a county in his district was trying to get RUS grants. Stimulus funding will help deploy more broadband, but federal policymakers also need to consider other steps, such as revamping the universal service program to include broadband. Boucher said he is close to finalizing bipartisan USF legislation that has the support of many carriers and stakeholders. He told reporters he hopes Congress can pass that bill this year. He said he also plans to co-sponsor a bill introduced by Rep. Anna Eshoo, D-Calif., that would require new federal highway projects to include conduit for broadband, a measure that may get included in federal highway reauthorization legislation. The Senate has a bill like Eshoo’s that was introduced this week by Democratic Sens. Amy Klobuchar of Minnesota and Mark Warner of Virginia. -- AV

The FCC should block the imposition of a 12.9 percent universal service fund contribution factor, the highest in history, David Bergmann, chair of the National Association of State Utility Consumer Advocates telecom committee, said in an interview Tuesday. The FCC, which released the proposed new factor Friday (CD June 16 p4), has until June 26 to act before the percentage request is deemed granted. The higher factor could mean $1-$2 hikes on some consumers’ phone bills, Bergmann said. In a filing last week at the FCC, NASUCA said the commission could reduce the factor by directing USAC to dip into $1 billion in unused USF E-rate funds, or nearly $6 billion in assets held for the federal fund. NASUCA believes that that’s a good temporary fix but that the FCC ultimately must revamp USF distribution to limit payouts to companies that don’t actually need subsidies, Bergmann said. Moving to a numbers-based system for USF contribution, which has been suggested by wireline companies big and small, isn’t the answer, he said. The existing system of basing contribution on carrier revenue works because it means people who use long distance service more also pay more to USF, he said. However, if the FCC wants to direct USF funds to broadband, NASUCA supports requiring all broadband providers to pay into USF, he said.

Carriers must pay 12.9 percent of their long-distance revenue to the Universal Service Fund in the third quarter, 1.6 percentage points more than this quarter. Big phone companies were quick to note that’s the highest figure in the fund’s history. But some small rural carriers disputed that the high factor shows that a thorough revamp of USF is needed.

The FCC should reject the 12.9 percent contribution factor proposed by the Universal Service Administrative Co. for the universal service in the third quarter, said the National Association of State Utility Consumer Advocates. The new factor takes effect July 1 unless the FCC acts to modify it. In a request filed at the FCC late Tuesday, NASUCA said the FCC could reduce the factor by directing USAC to dip into $1 billion in unused USF E-rate funds, or nearly $6 billion in assets held for the federal fund. “With high unemployment levels, foreclosures across the nation and everyone’s household budgets being stretched thin, we call on the FCC to reduce the proposed hike in the Universal Service Fund’s contribution level,” said NASUCA President David Springe. “The goals of the universal service fund are extremely important, but to demand that consumers pay the highest contribution level in history is to hurt the very customers we are trying to help.”